zsis) - Center for Swiss and International Tax Law

With the adoption of the STAF by the Swiss electorate on 19 May 2019, the cantonal tax privileges were abolished in all cantons as of 1 January 2020 and replaced by instruments that are internationally accepted. While the Solothurn electorate approved the STAF at federal level with 58.6% of the vote, it simultaneously rejected the first cantonal proposal to implement the STAF, which would have provided for a significant reduction in the profit tax rate, with 51.4% of the vote. In the second proposal, which was accepted by the electorate, it was possible to agree on a less extensive, but still substantial, reduction of the profit tax rate. For the city of Solothurn, for example, the effective profit tax rate for legal entities will be 15.29% from 2022 (previously: 21.23%). In addition to this reduction in the profit tax rate and the legislative changes prescribed by the Federal Act on the Harmonisation of Direct Taxes of the Cantons and Municipalities (StHG), individual provisions of the Tax Act were adapted to the new accounting law with the implementation of the STAF in the Canton of Solothurn and accompanying measures were adopted in the area of natural persons.

Editorial on the focus issue "Withholding Tax" of zsis).

With its dispatch of April 2021 on the reform of the withholding tax, the Federal Council is making a new attempt to strengthen the domestic debt capital market. The bill is economically necessary and suitable for finding a pragmatic solution that is acceptable to the majority. Parliamentary consultations have already begun.

In terms of withholding tax, we focus on withholding tax on the income from equity securities. In particular, pecuniary benefits occupy us and often lead to emotionally profound experiences and contacts with withholding tax. Similarly, we constantly deal with the question of the refund of withholding tax owed, including the issue of "How can I repatriate profit reserves subject to withholding tax abroad?

The withholding tax reform bill introduced with the Federal Council Dispatch published on 14 April 2021 aims to largely abolish withholding tax on interest income and, as an accompanying measure, to abolish the turnover tax on Swiss bonds. In this context, implementation issues at the banks and financial institutions, the effects of the reform on structured products and group financing, the treatment of substitute payments in securities lending/borrowing transactions and indirect interest investments are examined in greater detail.

The refund of withholding tax on dividends from Swiss companies by foreign shareholders can only be made on the basis of a double taxation agreement between Switzerland and the country of residence of the claimant. In order to claim relief from withholding tax under the applicable double taxation treaty, the residence of the claimant must be confirmed by the foreign tax authorities.

The problem of old reserves has become an integral part of daily tax consulting practice in Switzerland. The corresponding problem will be examined in this article on the basis of a transfer of the registered office of a foreign company to Switzerland. Here, too, the Federal Tax Administration (FTA) initially assumed that the "old reserves" brought into Switzerland were subject to Swiss abuse practice without restriction.

The withholding tax is a self-declaration tax: The taxpayer is responsible for declaring the withholding tax and fulfilling his tax liability. In contrast to the mixed assessment procedure, the procedure is not characterised by the cooperation of tax authorities and taxpayers. The responsibility for the payment of the withholding tax, including the determination of the assessment basis, lies solely with the taxpayer.