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.
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