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Changes to Switzerland's Withholding Tax (WHT) Ordinance will enter into force on April 1, with the aim of facilitating group financing activities.
The Swiss Federal Council approved the amendments on March 10.
The reforms will affect groups in which a Swiss group company (guarantor) provides a guarantee for a bond of a foreign group company (issuer) belonging to the same group. The interest on funds transferred from the foreign issuer to the guarantor, up to the maximum amount of the equity capital of the issuer, will no longer be subject to WHT.
In Switzerland, WHT is levied on interest, participation income, lottery winnings, and certain insurance benefits. It is collected from the debtor of the taxable item, in accordance with the debtor principle. It is refunded only if the corresponding income is declared.
The Swiss Federal Council said that any short-term reductions in WHT receipts as a result of the reforms should be negligible.
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