Insights

The Federal Tax Administration (FTA) publishes the recognized interest rates for the tax assessment of advances and loans in Swiss francs and foreign currencies on an annual basis.

Circular No. 32a of the Federal Tax Administration (FTA), published on January 20, 2025, deals with the tax treatment of restructuring measures for corporations and cooperatives.

Swiss Federal Tax Administration (FTA) annually publishes recognized interest rates applicable for tax assessments of advances and loans in Swiss francs and in foreign currencies.

Transfer prices must comply with the arm’s length principle, according to which transactions between affiliated companies should follow the same conditions that would be agreed between third parties. The Swiss legislator has not enacted any specific laws on transfer pricing. However, the arm’s length principle is implemented on the basis of various provisions in tax laws.

On 4 September 2024, the Federal Council decided to introduce the GloBE Income Inclusion Rule as of 1 January 2025 that supplements the OECD/G20 minimum taxation as in force since 2024.

According to commercial law, a corporation may acquire its own shares provided it has freely disposable equity in the amount of the acquisition value and the nominal value of the own shares does not exceed 10% of the share capital according to the commercial register. If the acquisition is in connection with a restriction on transferability, the maximum limit is 20%. Shares acquired in excess of 10% must be sold within two years or canceled through a capital reduction.

In December 2023, the Federal Council decided to introduce the OECD/G20 minimum taxation as of January 1, 2024 and will levy a top-up tax in Switzerland.

Swiss Federal Tax Administration (FTA) annually publishes recognized interest rates applicable for tax assessments of advances and loans in Swiss francs and in foreign currencies.

On December 22, 2023, the Federal Council informed about their decision to implement the OECD minimum tax concept as planned by January 1, 2024. Switzerland therefore will be a frontrunner in the implementation of the OECD tax reform together with other major European OECD member states.

As of January 1, 2020, a notional income tax deduction for highly equity financed corpora-tions was introduced. Cantons with an effective profit tax burden of at least 18% are entitled to grant such notional interest deductions for cantonal taxes on certain qualifying equity. No deduction applies for direct federal tax. The reduction via application of the notional interest expense on equity capital is not granted on the entire equity, but on the security equity capital to be defined. The imputed interest rate is based on the yield for ten-year federal bonds, alt-hough a considerably higher third-party interest rate may also be applied for intra-group fi-nancing activities of the company.

Swiss voters approve OECD minimum tax/Pillar Two concept to embed into fiscal regulations.

According to Swiss statutory regulations, contributions, including paid-in surplus, effectuated by direct shareholders, that are openly disclosed and accounted for in the financials of the receiving corporation or cooperative are considered as reserves from capital contributions. The repayment of such capital contributions to current or future shareholders is treated the same way as the repayment of nominal share capital and as such is neither subject to income nor withholding tax.

Confirmation of the practice of the Federal Tax Administration in the area of withholding tax in the case of a secondary adjustment.

For the tax assessment of advances and loans in Swiss francs and in foreign currencies, the Swiss Federal Tax Administration (FTA) publishes the recognised interest rates annually. The interest rates were massively increased in 2023 compared to previous years.

Changes in commercial law effective January 1, 2023, result in various tax planning opportunities and increased flexibility. This is especially true for foreign-controlled Swiss companies.

As per January 1, 2023, some improvements to the notification procedure for Swiss withholding taxes will enter into force.