SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Christian Hagen, Samuel Lieberherr and Dario Glauser, Walder Wyss Ltd
Value Added Tax (VAT) VAT is levied at a federal level on taxable supplies and services made in Switzerland, as well as on the import of goods. Taxable services from abroad are subject to the reverse charge mechanism. The standard tax rate is 8.1%. A special tax rate of 3.8% applies to accommodation services (eg, hotels), and a reduced tax rate of 2.6% applies to the charge (and import) of certain elementary supplies such as food, water and medication. Individuals and legal entities providing taxable sup - plies and services are subject to VAT if such supplies and services exceed CHF100,000 per annum (in cer - tain special cases such as sports associations, the threshold amount is CHF150,000). Withholding Tax (WHT) Dividends in cash or in kind in excess of the nomi - nal share capital plus confirmed capital contribution reserves from a tax resident company are subject to WHT at a rate of 35%, to be withheld by the com - pany and paid to the Swiss Federal Tax Authorities. The WHT is refundable or creditable, in full, to any shareholder who has recognised the distribution in the income statement; or reported it in the income tax return based on a DTT or, under certain circumstanc - es, the agreement with the EU regarding international automatic exchange of information. A notification procedure is available (instead of paying the tax and claiming the refund) under certain conditions. Interest payments of tax resident legal entities are subject to WHT if: • made for customer deposits with Swiss banks; or • based on collective debt fundraising (ie, debt raised from more than ten creditors under identical conditions or 20 creditors under deviating condi - tions, and where the aggregate debt concerned amounts to at least CHF500,000). Royalties paid by tax resident legal entities are not subject to WHT as long as they meet at arm′s length terms.
OECD/G20 Minimum Tax Rate The Federal Council implemented the minimum tax rate of 15% for large multinational companies with an annual turnover of at least EUR750 million, as agreed by the OECD and G20 member states by means of a constitutional amendment accepted by popular vote on 18 June 2023. The qualified domestic minimum top-up tax (QDMTT), which entered into force on 1 January 2024 based on a temporary ordinance, has been granted safe harbour status on the OECD’s central record. The tax law will be enacted subse - quently in the ordinary manner. The minimum tax rate has been implemented in Switzerland by means of a national supplementary tax. On 4 September 2024, the Federal Council decided to also enact the international supplementary tax-related Income Inclusion Rule (IIR) from 1 January 2025. 5.3 Available Tax Credits/Incentives Further tax credits and incentives – such as IP box, R&D super deduction and notional interest deduction – may be available; however, this depends on the can - tonal implementation (if any) and is therefore subject to the tax domicile. 5.4 Tax Consolidation Tax consolidation is available for VAT purposes. Legal entities, including permanent establishments, under common control may form a VAT group, through which intra-group supplies are excluded from VAT. 5.5 Thin Capitalisation Rules and Other Limitations The minimum equity of a tax resident company is cal - culated according to the asset base – ie, the maximum indebtedness permissible for tax purposes for each category of assets, with such permissible maximum indebtedness ranging between 0% and 100%. A com - pany is considered thinly capitalised if the aggregate debt owed to related parties exceeds the calculated
permissible maximum indebtedness. Such qualification has the effect that:
• related party debt exceeding the calculated per - missible maximum indebtedness will be deemed
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