The Swiss Federal Tax Administration (SFTA) published two circulars on updated safe harbour interest rates for intercompany loans for 2020.
Loans to related parties in Swiss francs
For loans to shareholders and affiliated parties, the interest rates that a Swiss resident shall receive at minimum are as follows:
- Loans financed from equity: 0.25%
- Debt-financed loans: the minimum interest rate should include a spread of 0.5% on loans up to CHF 10 million and a spread of 0.25% on loans above that amount.
Loans from related parties in Swiss francs
For loans received from shareholders and affiliated parties, the maximum interest rates payable by Swiss entities are as follows:
- For loans to finance real estate:
- up to a loan equal to the first mortgage, i.e. 2/3 of the market value of the property: housing and agriculture 1%; industry and commerce 1.5%
- Remainder: the following maximum rates for the debt financing applies: building land, villas, condominiums, holiday homes and factory properties up to 70% of the market value and other properties up to 80% of the market value: housing and agriculture 1.75%; industry and commerce 2.25%
- For operating loans:
- Loans up to CHF 1 million for trading and manufacturing companies: 3%
- Loans up to CHF 1 million for holding and asset management companies: 2.5%
- Loans exceeding CHF 1 million for trading and manufacturing companies: 1%
- Loans exceeding CHF 1 million for holding and asset management companies: 0.75%
These interest rates are considered safe harbour interest rates. Evidence of higher interest rates in a third-party comparison remains reserved.
Loans entered in foreign currency
Circular 2-179-DV-2020-d describes the 2020 interest rates for loans entered in foreign currency. For example, the interest rate for equity-financed loans in Euros is 0.5% and for loans in US dollars it is 2.25%.