Bundesrat approves further key points of the withholding tax reform
Tabea Lorenz
At its meeting on 27 September 2019, the Federal Council approved further key points for the reform of the withholding tax. The consultation is scheduled to open in the first quarter of 2020.
The withholding tax reform aims to strengthen the Swiss debt capital market by exempting domestic legal entities and foreign investors from withholding tax on Swiss interest rate investments. In order to secure tax revenues, on the other hand, domestic individuals will be subject to withholding tax on all interest rate investments, and now also on foreign ones.
On 26 June 2019, the Federal Council adopted the key parameters for the reform of the withholding tax (see the taxlawblog article of 29 June 2019). Now these central parameters are being supplemented with further parameters:
- Withholding tax is also to be levied on indirect interest investments. This applies to domestic and foreign collective investment schemes, irrespective of whether they distribute or reinvest their income.
- Any applicable exemption limits for bank interest must be maintained. Additional tax-free amounts are to be waived.
- The participation deduction should not be adjusted. However, the measure should be set out in the consultation draft.
- The turnover tax on domestic bonds should be abolished.
The proposed reform will lead to an estimated CHF 250 million in annual revenue shortfall. On the other hand, there will be additional income due to positive dynamic effects from the strengthening of the business location and the security purpose. The cost-benefit ratio is advantageous in the long term.
The press release is available here.
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