The Swiss Federal Tax Administration (SFTA) released a practice guidance on 13 September 2022 covering the refund of Swiss withholding taxes (Swiss WHT) on dividends and the applicable statutory limitations. The publication of the standardized practice is highly welcomed, as it provides clarity on how the SFTA determines the statute of limitations in a refund process.

General consideration to refund Swiss WHT

The request for refund of the Swiss WHT can be filed by the beneficial owner of the respective income (the “applicant”) as of the calendar year following the transaction subject to Swiss WHT. In case the request is based on a double tax treaty, such request may be filed immediately after the Swiss WHT was due. The right to file a reimbursement claim expires within three calendar years following the year of the transaction being subject to Swiss WHT.

The Refund of Swiss WHT – statutory limitation?

In case a denial of the Swiss WHT refund is announced to the applicant in the form of an informal rejection (due to lack of missing information / not delivered information) such informal rejection cannot be appealed against. However, the applicant could reapply and request a refund of the Swiss WHT claim.

The Swiss withholding tax law (“VStG”) does not contain any provisions on statutory limitation with regard to the refund of Swiss WHT. Consequently, the SFTA has established a practice of applying a relative limitation period of five years (derived from the interpretation of art. 17 para 1 VStG) with the possibility to “interrupt” and restart the relative limitation. Until recently, the absence of a clear definition of the actions required to interrupt and restart the limitation period caused some uncertainties.

According to the published practice guidance it is imperative to request an initial refund within the three-year period. The relative limitation period of five years starts with every action by the applicant aimed at requesting a refund of the respective Swiss WHT. In analogous application of Art. 17 para. 3 VStG, the limitation period is further interrupted by any “action” of the applicant to seek reimbursement / aimed at requesting a refund of the Swiss WHT. The practice guidance issued by the SFTA outlines the following actions that trigger an interruption and cause a restart of the relative limitation period:

• The “initial” claim to request a refund of Swiss WHT
• Every subsequent submission of requested information and/or documents in connection with the concerned request to refund Swiss WHT
• Every further action / claim to request a refund of Swiss WHT within the five-year period

While every action by the applicant is helpful, actions of the authorities are not of relevance and will not interrupt the period of limitation. For example:

• Requesting of additional information and documents regarding the request filed
• Informal rejection (without issuing a formal decision) of a refund request

The practice guidance provides clear guidance and legal certainty in ongoing and future Swiss WHT reclaim procedures. Considering the above consideration, the procedure to request a refund of Swiss WHT may be extended over time, in case necessary actions are taken in the appropriate time. Thus, should an applicant not receive any feedback and/or correspondence from the SFTA within five years of the initial filing, we recommend refiling the request to refund the Swiss WHT with the authorities to extend the limitation period.

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

Key contacts

Daniel Stutzmann - Partner, Global Minimum Tax  

Daniel is a Tax Partner with more than 15 years of experience as an international corporate tax specialist. This includes a one year assignment in the US to lead the Swiss ICE Desk. Daniel has extensive experience in the area of cross-border structuring (like establishing tax efficient IP- and financing structures) as well as business reorganizations including large supply chain transformation projects. This also includes advising several multinationals in moving their worldwide/regional headquarters or central functions to Switzerland, while often establishing tax privileged Swiss principal companies. In his capacity as Swiss tax expert he has worked on a significant number of value chain alignment (“VCA”) projects, cross border restructuring and headquarter relocations.

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Manuel Angehrn - Senior Manager, Global Minimum Tax  

Manuel is a Senior Manager with over 10 years of experience in International Tax. He is a Deloitte Switzerland’s Global Minimum Tax subject matter expert. He follows domestic and global tax developments and assesses the impact to Swiss multinationals.

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Mira Bekcic - Assistant Manager, Financial Services 

Mira is an Assistant Manager in the Financial Services Industry Tax team in Zurich. She has over 5 years of experience in advising individual and corporate customers such as asset managers, banks and insurance companies on a variety of Swiss tax topics in particular withholding tax, transactional taxes as well as reporting and compliance duties.

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Danielle Koyuncu - Director, Financial Services Tax

Danielle is a Director in the financial services Swiss tax team, specialized in advising financial institutions in the banking, insurance and asset management investment area. Danielle is a Swiss Certified Tax Expert with more than 15 years of experience in corporate international taxation and Swiss VAT. She holds a university degree in Business Administration and Master of Law of the University of Bern.

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