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Switzerland To Amend Withholding Tax Act

by Ulrika Lomas, Tax-News.com, Brussels

15 April 2020


The Swiss Federal Council has launched a consultation on proposals to close what it says is a loophole in the withholding tax system, in a bid to strengthen the country's debt market.

The Council has proposed a new exemption from withholding tax on interest-bearing investments, which would apply to domestic legal entities and foreign investors. This would enable corporate groups to issue their bonds in Switzerland without encountering what the Council said are "withholding tax hurdles."

The Council explained that, technically speaking, this measure would involve a partial switch to the paying agent principle. As a rule, banks would levy the new withholding tax in the future. As a complementary measure, the transfer stamp tax on domestic bonds would be abolished.

The move to the paying agent principle would in this case close a loophole with regard to individuals in Switzerland, and make income from foreign interest-bearing investments subject to withholding tax.

The Council said: "The reform means that bonds previously issued abroad can now be issued in Switzerland. There is also the possibility that more intragroup financing activities will be located in Switzerland, which will strengthen the Swiss debt market."

TAGS: individuals | tax | investment | business | interest | withholding tax | Switzerland | tax reform | BEPS

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