EY
+41 (58) 286-31-11
Maagplatz 1 Fax: +41 (58) 286-30-04 P.O. Box CH-8010 Zurich Switzerland
Head of Tax and Legal – Switzerland
Daniel Gentsch +41 (58) 286-36-13 Email: daniel.gentsch@ch.ey.com
Christian Röthlin, +41 (58) 286-35-38 Financial Services Email: christian.roethlin@ch.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Jan Bertini
+41 (58) 286-48-61 Email: jan.bertini@ch.ey.com
Daniel Gentsch +41 (58) 286-36-13 Email: daniel.gentsch@ch.ey.com
Dr. Kersten A. Honold +41 (58) 286-31-66 Email: kersten.honold@ch.ey.com
Carsten Kuhlmann +41 (58) 286-34-06 Email: carsten.kuhlmann@ch.ey.com
Sarah Lacher +41 (58) 286-34-20 Email: sarah.lacher@ch.ey.com
Dr. Georg Lutz +41 (58) 286-44-16 Email: georg.lutz@ch.ey.com
Sita Mahawattage +41 (58) 289-75-39 Email: sita.mahawattage@ch.ey.com
Marco Mühlemann +41 (58) 286-83-91 Email: marco.muehlemann@ch.ey.com
Dr. Thomas Semadeni +41 (58) 286-31-75 Email: thomas.semadeni@ch.ey.com
International Tax and Transaction Services – Operating Model Effectiveness and Transfer Pricing
Guillano Demon +41 (58) 286-38-78 Email: guillano.demon@ch.ey.com Nathan Richards +41 (58) 286-41-90 Email: nathan.richards@ch.ey.com
Hubert Stadler +41 (58) 286-49-41 Email: hubert.stadler@ch.ey.com
Ramon Taboada Souza Neto +41 (58) 286-33-56 Email: ramon.taboada@ch.ey.com
International Tax and Transaction Services – Global Tax Desk Network
Christian Koller, +41 (58) 286-46-75 Global Incentives, Innovation Email: christian.koller@ch.ey.com and Location Services
Michael Parets, +41 (58) 286-39-92 United States – Email: michael.parets@ch.ey.com Private Client Services
International Tax and Transaction Services – Tax Desks Abroad
Eric Duvoisin +1 (212) 773-0762 (resident in New York) Email: eric.duvoisin@ey.com
Stefan Ruest
+1 (415) 894-4317 (resident in San Francisco) Email: stefan.ruest@ey.com
Financial Services Organization
Anne Buser, +41 (58) 286-42-56
Insurance Email: anne.buser@ch.ey.com
Ralf Eckert, +41 (58) 286-35-59
Banking and Capital Markets Email: ralf.eckert@ch.ey.com
Katya Federspiel Alig, +41 (58) 286-43-34
Global Compliance Email: katya.federspiel-alig@ch.ey.com and Reporting
Rolf Geier, +41 (58) 286-44-94
Wealth and Asset Management Email: rolf.geier@ch.ey.com
Silvan Guler, +41 (58) 286-31-55
Wealth and Asset Management Email: silvan.guler@ch.ey.com
Dr. Hans-Joachim Jaeger, +41 (58) 286-31-58
Banking and Capital Markets Email: hans-joachim.jaeger@ch.ey.com
Business Tax Advisory
Thomas Fisler, +41 (58) 286-31-15
Private Client Services Email: thomas.fisler@ch.ey.com
Andreas Fross +41 (58) 286-85-60 Email: andreas.fross@ch.ey.com
Stefan Laganà, +41 (58) 286-31-78 Real Estate Email: stefan.lagana@ch.ey.com
Roland Suter, +41 (58) 286-31-80
Private Client Services Email: roland.suter@ch.ey.com
Global Compliance and Reporting
Virginie Casals +41 (58) 286-35-41 Email: virginie.casals@ch.ey.com
Gregor Müller, +41 (58) 286-30-53
Tax Accounting and Risk Email: gregor.mueller@ch.ey.com Advisory Services
Christoph Trachsel, +41 (58) 286-20-35 Accounting Services Email: christoph.trachsel@ch.ey.com
Michel Vasserot, +41 (58) 286-41-83
Business Tax Compliance Email: michel.vasserot@ch.ey.com
Indirect Tax
Silke Hildebrandt-Stürmer +41 (58) 286-32-41 Email: silke.hildebrandt-stuermer@ch.ey.com Benno Suter +41 (58) 286-43-86 Email: benno.suter@ch.ey.com
Legal Services
Oliver Blum +41 (58) 286-45-82 Email: oliver.blum@ch.ey.com
Michael Cadisch, +41 (58) 286-33-76 Private Client Services Email: michael.cadisch@ch.ey.com
Corinna Codd, +41 (58) 286-33-51
Legal Function Consulting Email: corinna.codd@ch.ey.com
Eric Eck, +41 (58) 286-45-80
Legal Managed Services and Email: eric.eck@ch.ey.com
Legal Function Consulting
Andrea Garnitschnig, +41 (58) 286-34-57 Financial Services Email: andrea.garnitschnig@ch.ey.com
Christian Röthlin, +41 (58) 286-35-38 Financial Services Email: christian.roethlin@ch.ey.com
Darko Stefanoski, +41 (58) 286-37-08 Financial Services Email: darko.stefanoski@ch.ey.com
Philippe Zimmermann, +41 (58) 286-32-19
Financial Services Email: philippe.zimmermann@ch.ey.com
People Advisory Services
Lukas Naef
+41 (58) 286-41-27 Email: lukas.naef@ch.ey.com
Dirk Nuyts, +41 (58) 286-30-09 Immigration Email: dirk.nuyts@ch.ey.com Gerard Osei-Bonsu, +41 (58) 286-43-24 Financial Services Email: gerard.osei-bonsu@ch.ey.com
Kirsten Vasey, +41 (58) 286-41-53 Performance Email: kirsten.vasey@ch.ey.com
Tax Technology and Transformation
Clare Franklin
+41 (58) 286-30-28 Email: clare.franklin@ch.ey.com
Charles Hainsworth, +41 (58) 286-44-03 Financial Services Email: charles.hainsworth@ch.ey.com
Aarau GMT +1
Ernst & Young
+41 (58) 286-23-23
Rain 41 Fax: +41 (58) 286-23-00 P.O. Box CH-5000 Aarau Switzerland
Business Tax Advisory
Andrea Jost
+41 (58) 286-75-26 Email: andrea.jost@ch.ey.com
Markus Nyffenegger +41 (58) 286-23-42 Email: markus.nyffenegger@ch.ey.com
Basel GMT +1
Ernst & Young +41 (58) 286-86-86
Aeschengraben 27 Fax: +41 (58) 286-86-00 P.O. Box CH-4002 Basel Switzerland
International Tax and Transaction Services – International Corporate Tax Advisory
Daniel Schmidt
+41 (58) 286-31-26 Email: daniel.schmidt@ch.ey.com
International Tax and Transaction Services – Operating Model Effectiveness and Transfer Pricing
Jean-Benoit Vögele
Business Tax Advisory
Markus Nyffenegger
+41 (58) 286-89-78 Email: jean-benoit.voegele@ch.ey.com
+41 (58) 286-23-42 Email: markus.nyffenegger@ch.ey.com
Thomas Püntener +41 (58) 286-82-54 Email: thomas.puentener@ch.ey.com
People Advisory Services
Fabio Filippi
+41 (58) 286-81-98 Email: fabio.filippi@ch.ey.com
Christine Vogel +41 (58) 286-86-24 Email: christine.vogel@ch.ey.com
Berne GMT +1
Ernst & Young +41 (58) 286-61-11 Schanzenstrasse 4a Fax: +41 (58) 286-68-18 CH-3008 Berne Switzerland
International Tax and Transaction Services – International Corporate Tax Advisory
Martin Baumgartner +41 (58) 286-62-32 Email: martin.baumgartner@ch.ey.com
Conradin Mosimann +41 (58) 286-67-18 Email: conradin.mosimann@ch.ey.com
Isabelle Seiler +41 (58) 286-69-17 Email: isabelle.seiler@ch.ey.com
Business Tax Advisory
Frédéric Bonny +41 (58) 286-62-02 Email: frederic.bonny@ch.ey.com
Matthias Britsch +41 (58) 286-65-37 Email: matthias.britsch@ch.ey.com
Hanspeter Saner +41 (58) 286-64-93 Email: hanspeter.saner@ch.ey.com
Global Compliance and Reporting
Reto Schwerzmann +41 (58) 286-63-69 Email: reto.schwerzmann@ch.ey.com
Legal Services
Marc Gugger, +41 (58) 286-61-90 Labor and Employment Law Email: marc.gugger@ch.ey.com
Andreas Jaeggi, +41 (58) 286-62-70 Digital Law/Data Protection Email: andreas.jaeggi@ch.ey.com
Geneva GMT +1
Ernst & Young +41 (58) 286-56-56 Place de Pont-Rouge 1 Fax: +41 (58) 286-56-57 P.O. Box 1575 CH-1211 Geneva 26 Switzerland
International Tax and Transaction Services – International Corporate Tax Advisory
Hugo Lombardini
+41 (58) 286-58-57 Email: hugo.lombardini@ch.ey.com
Karen Simonin +41 (58) 286-56-53 Email: karen.simonin@ch.ey.com
International Tax and Transaction Services – Operating Model Effectiveness and Transfer Pricing
Nicolas Bonvin
+41 (58) 286-55-03 Email: nicolas.bonvin@ch.ey.com
Xavier Eggspuhler +41 (58) 286-55-47 Email: xavier.eggspuhler@ch.ey.com
Ioseb Nutsubidze +41 (58) 286-58-03 Email: ioseb.nutsubidze@ch.ey.com
Indirect Tax
Ashish Sinha
+41 (58) 286-59-06 Email: ashish.sinha@ch.ey.com
Business Tax Advisory
Jean-Marie Hainaut
Global Compliance and Reporting
Sarah Drye
+41 (58) 286-58-51 Email. jean-marie.hainaut@ch.ey.com
+41 (58) 286-57-34 Email: sarah.drye@ch.ey.com
Elodie Tonetto +41 (58) 286-53-43 Email: elodie.tonetto@ch.ey.com
Legal Services
Silvia Devulder,
+41 (58) 286-38-03 Financial Services Email: silvia.devulder@ch.ey.com
Aurélien Muller +41 (58) 286-57-35 Email: aurelien.muller@ch.ey.com
People Advisory Services
Hugh Docherty
+41 (58) 286-43-42 Email: hugh.docherty@ch.ey.com
Lausanne GMT +1
Ernst & Young
+41 (58) 286-51-11 Avenue de la Gare 39a Fax: +41 (58) 286-51-01 P.O. Box CH-1002 Lausanne Switzerland
Business Tax Advisory
Christian Aivazian
Global Compliance and Reporting
Juan Leston,
+41 (58) 286-51-23 Email: christian.aivazian@ch.ey.com
+41 (58) 286-51-47 Accounting Services Email: juan.leston@ch.ey.com
Lucerne GMT +1
Ernst & Young
+41 (58) 286-77-11 Bahnhofstrasse 7 Fax: +41 (58) 286-77-05 CH-6003 Lucerne Switzerland
Business Tax Advisory
Martin Zemp
+41 (58) 286-75-25 Email: martin.zemp@ch.ey.com
Lugano GMT +1
Ernst & Young
+41 (58) 286-24-24 Corso Elvezia 9 Fax: +41 (58) 286-24-00 P.O Box CH-6901 Lugano Switzerland
International Tax and Transaction Services – Operating Model Effectiveness
Joost Vreeswijk
Business Tax Advisory
Sandro Jaeger
+41 (58) 286-24-09 Email: joost.vreeswijk@ch.ey.com
+41 (58) 286-75-24 Email: sandro.jaeger@ch.ey.com
St. Gallen GMT +1
Ernst & Young +41 (58) 286-20-20 St. Leonhard-Strasse 76 Fax: +41 (58) 286-20-22 P.O. Box CH-9001 St. Gallen Switzerland
Business Tax Advisory Roger Krapf
+41 (58) 286-21-25 Email: roger.krapf@ch.ey.com Christian Schwarzwälder +41 (58) 286-20-96 Email: christian.schwarzwaelder@ch.ey.com
Zug GMT +1
Ernst & Young +41 (58) 286-75-55 Gotthardstrasse 26 Fax: +41 (58) 286-75-50 CH-6300 Zug Switzerland
International Tax and Transaction Services – International Corporate Tax Advisory
Hartwig Hoffmann
Business Tax Advisory
André Bieri
Global Compliance and Reporting
Thilo Gauch
Indirect Tax
Andrea Stocker-Sohst
Legal Services
Roman Werder
People Advisory Services
Markus Kaempf
A. At a glance
Corporate Income
Capital
Withholding
Approximately
+41 (58) 286-75-71 Email: hartwig.hoffmann@ch.ey.com
+41 (58) 286-75-31 Email: andre.bieri@ch.ey.com
+41 (58) 286-75-58 Email: thilo.gauch@ch.ey.com
+41 (58) 286-75-20 Email: andrea.stocker-sohst@ch.ey.com
+41 (58) 286-75-42 Email: roman.werder@ch.ey.com
+41 (58) 286-44-06 Email: markus.kaempf@ch.ey.com
(b) See Section B.
(c) The withholding tax rates may be reduced under the Switzerland-European Union (EU) agreement (see Section E) and under double tax treaties (see Section F).
(d) Withholding tax is levied on bank interest and bond interest, but normally not on interest on commercial loans, including loans from foreign parents to Swiss subsidiaries.
(e) Income of the current year may be offset against losses incurred in the pre ceding seven years. Losses may not be carried back (see Section C).
B. Taxes on corporate income and gains
Income tax. Switzerland is a confederation of 26 cantons (states). Taxes are levied at the federal and cantonal/communal levels. As a result of this multilayered tax system, no standard tax rates exist. Under the Swiss income tax system, earnings are taxed at the corporate level and, to the extent profits are distributed as divi dends, again at the shareholder’s level. However, see Dividends for details regarding the participation exemption.
In general, a resident corporation is a corporation that is incorpo rated in Switzerland. In addition, a corporation incorporated in a foreign country is considered a resident of Switzerland under Swiss domestic law if it is effectively managed and controlled in Switzerland.
Resident companies are subject to corporate tax on worldwide income. Income realized by a foreign permanent establishment of a Swiss company or derived from foreign real estate is excluded from taxable income. Losses incurred by a foreign permanent establishment are deductible from taxable income. However, if a foreign permanent establishment of a Swiss company realizes profits in the seven years following the year of a loss and if the permanent establishment can offset the loss against such profits in the foreign jurisdiction, the Swiss company must add the amount of losses offset in the country of the permanent establishment to its taxable income in Switzerland.
A company not resident in Switzerland is subject to Swiss income tax if it has a permanent establishment or real estate in Switzerland.
Tax Harmonization Act. The Tax Harmonization Act (THA) sets certain minimum standards for cantonal/communal taxes. However, cantonal/communal tax rates are not harmonized under the THA.
Rates of corporate tax. The federal corporate income tax is levied at a flat rate of 8.5% of the taxable income. Because taxes are deductible, the effective federal corporate income tax rate is approximately 7.8%.
Cantonal/communal tax rates vary widely. The cantonal/communal tax rates are usually a certain percentage (known as “multipliers”) of the relevant cantonal statutory tax rates. The total effective maximum tax liability which consists of federal and cantonal/ communal taxes, ranges from 11% to 21%, depending on the canton and commune in which the taxable entity is located.
Tax incentives. In Switzerland, tax incentives are granted to com panies either by the cantons or by both the cantons and the fed eration. Except for the limitation on the duration of tax incentives
to a maximum period of 10 years, the cantons are autonomous in granting cantonal/communal tax incentives to the following:
• Newly established enterprises
• An already established enterprise that makes a material change in its operations
Tax incentives at the federal level require approval of the federation. Incentives at the federal level are governed by the federal law on regional policy, which is based on the following key factors:
• Establishment of new business activities in a qualifying area of economic development
• The performance by the applying company of industrial activi ties or services that have a close nexus to production activities
• Creation of new jobs or maintaining of jobs
• Particular economic relevance of the planned project for the area
The maximum amount of the federal tax relief is determined by the number of newly created or maintained jobs. Productionrelated service providers are eligible for a federal tax holiday if they create at least 10 new jobs within the first 5 years. No such limitation applies to industrial enterprises.
Federal and cantonal/communal tax holidays are typically subject to clawback provisions. The clawback clause is generally trig gered if the conditions for the tax holidays are no longer met (for example, the envisaged number of jobs have not been created or have not been maintained within the relevant time frame).
Capital gains. Capital gains are generally taxed as ordinary busi ness income at regular income tax rates. Different rules may apply to capital gains on real estate or to real estate companies at the cantonal/communal level.
Capital gains derived from dispositions of qualifying investments in subsidiaries qualify for the participation exemption. Under the participation exemption rules for capital gains, the parent com pany must sell a shareholding of at least 10% and, at the time of the disposal, it must have held the shares for at least one year (for further details regarding the participation exemption, see Dividends).
Administration. Income tax is generally assessed on the income for the current fiscal year, which corresponds to the corporation’s financial year. The financial year does not need to correspond with the calendar year. Corporations are required to close their books once a year and file annual returns. This rule does not apply to the founding year. Consequently, the first fiscal year can be extended up to a maximum of nearly two years.
The cantonal deadlines for filing the corporate tax return vary, and extensions may be obtained. The federal and cantonal tax returns are generally filed together.
Corporations may pay income tax in one lump-sum payment or in installments. The deadline for the payment of federal income tax is 31 March of the year following the fiscal year. The deadline for cantonal/communal taxes is usually between 30 June and 31 December.
Dividends. Dividends received are taxable as ordinary income. However, under the participation exemption rules, the corporate income tax liability is reduced by a proportion of net dividend income (as defined by the law) to the total taxable income if the recipient of dividends satisfies any of the following conditions:
• The recipient owns at least 10% of the shares of the distributing corporation.
• The recipient has a share of at least 10% of the profits and reserves of the distributing corporation.
• The recipient holds shares with a market value of at least CHF1 million.
Swiss companies distributing dividends or proceeds from liqui dation exceeding the nominal share capital and the capital contribution reserves are generally required to withhold tax at a rate of 35%. Under the Net Remittance Procedure, Swiss companies distributing qualifying dividends may apply the treaty withhold ing rates prospectively without making the full 35% prepayment. The Net Remittance Procedure applies to dividends distributed on “substantial participations.” These are participations that qualify for an additional reduction or a full exemption from Swiss withholding tax under a comprehensive income tax treaty or under the Automatic Exchange of Information (AEI) Agreement between Switzerland and the EU (see Section E). To distribute dividends under the Net Remittance Procedure, companies must file an ap plication with the Swiss Federal Tax Administration (SFTA).
The SFTA assesses, among other items, the beneficial ownership and substance elements. An approval remains valid for a three-year period. Reimbursements of Swiss withholding tax on dividends paid before the completion of the two-year minimum holding peri od require filing and approval of Form 70 after the completion of the two-year holding period (Denkavit-Practice; this is a reference to the European Court of Justice’s decision in the Denkavit case).
Under the capital contribution principle, contributions to equity made by a shareholder on or after 31 December 1996 can generally be distributed without triggering withholding tax consequences, provided that certain requirements are met. Nevertheless, as of 1 January 2020, Swiss companies that are listed on the Swiss stock exchange can only distribute capital contribution reserves tax-free to their shareholders if at least 50% of the dividend is distributed out of other reserves (typically retained earnings) to the extent available.
Intercantonal tax allocation. If a company operates in more than one canton, that is, the head office is in one canton and permanent establishments are in other cantons, its taxable earnings are allo cated among the different cantons. The allocation method depends on the type of business of the company. The determination of the method is based on case law, which is governed by a constitutional guarantee against intercantonal double taxation.
Foreign tax relief. Income from foreign permanent establishments of a Swiss company is not taxable in Switzerland. The interna tional allocation of profit is based on intercantonal rules, unless
a tax treaty provides for a different method. For the treatment of losses of foreign permanent establishments, see Income tax
C. Determination of taxable income
General. The net profit shown in the commercial financial state ments generally serves as the basis for income taxation. However, the tax authorities may require adjustments to correct for certain items such as excessive depreciation and provisions.
Federal and cantonal/communal corporate taxes paid or due are deductible for corporate income tax purposes.
Inventories. Any system of inventory pricing that is in accordance with accepted business practice and is used consistently by the taxpayer is presumed to be acceptable by the tax authorities.
Provisions. Swiss federal and cantonal regulations provide that a company may record a general tax-deductible reserve amounting to one-third of the inventory valuation.
Provisions to cover doubtful accounts receivable and expected liabilities are generally allowed for tax purposes if they are com mercially justifiable.
In general, a reserve of 5% of accounts due from Swiss debtors and 10% of those due from foreign debtors is allowed, without sub stantiation. In addition, provisions for specific accounts may be established if economically justifiable.
Depreciation. Depreciation may be calculated using the decliningbalance or the straight-line method. For federal tax purposes, the following are some of the maximum rates set forth in the official guidelines.
Method
Declining- StraightAsset balance (%) line (%)
Commercial buildings
3 to 4 1.5 to 2
7 to 8 3.5 to 4 Office furniture 25 12.5 Office machines 40 20
Industrial buildings
Data-processing equipment 40 20
Machinery 30 15 Motor vehicles 40 20 Intangibles 40 20
Some cantons have particularly favorable provisions (for example, immediate or one-time depreciation).
Relief for losses. Income of the current year may be offset against losses incurred in the preceding seven years, to the extent that such losses have not yet been used to absorb profits of prior years. No loss carryback is allowed.
Groups of companies. Except for value-added tax purposes, the concept of a consolidated or group return is unknown in Swiss tax law. Each corporation is treated as a separate taxpayer and files its own return.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax Rate (%)
Value-added tax (VAT), on deliveries of goods and services, including imports of goods and the purchase of services and (in very specific cases) of goods from foreign businesses that are not registered for VAT in Switzerland
Standard rate 7.7
Hotel and lodging services (overnight stays only) 3.7
Preferential rate (applicable to items such as foodstuffs, farming supplies, agricultural products, medicines and newspapers) 2.5
Exports 0
Net equity tax
Federal rate 0
Cantonal/communal rate; varies among the cantons and may also depend on the multiplier applied by the canton/commune (the cantons can provide for certain relief measures including the credit of the corporate income tax against the cantonal/communal equity tax) 0.001 to 0.5
Payroll taxes
Social security contributions, on gross salary; paid by Employer 5.3 Employee 5.3 Company pension fund; rate varies by plan (compulsory and optional), gender and age of employee; paid by Employer (must bear at least one-half of the contribution) 3.5 to 9 Employee 3.5 to 9
Unemployment insurance, imposed on annual gross salary
Gross salary up to CHF148,200; paid by Employer 1.1 Employee 1.1
Gross salary from CHF148,200 (uncapped); paid by Employer Additional 0.5 Employee Additional 0.5
Family allowance; paid on salary by employer; imposed by various cantons at different rates 0.7 to 3.5
Maternity insurance (only for some cantons) Various Accident insurance; rates vary depending on extent of coverage and the risk of the business; imposed on annual gross salary of up to CHF148,200
Nature of tax Rate (%)
Occupational; paid by employer; for extremely high risks, rates vary depending on various factors (for example, industrial sector of the employer)
Various
Non-occupational; employer may elect to charge all or part of these premiums to employees; for extremely high risks, rates vary depending on various factors (for example, industrial sector of the employer) Various Stamp duties
One-time capital contribution tax, on Swiss shares (the rate is 0% for shares issued within the scope of qualified mergers and reorganizations, as well as for financial reorganizations, provided specific requirements are met); for incorporations and capital increases, the first CHF1 million is exempt from tax 1 Securities turnover tax; on the sale or exchange of taxable securities involving a Swiss-registered securities dealer (as defined by the law) that acts in the capacity of a broker or dealer or that trades on its own account; the onus for payment of the securities turnover tax is on the Swiss securities dealer, but it is customary that the securities turnover tax be charged to the ultimate buyer and/or seller; several types of parties are exempt, including investment fund managers and foreign companies listed on a recognized stock exchange; several types of transactions are exempt, including the brokering of foreign bonds between foreign parties and qualifying internal group transactions Securities issued by a Swiss party 0.15 Securities issued by a foreign party 0.3 Stamp duty on insurance premiums
Third-party liability, fire, comprehensive vehicle and house contents insurance 5 Life insurance with single premium 2.5
E. Miscellaneous matters
Tax relief measures introduced in 2020. In the context of the Swiss corporate tax reform, the internationally accepted measures described below were introduced in 2020. These measures have replaced the preferential cantonal taxation schemes available for holding, mixed and domiciliary companies:
Patent box at the cantonal level. A patent box, which is Organisation for Economic Co-operation and Development (OECD) compliant, is available at the cantonal level. Subject to the nexus approach, qualifying income derived from patents and equivalent rights is eligible for a relief between 10% to 90% (var ies among the cantons). On entry in the patent box, the previ ously deducted research and development (R&D) expenditures are recaptured and taxed at the cantonal level. R&D super deduction at the cantonal level. In certain cantons, an incremental deduction between 20% and 50% of the taxpayer’s
qualifying R&D expenditures can be applied (varies among the cantons). Only expenditures incurred in connection with R&D activities performed in Switzerland, either by the taxpayer or by related or unrelated parties, are eligible for the super deduction.
Notional interest deduction for taxpayers domiciled in the canton of Zurich. There is a grant of a notional interest deduction (NID), which is an imputed interest deduction on surplus equity. Surplus equity represents the portion of equity that exceeds the core eq uity required to conduct the business activity of the entity.
Immigration step-up at the federal and cantonal level. Hidden reserves, including self-created goodwill, can be disclosed for tax purposes on the immigration of assets, businesses or functions from abroad to Switzerland. The disclosed hidden reserves must be amortized within the ordinary amortization periods, while disclosed self-created goodwill must be amortized within 10 years.
Overall cantonal tax relief limitation at the cantonal level. The cantonal tax relief measures such as patent box, R&D super deduction and NID are subject to an overall relief limitation between 9% and 70% of the taxable profit (varies among the cantons).
Debt-to-equity rules. Under the federal thin-capitalization guide lines, which are also applied by most cantons, the minimum capitalization is calculated based on the maximum indebtedness of all of the assets. For each type of asset, only a specified per centage may be financed with debt from related parties (directly or indirectly). Consequently, the debt-to-equity ratio results from the sum of the maximum amount of indebtedness of all of the assets. The following are examples of the maximum percentages of indebtedness:
• Cash: 100%
• Accounts receivable: 85%
• Participations: 70%
• Manufacturing plants: 70%
• Intangibles: 70%
The required equity is calculated at the end of the year based on the balance sheet or on the fair market value of all assets, if higher. For finance companies, the maximum indebtedness is 6/7 of the assets.
Interest rates may not exceed arm’s-length rates (the SFTA pub lishes safe haven rates periodically).
In certain cantons, specific debt-to-equity rules apply to real estate companies.
Foreign-exchange controls. Switzerland does not impose foreignexchange controls.
Transfer pricing. Switzerland does not have statutory transferpricing rules. Intercompany charges should be determined at arm’s length. The tax authorities accept the transfer-pricing meth ods described by the OECD guidelines. In particular, cost-plus charges should be justified and documented with appropriate
ranges of mark-ups for each individual case. For the provision of financial and management services, the cost-plus method is accepted in exceptional cases only.
Special guidelines apply concerning minimum and maximum in terest on loans granted to or from shareholders or related parties.
Companies may discuss transfer-pricing issues with the tax au thorities and confirm the outcome in binding rulings. In complex cases, they may apply for APAs. Rulings are more common.
All of Switzerland’s tax treaties contain a provision relating to the mutual agreement procedure (MAP), which generally follows Article 25 Paragraphs 1 through 3 of the OECD Model Tax Convention. Furthermore, more than 35 double tax treaties provide for the possibility of binding arbitration if the competent authorities of the countries involved cannot reach an agreement within MAP.
Country-by-Country Reporting. Multinational corporations that are resident in Switzerland with a minimum consolidated turnover of more than CHF900 million are required to submit a Countryby-Country Report to the SFTA no later than 12 months after the end of the respective financial year.
Reorganizations. The Swiss Merger Law of 3 October 2003 autho rizes companies to carry out tax-neutral reorganizations (mergers, demergers and transformations) if certain conditions are met, including the following:
• Liability to Swiss tax continues after the reorganization.
• Assets and liabilities are transferred and acquired at their previ ous value for income tax purposes.
Anti-avoidance measures. Switzerland has double tax treaties with more than 115 jurisdictions for the avoidance of double taxation and is committed to align all treaties with the global minimum standard in accordance with OECD Base Erosion and Profit Shifting (BEPS) Action 6.
Automatic Exchange of Information Agreement between Switzerland and the EU. Article 9 of the Automatic Exchange of Information Agreement between Switzerland and the EU (AEI Agreement) contains a measure providing that dividends paid (similar rules apply to intercompany interest payments and royal ties) are not subject to tax in the country of source if the follow ing conditions are satisfied:
• The parent company has a direct minimum holding of 25% of the capital of the payer of the dividends (subsidiary) for at least two years.
• Both the parent company and the subsidiary are subject to cor porate tax without being exempted and both are in the form of a limited company.
• One company is tax resident in an EU member state and the other company is tax resident in Switzerland.
• Neither company is tax resident in a third state under a double tax treaty with that state.
Bilateral double tax treaties between Switzerland and individual EU member states remain applicable and are not restricted by the AEI Agreement.
Subject to fulfillment of the respective requirements, the taxpayer may rely either on the AEI Agreement or the applicable double tax treaty. The AEI Agreement will be extended to other jurisdic tions that may join the EU in the future.
Outlook regarding the implementation of BEPS 2.0 Pillar Two in Switzerland. Pillar Two of BEPS 2.0 stipulates that multinational enterprises with a turnover of more than EUR750 million are subject to a global minimum tax rate of at least 15% in each ju risdiction (the minimum tax rate is calculated based on the rules provided by the OECD and may significantly differ from the statutory tax rates).
On 12 January 2022, the Swiss Federal Council decided on the basic procedural and material elements of a national implementa tion of the global minimum tax rules (Income Inclusion Rule, Undertaxed Payments Rule and Domestic Top-Up Tax). Based thereon, Switzerland will implement the 15% minimum tax for multinational companies that are in scope of the Pillar Two system. As a result of the urgency of the implementation, Switzerland plans to introduce the required legal basis by a constitutional amendment, which will require a popular vote expected to take place in June 2023. Based on that, the Federal Council will then issue a temporary ordinance to implement the global minimum tax rules as of 1 January 2024.
F. Treaty withholding tax rates
Residence of Dividends Interest (a) Royalties (b) recipient % % %
Albania 5 (d) 5 (ff) 0
Algeria 5 (o) 10 0
Antigua (tttt) 15/25 (uuuu) 0 0
Argentina 10 (ggg) 0/12 (qqq) 0
Armenia 5 (mm) 0/10 (rrr) 0
Australia 0/5 (cccc) 0/10 (ffff) 0 Austria 0 (t)(gg) 0 (gg) 0 Azerbaijan 5 (jj) 0/5/10 (kk) 0
Bahrain 0/5/15 (pppp) 0 0
Bangladesh 10 (t) 0/10 (uu) 0
Barbados (tttt) 15/25 (uuuu) 0 0
Belarus 5 (d) 0/5/8 (gggg) 0 Belgium 0 (gg)(hh) 0/10 (gg)(ll) 0
Belize (tttt) 15/25 (uuuu) 0 0
Brazil 0/10/15 (qqqq) 0/10/15 (rrrr) 0
British Virgin Islands (tttt) 15/25 (uuuu) 0 0 Bulgaria 0 (x)(gg) 0/5 (gg)(ttt) 0
Canada 0/5 (f)(xx) 0/10 (yy) 0
Chile 15 5/15 (vv) 0
China Mainland (w) 0/5 (bbbb) 0/10 (dddd) 0 Colombia 0 (t) 0/10 (hhhh) 0
Côte d’Ivoire 15 15 0
Croatia 5 (d)(gg) 5 (gg) 0 Cyprus 0 (gg)(sss) 0 (gg) 0
Czech Republic 0 (gg)(vvv) 0 (gg) 0 Denmark (rr) 0 (h)(gg) 0 (gg) 0
Dominica (tttt) 15/25 (uuuu) 0 0
Residence of Dividends Interest (a) Royalties (b) recipient % % %
Ecuador 15 0/10 (ll) 0
Egypt 5 (d) 0/15 (m) 0
Estonia 0 (dd)(gg) 0 (gg) 0
Faroe Islands (rr) 0 0 0
Finland 0 (gg)(oo) 0 (gg) 0
France 0 (e)(gg) 0 (gg) 0
Gambia (tttt) 15/25 (uuuu) 0 0
Georgia 0 (oo) 0 0
Germany 0 (j)(gg) 0 (gg) 0
Ghana 5 (g) 0/10 (ll) 0
Greece 5 (d)(gg)(zz) 7 (gg) 0
Grenada (tttt) 15/25 (uuuu) 0 0
Hong Kong 0 (ppp) 0 0
Hungary 0 (gg)(www) 0 (gg) 0
Iceland 0 (nn) 0 0
India (ss) 5 (ss) 0/10 (cc) 0
Indonesia 10 (d) 10 0 Iran 5 (i) 0/10 (r) 0
Ireland 0 (gg)(www) 0 (gg) 0
Israel 5 (g) 5/10 (k) 0
Italy 15 (gg) 12.5 (gg) 0 Jamaica 10 (s) 0/10 (iiii) 0
Japan 0/5 (ww) 0/10 (ff) 0 Kazakhstan 5 (bb)(yyy) 10 0 Korea (South) 5 (g) 0/5/10 (k)(iii) 0
Kosovo 0/5 (yyy)(mmmm) 0/5 (llll) 0
Kuwait 15 10 0 Kyrgyzstan 5 (d) 5 0
Latvia 0 (dd) 0/10 (qq) 0
Liechtenstein 0 (eeee) 0 0 Lithuania 5 (o)(gg) 0/10 (gg)(iiii) 0 Luxembourg 0 (q)(gg) 0/10 (gg) 0
Malawi (tttt) 15/25 (uuuu) 0 0
Malaysia 5 (d) 10 0 Malta 0 (gg)(mmm) 0/10 (gg)(lll) 0
Mexico 0 (bb) 5/10 (p) 0
Moldova 5 (d) 0/10 (ll) 0
Mongolia 5 (d) 0/10 (ll) 0
Montenegro 5 (t) 10 0 Montserrat (tttt) 15/25 (uuuu) 0 0
Morocco 7 (d) 10 0
Netherlands (kkkk) 0 (h)(gg) 0 (gg) 0
New Zealand 15 10 0
North Macedonia 5 (d) 0/10 (cc) 0
Norway 0 (y) 0 0
Oman 0/5 (g)(kkk) 0/5 (llll) 0
Pakistan 10 (ee) 10 0
Peru 10 (zzz) 10/15 (aaaa) 0 Philippines 10 (y) 10 0
Poland 0 (gg)(tt) 0/5/10 (c)(gg) 0
Portugal 5 (d)(gg) 10 (gg)(dddd) 0
Qatar 5 (pp) 0 0
Romania 0 (gg)(ii) 0/5 (gg)(nnn) 0
Russian Federation
(hhh)(ooo)
Residence of Dividends Interest (a) Royalties (b) recipient % % %
St. Kitts and Nevis (tttt)15/25 (uuuu) 0 0
St. Lucia (tttt) 15/25 (uuuu) 0 0
Saint Vincent and the Grenadines (tttt) 15/25 (uuuu) 0 0
Saudi Arabia 5/5/15 (ssss) 0/5 (llll) 0
Serbia 5 (t) 10 0 Singapore 0/5 (aaa) 0/5 (bbb) 0 Slovak
Republic 0 (gg)(eee) 0/5 (gg)(jjj) 0 Slovenia 0 (gg)(uuu) 0/5 (gg)(xxx) 0
South Africa 5 (o) 5 0
Spain 0 (gg)(hh) 0 (gg) 0
Sri Lanka 10 (d) 10 (k) 0
Sweden 0 (gg)(ddd) 0 (gg) 0
Taiwan 10 (t) 0/10 (n) 0
Tajikistan 5 (o) 0/10 (n) 0 Thailand 10 (y) 0/10/15 (u) 0 Trinidad and Tobago 10 (l) 10 0
Tunisia 10 10 0
Turkey 5 (o) 0/5/10/15 (fff) 0
Turkmenistan 5 (d) 10 0
Ukraine 5 (f)(kkk) 0/5 (oooo) 0
United Arab Emirates 0/5 (g)(kkk) 0 0 United Kingdom 0 (h)(gg) 0 (gg) 0
United States 0/5 (nnnn) 0 0
Uruguay 5 (d) 0/10 (ll) 0
Uzbekistan 5 (o) 0/5 (r) 0 Venezuela 0 (z) 0/5 (aa) 0 Vietnam 7 (v) 0/10 (jjjj) 0
Zambia 0/5 (ccc) 10 0
Non-treaty jurisdictions 35 0/35 0
(a) Withholding tax is imposed only on bank interest and on interest from pub licly offered bonds, debentures and other instruments of indebtedness issued by a Swiss borrower, but not on interest on commercial loans, including loans from foreign parents to Swiss subsidiaries.
(b) Under Swiss domestic law, no withholding tax is imposed on royalties, manage ment fees, rents, licenses and technical assistance fees and similar payments.
(c) A 5% general rate and a 0% rate on interest paid between related parties (as defined in the double tax treaty) apply to interest paid on or after 1 July 2013. A 10% rate applies to interest paid on or before 30 June 2013.
(d) This rate applies if the shareholding by a corporation is at least 25%. A 15% rate applies to all other dividends.
(e) The 0% rate generally applies if the shareholding of a corporate recipient of dividends is at least 10%. The rate is increased to 15% if the shareholding of a corporate recipient is less than 10% or if the corporate recipient is con trolled by persons that are not in the contracting states unless the corporate recipient demonstrates that the participation rights are not solely intended to profit from the advantages mentioned above. The 15% rate also applies to dividends paid to individuals and all other dividends.
(f) The 5% rate applies to dividends paid to corporations with a shareholding and voting stock of at least 10% in the payer. A 15% rate applies to other dividends.
(g) A 0% rate applies to dividends paid to pension funds or other similar institu tions providing pension schemes. The 5% rate applies to dividends paid to corporations with a shareholding of at least 10% in the payer. A 15% rate applies to other dividends.
(h) This rate applies to dividends paid to corporations holding at least 10% of the capital and to dividends paid to pension funds or other similar institutions providing pension schemes. A 15% rate applies to other dividends.
(i) The 5% rate applies if the recipient of the dividends is a corporation with a shareholding of at least 15%. A 15% rate applies to other dividends.
(j) The 0% rate generally applies if the recipient of the dividends is a corporation that has a shareholding of at least 10% and if the participation has been held for at least one year. A 15% rate applies if the recipient of the dividends is a corporation that has a shareholding of less than 10% or if the recipient of the dividends is an individual.
(k) A rate of 5% applies to interest on bank loans.
(l) Rate is applicable if shareholding by a corporation is at least 10%. The net treaty withholding rate is increased to 20% if shareholding is less than 10%.
(m) A 0% rate applies to interest on bank loans.
(n) The 0% rate applies to the following interest payments:
• Interest paid to the other contracting state in connection with the sale on credit of industrial, commercial or scientific equipment
• Interest paid in connection with the sale on credit of merchandise by one enterprise to another enterprise
• Interest on a loan granted by a bank or to the other contracting state or a political subdivision or a local authority thereof
(o) The 5% rate applies if the recipient of the dividends is a corporation with a shareholding of at least 20%. The rate is increased to 15% in all other cases.
(p) For interest paid to banks, the withholding tax rate is reduced to 5%.
(q) The 0% rate applies to dividends paid to corporations with direct ownership of at least 10% and a holding period of two years and to dividends paid to pension funds or other similar institutions. A 5% rate applies to corporations with direct ownership of at least 10% before the two-year holding period has elapsed. A 15% rate applies in all other cases.
(r) The 0% rate applies to the following interest payments:
• Interest paid with respect to a loan made, guaranteed or insured by the government of the other state or an instrumentality or agency thereof
• Interest paid in connection with the sale on credit of industrial, commercial or scientific equipment
• Interest paid in connection with the sale on credit of merchandise by one enterprise to another enterprise
• Interest on a loan granted by a bank
(s) This rate applies to dividends paid to corporations holding at least 10% of the voting power of the payer. A 15% rate applies to other dividends.
(t) This rate applies if the shareholding of the recipient is at least 20%. For other dividends, the rate is 15%.
(u) The 0% rate applies to interest on special trade credits or loans. The 10% rate applies to interest paid to banks or insurance companies. The 15% rate applies to other interest.
(v) This rate applies if the shareholding of the recipient is at least 50%. The rate is 10% if the shareholding of the recipient is at least 25% but less than 50%. The rate is 15% for other dividends.
(w) The China treaty does not cover the Hong Kong SAR.
(x) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) directly owning shares representing at least 10% of the capital of the company paying the dividends for at least one year before the payment of the dividends
• A pension fund or scheme
• The central bank
(y) This rate applies if the direct shareholding of the corporate recipient is at least 10%. For other dividends, the rate is 15%.
(z) The rate is 10% if the shareholding of the recipient is less than 25%.
(aa) The 0% rate applies to interest on certain government bonds. The 5% rate applies to other interest.
(bb) This rate applies if the shareholding of the recipient is at least 10%. A 15% rate applies to all other dividends.
(cc) A 0% rate applies to interest on bank loans and in certain other special cases.
(dd) The 0% rate applies if the beneficial owner of the dividends is one of the following:
• A company (other than a partnership) that is a resident of the other state and that holds directly at least 10% of the capital in the company paying the dividends for at least one year before the payment of the dividend
• A pension scheme
• The central bank of the other contracting state
(ee) The 10% rate applies to dividends paid to corporations holding participations of at least 20% in other enterprises. A 20% rate applies to other dividends.
(ff) The 0% rate applies to the following interest payments:
• Interest paid to a contracting state or a political subdivision or local authority thereof
• Interest paid to the central bank of the other contracting state or any institution owned by the government
• Interest paid to a bank, insurance company, securities dealer or pension fund or scheme
(gg) A 0% rate may apply under the Switzerland-EU agreement (see the para graph preceding the treaty withholding tax rate table). The rates shown in the table are the treaty withholding tax rates.
(hh) The 0% rate applies if the recipient is a company that owns directly at least 10% for a period of at least one year of the capital of the company paying the dividends or if the recipient is a pension fund or pension scheme, pro vided that the dividends do not result from a business activity or are paid by a related company. The 15% rate applies to other dividends.
(ii) The 0% rate applies if the recipient is a company (other than a partnership) that owns directly at least 25% of the capital of the company paying the dividends, a governmental institution, a pension fund or a central bank authority. A 15% rate applies to other dividends.
(jj) The 5% rate applies if the corporate recipient of the dividends holds a shareholding of at least 20% in the distributing entity and has invested at least USD200,000 in the country of the distributing entity. The treaty with holding tax rate is increased to 15% if the shareholding is less than 20%.
(kk) The 0% rate applies to interest paid to certain government agencies or in connection with the purchase of industrial, commercial or scientific equip ment on credit. The 5% rate applies to interest paid to banks or in connection with the purchase of goods on credit. The 10% rate applies to other interest.
(ll) The 0% rate applies to the following interest payments:
• Interest paid on loans granted by a company of the other state
• Interest paid to pension funds or pension schemes, provided that the interest does not result from a business activity or is paid by a related company
• Interest paid to the other contracting state, one of its political subdivi sions, to local authorities or to a statutory body
A 10% rate applies to all other interest payments.
(mm) The 5% rate applies if, at the time the dividends become due, the corporate recipient of the dividends holds a shareholding of at least 25% in the dis tributing entity and the value of the participation is at least CHF200,000 (or the equivalent in foreign currency). The treaty withholding tax rate is 15% if these conditions are not met.
(nn) The 0% rate applies if the beneficial owner of the dividends is one of the following:
• A company (other than a partnership) that is a resident of the other con tracting state and that holds directly at least 10% of the capital in the company paying the dividends for at least one year before the payment of the dividend
• A pension scheme
• The central bank of the other contracting state
(oo) The 0% rate generally applies if the shareholding of a corporate recipient of dividends is at least 10%. The rate is increased to 10% if the shareholding of a corporate recipient is less than 10%.
(pp) A 0% rate applies to dividends paid to the other contracting state or a politi cal subdivision or local authority thereof, the central bank or pension funds. The 5% rate applies to dividends paid to corporate recipients if the share holding is at least 10%. A 10% rate applies if the recipient is an individual with a shareholding of at least 10%. For other dividends, the rate is 15%. (qq) The 0% rate applies if the recipient of the interest is a company (other than a partnership).
(rr) The treaty between Denmark and Switzerland was extended to the Faroe Islands as of 22 September 2009. The extension and the revised protocol between Denmark and Switzerland entered into force in November 2010. (ss) On 10 October 2011, an amending protocol entered into force. The proto col did not change the withholding tax rates. However, if after the date of signing of the amending protocol, India and a third state that is an OECD member sign a convention, agreement or protocol and if under this conven tion, agreement or protocol, India limits its taxation at source of dividends, interest, royalties or fees for technical services to a rate lower than the rate provided for in the double tax treaty between Switzerland and India, the lower rate will also apply under the double tax treaty between Switzerland and India, effective from the date on which such convention, agreement or protocol enters into force.
As a result, the following rate reductions apply:
• The withholding tax rate on dividends paid to corporate recipients if the shareholding is at least 10% was lowered from 10% to 5%. The lower rate applies retroactively from 5 July 2018 when Lithuania became a member of the OECD.
• The withholding tax rate on dividends paid to other recipients was low ered from 10% to 5%. The lower rate applies retroactively from 28 April 2020 when Colombia became a member of the OECD.
(tt) The 0% rate applies if the dividends are paid to corporations with a share holding of at least 10% in the capital of the payer and the shareholding is held for at least two years or if the dividends are paid to pension funds or similar institutions. A 15% rate applies in all other cases.
(uu) The 0% rate applies to interest paid to the other contracting state or certain government agencies of the contracting state or in connection with financing transactions, the purchase of industrial, commercial or scientific equipment or the construction of industrial, commercial, scientific or public facilities on credit. The 10% rate applies to all other interest.
(vv) The 5% rate applies to interest paid on bank and insurance loans, on bonds and other securities that are traded on a stock exchange and in certain other special transactions. The 15% rate applies to all other interest payments.
(ww) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company that has owned directly or indirectly for at least six months shares representing at least 50% of the capital or voting power of the company paying the dividends
• A pension fund or scheme
The 5% rate applies to corporate recipients if the direct or indirect share holding represents at least 10% of the capital or voting power and if the participation has been held for six months. A 10% rate applies to all other dividends.
(xx) The 0% rate applies to dividends that are paid to the Bank of Canada or qualifying pension schemes.
(yy) The 0% rate applies to interest payments if the beneficial owner of the interest is a resident of Canada and is not related to the payer.
(zz) The 0% rate applies if the beneficial owner of the dividends is the other contracting state, a political subdivision or a local authority of the other contracting state or a pension fund or scheme.
(aaa) The 0% rate applies to dividends paid to the Monetary Authority of Singapore or the Government of Singapore Investment Corporation Pte Ltd. The 5% rate applies to dividends paid to a corporation (other than a partnership) holding directly at least 10% of the capital of the company paying the dividends. A 15% rate applies to other dividends.
(bbb) The 0% rate applies to interest paid by a banking enterprise to a banking enterprise in the other contracting state or interest arising in Switzerland and paid to the Monetary Authority of Singapore. The 5% rate applies to other interest.
(ccc) The 0% rate applies to dividends paid to the respective national banks or certain pension funds listed in the protocol. The 5% rate applies if the recipient is a company that owns directly at least 10% for a period of at least one year of the capital of the company paying the dividends. A 15% rate applies to other dividends.
(ddd) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) that has owned directly or indi rectly shares representing at least 10% of the capital or voting power of the company paying the dividends
• A pension fund
A 15% rate applies to other dividends.
(eee) The 0% rate applies to dividends paid to a corporation with a direct shareholding of at least 10% in the capital of the payer and to dividends paid to a governmental institution, pension fund or central banking authority. A 15% rate applies to other dividends.
(fff) The 0% rate applies to interest paid to the state or the central bank. The 5% rate applies to interest paid with respect to a loan or credit made, guaranteed or insured for the purposes of promoting export by an Eximbank or similar institution. The 10% rate applies to interest derived by a bank. A 15% rate applies in all other cases.
(ggg) The 10% rate applies to dividends if the beneficial owner is a company (other than a partnership) that holds directly at least 25% of the capital of the company paying the dividends. A 15% rate applies to other divi dends.
(hhh)
The 5% rate applies if the recipient of the dividends holds a shareholding of at least 20% in the distributing entity and if the value of the participa tion is at least CHF200,000 (or the equivalent in foreign currency). A 15% rate applies to other dividends (in specific cases the 0% rate applies; see footnote [ooo]).
(iii) The 0% rate applies to the following interest payments:
• Interest paid with respect to a loan made, guaranteed or insured by the government of the other state or an instrumentality or agency thereof
• Interest paid in connection with the sale on credit of industrial, com mercial or scientific equipment
• Interest paid in connection with the sale on credit of merchandise by one enterprise to another enterprise
• Interest paid to the other contracting state
(jjj) The 0% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of industrial, com mercial or scientific equipment
• Interest paid on bank loans
• Interest paid to a bank, insurance company or pension fund or scheme
• Interest paid to a contracting state, a political subdivision or local authority thereof, or a central bank
• Interest paid between enterprises that are associated by a stake of at least 25% held for at least two years or that are both held by a third company that directly holds at least 25% of the capital of both compa nies for at least two years
(kkk) A 0% rate applies to dividends paid to the other contracting state or a political subdivision or local authority thereof, the central bank or a pen sion fund.
(lll) The 0% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of industrial, com mercial or scientific equipment
• Interest paid on the sale of goods between corporate entities
• Interest paid on bank loans
In addition, the 0% rate applies if the interest is paid between enterprises that satisfy all of the following conditions:
• They are associated by a stake of at least 10% held for at least one year or they are both held by a third company that directly holds at least 10% of the capital of both companies.
• They are resident in a contracting state and, under any double tax agreement with any third state, none of the companies is resident in that third state.
• They are subject to corporation tax and are not exempt from tax on interest payments.
• They are both limited companies.
The 10% rate applies to other interest payments.
(mmm) The 0% rate applies if the direct shareholding of the corporate recipient is at least 10% and if the participation has been held for at least one year. For other dividends, the rate is 15%.
(nnn) The 0% rate applies to the following interest payments:
• Interest paid to a contracting state or a political subdivision, local authority, administrative-territorial unit or export financing institution thereof
• Interest paid between enterprises that are associated by a stake of at least 25% or that are both held by a third company that directly holds at least 25% of the capital of both companies (ooo) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• A pension fund or scheme
• The government of the other state, or a political subdivision or local authority thereof
• The central bank (ppp) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) directly owning shares represent ing at least 10% of the capital of the company paying the dividends
• A pension fund or scheme
• The central bank
A 10% rate applies to other dividends. (qqq) The 0% rate applies to interest on government bonds and in certain other special cases. (rrr) The 0% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of industrial, com mercial or scientific equipment
• Interest on a loan granted by a bank
(sss)
The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• A company (other than a partnership) that has its capital wholly or partly divided into shares and that holds directly at least 10% of the capital of the company paying the dividends during an uninterrupted period of at least one year
• A pension fund or other similar institution providing pension schemes in which individuals may participate to secure retirement, disability and survivors’ benefits, if such pension fund or other similar institution is established, recognized for tax purposes and controlled in accor dance with the laws of the other contacting state
• The government of the other contracting state, a political subdivision or local authority thereof, or the central bank of the other contracting state (ttt) The 0% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of equipment, mer chandise or services
• Interest paid on bank loans
• Interest paid with respect to pension schemes
• Interest paid to the government of the other state, a political subdivi sion or local authority thereof, or the central bank
• Interest paid between companies that are associated by a direct stake of at least 10% held for at least one year or by a direct holding of a third company of at least 10% for at least one year of the capital of both companies
The 5% rate applies to other interest payments. (uuu) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) that directly owns shares repre senting at least 25% of the capital of the company paying the dividends
• A pension fund or scheme (vvv) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) that directly owns shares repre senting at least 10% of the capital of the company paying the dividends for an uninterrupted period of at least one year
• A pension fund or central bank (www) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• A company (other than a partnership) that directly owns shares repre senting at least 10% of the capital of the company paying the dividends
• A pension scheme
• The central bank
A 15% rate applies to other dividends. (xxx) The 0% rate applies to the following interest payments:
• Interest paid to the government of the other state, a political subdivi sion or local authority thereof, or the central bank
• Interest paid on specific bank loans of international business transac tions
• Interest paid in connection with the sale on credit of equipment, mer chandise or services
• Interest paid between companies that are associated by a direct stake of at least 25% or by a direct holding of a third company (resident in the EU or Switzerland) of at least 25% of the capital of both companies
The 5% rate applies to other interest payments. (yyy) A 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• A pension fund or scheme
• The central bank (zzz) The 10% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is a company (other than a partnership) that holds directly at least 10% of the capital and of the voting power of the company paying the dividends. A 15% rate applies to other dividends. (aaaa) The 10% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of industrial, com mercial or scientific equipment
• Interest paid on bank loans
The 15% rate applies to other interest payments. (bbbb) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• The government of the other state, or a political subdivision or local authority thereof
• An institution or fund wholly owned by that other state as agreed by mutual agreement of the competent authorities of the contracting states
• The central bank
The 5% rate applies if the recipient is a company (other than a partner ship) that owns directly at least 25% of the capital of the company paying the dividends. A 10% rate applies to other dividends. (cccc) The 0% rate applies to dividends if the beneficial owner of the dividends is one of the following:
• A corporation of a listed group holding at least 80% of the voting power of the payer
• A pension scheme
• The central bank
• A contracting state, political subdivision or local authority thereof (including a government investment fund)
The 5% rate applies to dividends paid to a corporation holding at least directly 10% of the voting power of the payer. A 15% rate applies to all other dividends.
(dddd) The 10% rate applies to interest payments. However, exemptions apply to, among others, the following:
• The government of the other contracting state, and several governmen tal bodies and institutions thereof
• The national bank (eeee) The 0% rate applies to dividends if the beneficial owner of the dividends is one of the following:
• A corporation that directly holds at least 10% of the capital in the company paying the dividend for at least one year before the payment of the dividends
• A pension scheme
• A contracting state, political subdivision or local authority thereof
A 15% rate applies to all other dividends. (ffff) The 0% rate applies to interest if the beneficial owner is a resident of the other contracting state and is in one of the following categories:
• Bodies exercising governmental functions and banks performing cen tral bank functions
• Financial institutions that are unrelated to and dealing independently with the payer
• Complying Australian superannuation funds and tax-exempt Swiss pension schemes
A 10% rate applies to other interest payments. (gggg) The 0% rate applies to the following interest payments:
• Interest on loans approved by the government
• Interest income derived from sales on credit of industrial, medical or scientific equipment
• Interest on bonds issued by a contracting state or a political subdivision or local authority thereof
The 5% rate applies to interest on bank loans. The 8% rate applies to other interest payments. (hhhh) The 0% rate applies if any of the following circumstances exist:
• The beneficial owner of the interest is the contracting state or a politi cal subdivision or local authority thereof.
• The interest is paid in connection with the sale on credit of goods, merchandise or any equipment.
• The interest is paid on bank loans.
A rate of 10% applies to other interest payments. (iiii) The 0% rate applies to interest in connection with bonds, debentures or other similar obligations of the government or of a political subdivision or local authority thereof and in certain other special cases. The 10% rate applies to other interest payments.
(jjjj) The 0% rate applies to interest on certain loans guaranteed, insured or financed by the contracting state. The 10% rate applies to other interest. (kkkk) Special rules apply to for collective-investment vehicles regarding divi dend and interest payments. (llll) The 0% rate applies to the following interest payments:
• Interest paid in connection with the sale on credit of equipment, mer chandise or services
• Interest paid on bank loans
• Interest paid with respect to pension schemes
• Interest paid to the government of the other state, a political subdivi sion or local authority thereof, or the central bank
• Interest paid on intercompany loans
The 5% rate applies to other interest payments. (mmmm) The 5% rate applies if, at the time the dividends become due, the corpo rate recipient of the dividends has directly held a shareholding of at least 25% in the distributing entity for more than a year. For the purpose of the
holding period, prior restructurings are disregarded. The treaty withhold ing tax rate is 15% if this condition is not met. (nnnn) The 0% rate applies to dividends paid to individual pension institutions (that is, in Switzerland, pillar 3a institutions). The 5% rate applies to dividends paid to corporations with a shareholding of at least 10% in the payer. A 15% rate applies to other dividends. (oooo) The 0% rate applies if any of the following circumstances exist:
• The beneficial owner of the interest payment is the contracting state, a political subdivision or local authority thereof, or the central bank.
• The interest is paid by the contracting state or a political subdivision or local authority thereof.
• The interest is paid with respect to a loan, debt claim or credit that is owed to, or made, provided, guaranteed or insured by, that state or a political subdivision, local authority or export financing agency thereof.
The 5% rate applies to other interest payments. (pppp) The 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• The government of the other state, or a political subdivision or local authority thereof
• The central bank
• A pension fund or scheme
• An investment authority or another institution recognized by the con tracting state and established by the government of the other state, or a political subdivision or local authority thereof
The 5% rate applies to dividends if the beneficial owner is a company (other than a partnership) with a shareholding of at least 10% of the payer’s capital. The 15% rate applies to other dividends. (qqqq) A 0% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is either of the following:
• Certain pension funds or schemes
• The central bank
The 10% rate applies to dividends if the beneficial owner is a company (other than partnership) owning directly at least 10% of the capital of the paying company for at least a year. The 15% rate applies to other divi dends. (rrrr) The 0% rate applies to the following interest payments:
• Interest paid with respect to certain pension schemes
• Interest paid to the government of the other state, a political subdivi sion or local authority thereof, or the central bank
The 10% rate applies to interest payments if the beneficial owner is a bank; the loan is used for the financing of equipment or investment projects; and the loan has a term of at least five years. The 15% rate applies to other interest payments. (ssss) The 5% rate applies to dividends if the beneficial owner is a resident of the other contracting state and is one of the following:
• A company owning directly at least 10% of the capital of the paying company
• The central bank
• An institution or fund fully owned by that state
• A pension fund or scheme
The 15% rate applies to other dividends.
(tttt) The double tax treaty between Switzerland and the United Kingdom signed on 30 September 1954 has been extended to the following territo ries: Antigua, Barbados, Belize, British Virgin Islands, Dominica, Gambia, Grenada, Malawi, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.
(uuuu) The 15% rate applies to dividends if the beneficial owner is a company resident in the other contracting state holding directly or indirectly shares representing at least 95% of the voting power of the Swiss company pay ing the dividends. The 25% rate applies to dividends if the beneficial owner is a company resident in the other contracting state and is one of the following:
• A company holding directly or indirectly shares representing between 50% and 94% of the voting power of the Swiss company paying the dividends
• A company holding at least 10% of the share capital of the Swiss company paying the dividends and a portion of the dividends is being paid to a company resident in the other contracting state holding directly or indirectly shares representing at least 50% of the voting power of the Swiss company paying the dividends
At the time of writing, Switzerland had signed new double tax treaties or amending protocols to double tax treaties that provide changes to treaty withholding tax rates with Armenia, Ethiopia, Japan and Kuwait.