Good news for Swiss groups and holdings with subsidiaries in Switzerland regarding withholding tax. As of January 1, 2023, changes related to the Ordinance of May 4, 2022 (“RU 2022 307”) on the notification procedure within a group for withholding tax purposes will take effect.
The notification procedure replaces the payment of Swiss withholding tax on dividends and similar.
The first change is the reduction of the qualifying shareholding: a foreign company must directly holds at least 10 percent of the Swiss company’s capital (previously was 20 percent).
The other feature is that the authorization required internationally will now be valid for five years instead of three.
According to article 1 of the Swiss Federal Law of 13 October 1965 on withholding tax (“LIP; RS 642.21”), the Confederation levies a withholding tax on capital gains, on winnings from gambling, on winnings from games of skill or lotteries for sales promotion and on insurance benefits.
In the case of capital gains subject to withholding tax, the tax claim arises at the time the taxable payment falls due, and withholding tax is due 30 days after the tax claim arises.
In the case of benefits (dividends and their equivalent) paid in a group, the taxpayer may be allowed to fulfil his tax obligation by notifying the taxable benefit instead of paying the tax. If the taxpayer fulfils the necessary requirements to apply this procedure, he must declare the taxable payment to the Federal Tax Administration (FTA) within 30 days after the tax liability has arisen.
The notification procedure is possible both domestically and at the international level
In this transitional phase, the former law still applies to requests (forms) submitted up to and including 31 December 2022.
In this case, the legislator provides for the date of filing of the request as the relevant factor for the application of the previous or the new legislation. The date of the postmark is therefore decisive. The possibility of filing an online notification via the FTA portal is not yet available, but should be in the future.