Swiss Federal Council gives shape to the new Swiss withholding tax regime and proposes the abolishment of Swiss securities transfer tax on debt instruments - Tax and Legal blog

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After having informed about the key parameters of the planned Swiss withholding tax reform in June (see our prior blog post), the Swiss Federal Council agreed on further details during its meeting on 27 September 2019.

The planned Swiss withholding tax reform aims at strengthening the Swiss debt capital market and increasing tax honesty of Swiss resident individual investors. In pursuit of these goals, the Swiss Federal Council communicated four additional key parameters to complement the ones agreed and published in June:

  • Indirect investments in debt instruments should be subject to the Swiss withholding tax. This will apply to both Swiss and non-Swiss investment funds, and to both accumulating and distributing funds.
  • The threshold for bank interest triggering the application of the Swiss withholding tax should remain at the current level of CHF 200 per calendar year.
  • The current rules on the participation exemption will not be amended. Still, the Swiss Federal Council wants to elaborate further on this topic in the consultation draft, which is expected to be published early next year.
  • The Swiss securities transfer tax is proposed to be abolished for Swiss debt instruments.

The Swiss Federal Council expects the reform to cause a shortfall in tax revenue of about CHF 250 million. However, it anticipates this shortfall to be offset by the positive fiscal effects of the strengthened Swiss debt capital market and the enhanced measures on securing tax honesty.

Deloitte view

This latest communication from the Swiss Federal Council mainly provides additional guidance on certain points. The treatment of investment funds under the new Swiss withholding tax regime was already outlined in June and the detailed technical aspects are not yet known. Similarly, the fact that there is little appetite to amend the participation exemption was already signalled in the publication from June. The main news is the planned abolishment of the Swiss securities transfer tax for Swiss debt instruments, which would of course be very positive and increase the competitiveness of the Swiss capital market even further.

At this stage many points remain unclear, including details about the envisaged shift to the paying agent system for certain types of payments, the application of the Swiss withholding tax to derivatives and how the transitional solution for “too big to fail” instruments will look. We would expect that the consultation draft, which should be published in early 2020, will clarify on these and other open questions.

Authors: Robin King, Senior Manager and Steven Gruendel, Consultant, Financial Services Tax 

If you would like to discuss more on this topic, please do reach out to our key contacts below.

Key Contacts

Rene Zulauf

René Zulauf - Partner, International Tax

René has 20 years of experience in the field of international tax structuring, financial services tax and Mergers & Acquisitions. He specializes in cross-border tax planning and has assisted numerous multinationals in particular in the establishment of Swiss finance and IP structures, as well as in the structuring of Swiss trading and principal/headquarter operations.



André Kuhn - Director, Financial Services Tax

André is a Swiss Certified Tax Expert with more than twelve years of experience in corporate international taxation. He leads the Swiss corporate tax team in Zurich that advises banks, insurance companies and asset managers on Swiss tax matters. As tax responsible for the investment management industry in Switzerland, he also acts as the subject matter expert on all tax aspects of collective investment schemes.


Robin King blog

Robin King - Senior Manager, Financial Services Tax

Robin is a Senior Manager working in Financial Services Tax. He is currently advising leading Swiss universal and private banks, acting as subject matter expert in the area of QI, FATCA , CRS and DAC6. Robin is the author of several articles on CRS. Prior to joining Deloitte, he worked as a cross-border tax compliance expert at a Swiss private bank.



Steven Gruendel - Consultant, Financial Services Tax

Steven is a consultant in Financial Services Tax. He advises Swiss and international financial service providers on various Swiss tax matters such as corporate income tax, withholding tax and Swiss stamp tax. Prior to joining Deloitte, Steven obtained a Master of law from the University of Lucerne.



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