CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Switzerland Postpones Withholding Tax Reforms

Switzerland Postpones Withholding Tax Reforms

by Ulrika Lomas,, Brussels

25 June 2015

The Swiss Federal Council is to postpone a planned overhaul of the withholding tax (WHT) system and re-examine the appropriateness of the reforms at a later date.

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 Council had proposed a move to a paying agent system, under which the debtor would transfer the full gross amount to the paying agent (typically a bank). Depending on who the investor is, the paying agent would then decide whether WHT needs to be collected.

The Federal Council said that while many of those who participated in its consultation acknowledged the advantages of the proposed reforms, they opposed immediate implementation. Some submissions advocated delaying implementation until after the international introduction of the automatic exchange of information (AEOI) and the domestic discussion on Swiss banking secrecy. The Swiss Bankers Association and economiesuisse recommended a partial transition to a WHT reporting system.

The Council has now proposed an extension of the temporary tax exemption for contingent convertible bonds (CoCos) and write-off bonds, and the introduction of a similar exemption for bail-in bonds. The exemptions would be effective for a five-year period, beginning on January 1, 2017. The Federal Department of Finance (FDF) has been instructed to prepare the necessary dispatch by September 2015.

The Council said the paying agent principle should be discussed again before the planned exemptions for CoCos, write-off bonds, and bail-in bonds expire. However, in view of the outcome of its previous WHT consultation, the Council intends to wait until the result of the referendum on the popular initiative "Yes to the protection of privacy" is known. That initiative was launched in March 2013 by a cross-party committee, with the aim of ensuring citizens' privacy.

TAGS: tax | banking | insurance | banking secrecy | withholding tax | Switzerland | tax reform | trade association | trade

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »