Switzerland: Consultation on Amending the Withholding Tax Ordinance

The Swiss Federal Council issued a press release announcing that it has initiated the consultation procedure on an amendment to the Withholding Tax Ordinance. The aim of the proposed amendments is to strengthen financing activities of groups in Switzerland.

Activities Abroad

The Swiss Federal Council informed that groups established in Switzerland often carry out targeted financing activities abroad. "In this way, they avoid withholding tax, which would be due in certain situations were they to conduct the financing via group companies established in Switzerland. The Swiss economy thereby misses out on some of the added value in this sector," the Federal Council informed.

Retaining Added Value

In order to retain the added value, the Federal Council proposed an amendment to the Withholding Tax Ordinance targeted at Swiss group companies (guarantors) that provide a guarantee for a bond of a foreign group company (issuer), which belongs to the same group. Under the proposed amendment, intra-group interest payments of the Swiss guarantor would no longer be subject to withholding tax in all cases. "Forwarding of funds from the foreign issuer to a group company established in Switzerland should still be possible up to the maximum amount of the equity capital of the issuer,"  The Swiss Federal Council added.


The amendment is proposed due to suspension of the former reform proposed on December 18, 2014 in the consultation, which awaits the outcome of the vote on the popular initiative "Yes to protecting privacy". The Federal Council informed it has decided to propose this particular amendment of the Withholding Tax Ordinance to enhance the appeal of Switzerland as a business location. The consultation period runs until December 23, 2016.

Source: The Swiss Federal Council

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