Swiss Parliament eases dispute about the withholding tax notification procedure
By Marc Nideröst, Treuhand- und Revisionsgesellschaft Mattig-Suter & Partner
According to a partial revision to the withholding tax law which was approved by the Swiss parliament at the end of September 2016, the notification procedure is applicable for dividend payments to a holding company with a participation of at least 20%, even if the notification has not been filed within 30 days after the due date of the dividend payment.
Open or hidden dividend payments are liable to the 35% Swiss withholding tax. If the recipient of the dividend payment is a company owning at least 20% of the share capital, the dividend payment can be notified instead of being paid.
Usually, Swiss double tax treaties and the savings income agreement with the EU also foresee the zero rate for such dividend payments. The notification form must be filed within 30 days after the due date of the dividend payment. If the dividend is paid to a company domiciled outside of Switzerland, the Swiss company must file a request for authorisation of this notification. The authorisation is valid for three years.
During the last few years, there have been some disputes between taxpayers and the Federal Tax Administration (FTA) about cases where notification forms have not been filed or have been filed too late. According to the FTA, the submission deadline of 30 days was a forfeiture deadline and the notification procedure was not applicable anymore. The withholding tax of 35% and a late interest of 5% were collected. Many taxpayers did not agree with this and objected to the decisions taken by the FTA, because, according to them, the right to use the notification procedure does not expire, even if the deadline has done so.
Now, the Swiss parliament has approved a partial revision to the withholding tax law which states that the notification procedure is applicable for dividend payments to a holding company with a participation of at least 20%, even if the notification has not been filed within 30 days after the due date of the dividend payment. At some point, a fine will need to be paid.
This partial revision is applicable retroactively for cases decided from 1 January 2011 onwards. Any late interest which has been paid can be refunded upon request. The request must be filed within one year after the entry into force of the partial revision.
Marc NideröstTreuhand- und Revisionsgesellschaft Mattig-Suter und Partner, Schwyz, Switzerland
Marc Nideröst LL.M. UZH International Tax Law / Swiss Certified Tax Expert / Graduate of Lucerne University of Applied Scienes in Economic and Business Administration Marc Nideröst is the Leader of the Tax consulting department at Treuhand- und Revisionsgesellschaft Mattig-Suter und Partner und has specialised during the last years in the area of taxation, in particular for regional, national and international enterprises as well as in the area of Value Added Taxation.
Treuhand- und Revisionsgesellschaft Mattig-Suter und Partner, Schwyz, has been conducting business since 1960 and employs around 90 staff altogether. The partnership provides market services in the areas of auditing, finance and accounting, tax consulting, business consulting and mediation as well as legal consulting and has highly qualified specialists in all areas thanks to its ideal size.
Published: November 2016 l Photo: Colourbox.de