SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Dario Glauser, Christian Hagen and Samuel Lieberherr, Walder Wyss Ltd
5.4 Tax Consolidation Tax consolidation is available for VAT purposes. Legal entities, including permanent establish - ments, 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 calculated according to the asset base – ie, the maximum indebtedness permissible for tax purposes for each category of assets, with such permissible maximum indebtedness rang - ing between 0% and 100%. A company is con - sidered 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 permissible maximum indebtedness will be deemed hidden equity for capital tax pur - poses (ie, increasing the basis of the capital tax); and • interest payments on such excess related party debt will not be tax deductible and will be deemed a (hidden) dividend, resulting in respective taxes being applicable, in particu - lar a 35% WHT. 5.6 Transfer Pricing As a principle, Switzerland has no statutory transfer pricing rules other than the requirement that intercompany charges are on arm′s length terms. Therefore, Swiss tax authorities accept, in principle, the transfer pricing methods described by the OECD guidelines. Special rules apply with regard to interest rates on loans granted from or to shareholders and
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 conditions, and where the aggre - gate 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 decided to implement 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 constitution - al amendment accepted by popular vote on 18 June 2023. The minimum tax rate entered into force on 1 January 2024 based on a temporary ordinance. 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 inter - est deduction – may be available; however, this depends on the cantonal implementation (if any) and is therefore subject to the tax domicile.
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