Swiss Parliament ends intra-group dividend distributions

Raoul Stocker	Jacques Kistler

By way of background, a Swiss corporation can fulfil its withholding tax liability by using a notification procedure to the Swiss Federal Tax Administration instead of remitting withholding tax. For intra-group dividends, the dividend notification procedure can be applied if the recipient of the dividend is a corporation and holds a qualifying participation in the Swiss corporation paying the dividends.

In 2011, the Swiss Supreme Court ruled that missing the 30-day filing deadline resulted in a forfeiture of the right to apply the notification procedure for qualifying intra-group dividends. Based on this decision the Swiss Federal Tax Administration levied a 5% late payment interest on the withholding tax liability if it was paid 30 days after the dividend due date) in cases where the deadline for the notification procedure was missed.

On September 30 2016, the Swiss Parliament agreed to amend the Swiss withholding tax law as follows:

• If the respective requirements are met, the notification procedure for withholding tax on intra-group dividend distributions will apply, even if the 30-day filing deadline is missed;

• The amended law applies retroactively, unless the statute of limitations on the tax liability/late payment interest has expired, or the tax liability/late payment interest were already finally assessed prior to January 1 2011;

• Taxpayers who had to pay late payment interest for missing the 30-day deadline for the notification procedure can retroactively claim back the late payment interest if the respective requirements are met;

• After the enactment of the new law, the taxpayer will have to make an official request to claim back the late payment interest within one year; and

• Missing the 30-day filing deadline will in the future only lead to an administrative fine of up to CHF 5,000 ($5,000).

The law change will be subject to a possible referendum, which may be considered relatively unlikely, so that the new law could enter into force in early 2017.

The amended withholding tax law represents the best possible outcome for taxpayers because the law applies retroactively and allows late payment interest paid by taxpayers to be reclaimed.

While missing the 30-day deadline will no longer lead to a forfeiture of the notification procedure and there will no longer be 5% late payment interest, it is still important for taxpayers to meet the 30-day filing deadline for the notification procedure, so they comply with the law and to avoid possible fines.

Raoul Stocker (rstocker@deloitte.ch) and Jacques Kistler (jkistler@deloitte.ch)

Deloitte Switzerland

Tel: +41 58 279 6271 and +41 58 279 8164

Website: www.deloitte.ch