Switzerland's federal tax administration (SFTA) published a
number of updates on April 29 2019 regarding the required
formalities that should be respected in the areas of federal
tax, withholding tax (WHT) and stamp duties (hereafter referred
to as 'communication').
It is a long-standing practice in Switzerland that tax
rulings have legal certainty. Especially for companies, tax
rulings provide legal certainty in the field of mergers and
acquisitions (M&A), restructurings, and in the
international allocation of profits (or with respect to special
tax regimes applicable to Swiss-based companies).
Even if a long lasting practice exits, federal or cantonal
tax authorities have historically had a different approach to
what tax rulings should look like.
As a result, the published communication might be a welcome
effort to harmonise the formalities for ruling requests on a
federal and cantonal level in Switzerland. This article
provides a summary of the key communication updates.
Switzerland's tax laws
Switzerland's tax laws generally set forth a broad set of
guidelines rather than detailed provisions. Accordingly, case
law and doctrine has played an important role in explaining
these guidelines. Many aspects of these guidelines are covered
in 'circular letters' (Kreisschreiben) or in
guidelines for administrative practice
(Merkblätter) that the Swiss tax administration
issues from time to time.
Despite these publications, there is still capacity for
interpretation of these tax laws. In Switzerland, it is good
business practice to discuss tax matters with the tax
administration. This dialogue and the subsequent tax climate is
considered one of the major advantages for choosing Switzerland
as a corporate headquarter, provided these discussions are held
in a climate of mutual respect.
Code of Conduct
In 2003, the Swiss Tax Conference, the SFTA, the fiduciary
chamber (today EXPERTsuisse), and the academic
community drew up a Code of Conduct for tax authorities,
taxpayers and tax consultants.
This Code of Conduct provides a very basic list of 'dos' and
'don'ts' which apply to communication between tax advisors and
the tax administration, as well as citizens approaching an
With respect to tax rulings, the Code of Conduct contains
various statements. In situations where requested, a taxpayer's
identity and their relationship with their advisors can be
disclosed. It also states that there must be an interest in
justifying a request for a tax ruling or for binding
information, and these can include the completion of a given
transaction depending on a tax ruling, uncertainty regarding
the law, an intent to avoid legal disputes, or a lack of
precedents when a particular situation is encountered.
If no professional advisor is involved in a ruling request,
then the formal requirements shall be relaxed.
In cases where there is a request made for a tax ruling, all
legal issues involved and all relevant facts shall be provided.
The presentation of the relevant facts shall be accurate, true
and complete. Anything that has no proper bearing on the final
determination should be omitted.
The resulting conclusions are to be based on the legal
considerations applicable to the underlying facts. The tax
administration shall then approve or deny the taxpayer's
request. In case the tax administration does not approve the
request, the taxpayer may file a formal objection.
In situations where there is a contradiction between the
communication and the Code of Conduct, the communication takes
precedence over the Code of Conduct.
Switzerland's tax rulings
A tax ruling is binding information issued by Switzerland's
tax administration on the tax treatment of a planned,
tax-relevant situation. It takes place by request from a
taxpayer. The tax ruling aims to ensure a correct assessment of
the facts in question, but has no assessment character.
Tax rulings are defined as advanced information by the tax
administration. They do not qualify as an assessment, but can
trigger legal consequences. Tax rulings can affect both
individual situations (e.g. tax consequences of a specific
restructuring) and permanent situations (e.g. tax qualification
of an employee participation plan). They can be requested by
the taxpayer or its authorised representative.
In order to obtain in good faith a binding tax ruling from
the tax administration, the following requirements must be
- The confirmation issued by the tax administration must
refer to a specific pattern affecting a specific
- The tax administration issuing the confirmation must be
competent to do so, or the taxpayer must have good reasons to
believe that the issuing administration is competent to
handle the case at hand;
- The taxpayer has no reason to believe that
the consequences confirmed by the tax administration are
inaccurate or wrong;
- Based on inaccurate confirmation, the taxpayer has made
arrangements that cannot be reversed without negative
consequences to the taxpayer;
- The legal situation at the time of implementation is the
same as the time the ruling request was filed; and
- The protection of legitimate expectations in a specific
case must be weighted more important than the interest in the
correct application of the law.
If all the aforementioned requirements are fulfilled, the
tax ruling is binding, even if the answer of the tax
administration is incorrect (i.e. in contradiction to the law
or administrative practice).
It should be noted that a generally written or oral
statement by the tax administration is not a tax ruling.
Furthermore, a tax agreement does not have the same effect as a
Specifically, a tax agreement is an agreement between the
taxpayer and a tax authority that applies to a specific
situation where regulations deviate from the statutory
provisions of the tax obligation.
Swiss Federal Tax Authority responsibilities
The SFTA has a number of responsibilities that directly
oversee federal tax, WHT and stamp duties.
Direct federal tax
Switzerland's direct federal tax is assessed and levied by
the cantons under the supervision of the Swiss federal
authorities. Federal supervision is exercised by the SFTA as
part of the Federal Department of Finance.
Considering that the SFTA only carries out supervision in
the field of income taxes, the cantonal tax administrations are
therefore responsible for issuing a tax ruling in the area of
direct federal corporate and individual income tax. The SFTA
only provides expert information in the form of a statement for
direct federal tax. Only in very special cases is the SFTA
responsible for the legal harmonisation of tax rulings (e.g.
for the approval of Pillar 3a products).
Withholding tax and stamp duties
Pursuant to the Swiss federal law on WHT, the SFTA issues
all instructions, orders and decisions for the levy and
reimbursement of WHTs that are not expressly reserved to
another authority. This implies that the SFTA is responsible
for approving corresponding tax rulings in the field of
The SFTA is also responsible for issuing all instructions,
orders and decisions in the field of stamp duties that are not
expressly reserved to another authority. The SFTA is therefore
also responsible for approving corresponding tax rulings for
Formal requirements of a tax ruling
A tax-ruling request must comply with the following
- The tax ruling must be submitted in writing to the
- The request must summarise all relevant legal facts
clearly and comprehensively in a brief form;
- The identities (names and addresses) of the involved
individual and legal entities must be disclosed in the
- The request must contain the legal considerations and the
resulting tax consequences;
- The ruling must contain one or more legal requests;
- All necessary supporting documents must be enclosed in
- The ruling must be drafted in one of the
official Swiss languages (German, French, Italian or
Rhaeto-Romanic, if a request concerns a Rhaeto-Romanic
speaking taxpayer). Possible necessary translation costs from
a foreign language to one of the official Swiss languages
must be borne by the requesting taxpayer. Supporting
documentation can, after consulting the SFTA, be filed in the
original language (especially in English); and
- Legal representatives filing tax rulings
for their clients must include in their communication a duly
signed power of attorney.
The SFTA reserves the right to reject without further
examination a request for a tax ruling if it does not meet the
Impact of a tax ruling
If all formal and material requirements for a tax ruling
have been met, and the ruling request complies with the
relevant legal requirements, the tax ruling will be approved by
the competent department within the SFTA.
This approval will be issued in writing, either by
counter-signing the ruling request, or by issuing a separate
letter with the confirmation. As a ruling request might be
counter-signed directly on the filed request, it is advised to
always file two sets of ruling requests with the SFTA (or other
cantonal authorities). An approval by the competent tax
administration might be given either unconditionally, or be
subject to certain reservations.
The issuance of tax rulings by the SFTA is normally free of
charge. In individual cases, however, the SFTA reserves the
right to charge a fee in the event of an excessively extensive
A tax ruling can only have legal effect if all the facts are
set out in it. For example, if relevant parameters change, or
facts are omitted, these protections are automatically rendered
null and void. In such cases, the tax ruling does not have to
be formally terminated by the SFTA.
Revocation of tax rulings
Tax rulings affecting permanent situations enjoy protection
of legitimate expectations until they are revoked by the
responsible tax administration (in general, or for individual
cases). The SFTA may also limit a tax ruling by time.
The SFTA is also responsible for the revocation of tax
rulings in the field of WHT and stamp duties. In the areas of
direct federal tax and the refund of WHT to individuals who are
a resident in Switzerland, the SFTA instructs the competent
cantonal tax authority in writing to revoke a tax ruling it has
formerly granted, and informs the taxpayer accordingly.
The revocation of a tax ruling takes place in written form
and with effect for the future. In individual cases, the SFTA
may grant the taxpayer an appropriate transitional period until
it expires. In such cases, the SFTA enables the taxpayer to
adapt their structures or arrangements to the new legal
The protection of legitimate expectations in a tax ruling
ends automatically (i.e. without revocation of the ruling by
the competent tax authority) if the relevant legal provisions
change, the case law leads to an adjustment of the
administrative practice, or the time limit set by the SFTA when
approving the tax ruling has expired. In such cases, it is not
necessary for the tax administration to terminate or revoke the
tax rulings concerned.
Exchange of information impacts
Since January 1 2018, Switzerland has enforced an exchange
of information (EOI) on tax rulings with other states, without
the prior request of the other state. This is based on the
Mutual Administrative Assistance in Tax Matters Convention from
January 25 1988.
Only the basic parameters of a tax ruling (e.g. information
on the taxable company, duration of the tax ruling, summary of
the content of the tax ruling), and the so-called ruling
reports (templates), are exchanged.
The EOI impacts tax rulings issued from January 1 2010,
which are still applied from January 1 2018 or later.
The SFTA grants Swiss companies impacted by a spontaneous
EOI ruling the right to be heard in advance of the exchange.
This Swiss procedure is reviewed and evaluated by the OECD's
Global Forum on Transparency and Exchange of Information for
The recipient state has the possibility of requesting the
complete tax ruling by means of an EOI upon request. The
spontaneous EOI takes place on a reciprocal basis, and
Switzerland has exchanged, but also received ruling reports,
from other contracting states since 2017. Such received ruling
reports are made available to interested cantonal tax
administrations by the SFTA.
The SFTA has developed a digital platform that allows the
electronic recording of ring messages and is available to
taxable companies and cantonal tax administrations.
Tax rulings and VAT
The SFTA is also responsible for providing information in
the field of Swiss value-added tax (VAT). Legal information
issued by the SFTA relates to domestic and acquisition tax. On
the other hand, import taxes are levied by the Federal Customs
Administration. Customs enquiries must be addressed to the
Federal Customs Administration.
According to Swiss VAT law, a taxable person must provide
the SFTA in good faith with information on all matters to the
best of their knowledge. Information and tax rulings are
legally binding for the requesting taxpayer and for the SFTA as
long as there is no change in the law or practice of the SFTA.
Information given by the SFTA is binding, even if it is
incorrect and the taxpayer does not recognise this.
This article was written by Rolf Wuethrich of burckhardt
Tel: +41 59 881 00 00
Rolf Wüthrich is an international tax lawyer with
expertise in national and international tax advisory,
inbound and outbound transactions, particularly between
the US and Switzerland, corporate restructuring and
acquisitions, as well as general corporate secretarial
Burckhardt provides its clients and their businesses
with comprehensive advice on national and international
tax planning issues and structuring, offers corporate,
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international experience on restructurings, mergers and
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