Everyday and special issues in the withholding tax procedure

Case 1: Administrative proceedings and administrative criminal proceedings

1. facts of the case

Olympia AG is a company domiciled in Switzerland. Its main purpose is to provide financial services. According to the share register, Mr. N owns 990 shares in the company and Mr. O owns 10 shares. Mr. N is a member of the company's Board of Directors with sole signing authority.

In the years 2016-2018, the company paid various invoices that turned out to be private expenses for Mr. N.

Olympia AG submitted the 2016 annual financial statements to the FTA on October 17, 2017, the 2017 annual financial statements at the end of September 2018 and the 2018 annual financial statements in July 2019, in each case without declaring a monetary benefit.

The FTA carried out an audit at Olympia AG in July 2020. The company did not respond to the request for numerous missing documents.

Based on the results of the audit, it was suspected that Olympia AG had paid benefits of monetary value. Subsequently, the FTA-ASU initiated a criminal investigation against Mr. N in order to fully clarify the facts of the case. As a respondent in these proceedings, Olympia AG submitted various additional documents. The FTA-ASU drew up a final report, presented it to the accused Mr. N and granted him access to the available files.

On December 15, 2021, the FTA informed Olympia AG that it was interrupting the limitation period for any taxable services provided in the 2016 financial year with this letter. A similar letter was sent on December 9, 2022 for the 2017 financial year and on December 12, 2023 for the 2018 financial year.

In July 2024, the FTA issued an invoice to Olympia AG and Mr. N for withholding tax on the pecuniary benefits provided in the 2016-2018 financial years. Mr. N was held jointly and severally liable in accordance with Article 12 VStrR.

On October 20, 2024, the FTA issued its corresponding (initial) decision. In the run-up to the decision, the FTA gave Olympia AG the opportunity to comment on the defined amount of the non-cash benefit. Olympia AG then submitted various but incomplete supporting documents. Without informing Olympia AG, the FTA included documents that it had received as part of the information provided by one of the company bodies as a respondent in the administrative criminal proceedings against Mr. N.

Olympia AG and Mr. N lodged an objection to this decision in November 2024 with the following requests and issues:

• Request for a declaratory judgment that no monetary benefits were paid
• Application for suspension until the parallel administrative criminal proceedings have been concluded
• Violation of the right to be heard
• Request for the examination of witnesses
• Request for an oral hearing
• Start of the default interest run
• Statute of limitations

Questions

• What procedural aspects need to be considered in this case?
• What substantive legal questions arise and how are they to be answered?

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Case 2: Interest on hidden equity

1. facts of the case

The American Jet Group holds a stake in Jet Switzerland AG, Zug, among others, via an American subsidiary, Jet Europe LLC.

In March 2025, Jet Europe LLC granted Jet Switzerland AG a credit line of up to USD 50 million. In accordance with the transfer pricing concept applicable to the entire Group, the loan agreement stipulates that the loan is subject to interest at a rate of Saron + 4.25%. The interest is capitalized annually and is payable on repayment of the loan.

In March 2026, the Group finalizes the financial statements of Jet Switzerland AG in accordance with the Swiss Code of Obligations and determines that it has hidden equity as at 31 December 2025 and has partially recognized interest expense on hidden equity.

The Annual General Meeting of Jet Switzerland AG will take place on April 25, 2026, at which the annual financial statements (including interest expense) will be approved.

Questions

• When is the non-cash benefit (in the form of interest expenses on hidden equity) to be declared?
• How can the withholding tax be passed on to Jet Europe LLC?

Variant

In the original case, the credit line is not granted by Jet Europe LLC, but by an independent foreign bank. The American parent company JetCo Ltd. grants the bank a guarantee for the credit line.

Questions

• Who is deemed to be the recipient of the service with regard to withholding tax?
• What is the procedure for declaring and passing on withholding tax?
• What is to be observed under procedural law if the credit line qualifies as a bond under Art. 4 para. 1 lit. a VStG?

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Case 3: Notification procedure/reimbursement procedure

1. facts of the case

At the Extraordinary General Meeting on November 15, 2017, NoName GmbH resolved to pay an extraordinary dividend totaling CHF 5 million, payable on the same day. At the time the dividend was due, #AG held a 10% stake in NoName GmbH.

On November 29, 2017, NoName GmbH declared the dividend using form 110 of the FTA and at the same time submitted an application for notification using form 106, which the FTA rejected in a letter dated February 15, 2018, as #AG did not meet the
(then) required participation quota of 20%. NoName GmbH then transferred the withholding tax owed on this portion to the FTA. The associated default interest was also paid.

On May 19, 2021, the FTA received an application on form 25 from the #AG requesting a refund of the withholding tax paid on the extraordinary dividend of November 15, 2017. In it, the #AG stated that the refund of the withholding tax was to be granted as an exception despite the "statute of limitations" and that it was aware that the #AG had failed to do so. In a letter dated June 1, 2021, the FTA informed the #AG that its claim for a refund of the withholding tax had been forfeited due to the late submission of the application. In a further letter, both companies complained that the application for registration of NoName GmbH at the time had been wrongly rejected.

On February 13, 2023, the FTA issued a decision in which it confirmed its view regarding the forfeiture of the refund claim. In a separate decision, it also ruled that the reporting procedure (within the group) had been rightly rejected and that the withholding tax had therefore been rightly paid. On March 14, 2023, both companies filed an appeal against the (initial) rulings.

• Both companies require that the reporting procedure be granted
• NoName GmbH demands a tax refund due to payment of a non-debt, on the grounds that the VAT debt has already been fulfilled by notification (Art. 12 para. 1 VStV); there would be a direct legal claim under Art. 20 para. 2 sentence 2 VStG
• The #AG takes the view that it had already submitted the application for a refund to the FTA in 2020; therefore, no forfeiture had occurred; the deadline according to Art. 32 VStG is a regulatory deadline and not a forfeiture deadline
• Subsidiarily, compliance with the time limit pursuant to Art. 32 para. 1 VStG is to be assumed by submitting form 106

Questions

• What are the findings for the reporting procedure?
• What are the findings for the reimbursement procedure?

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Case 4: Sale ex dividend

1. facts of the case

On May 13, 2025, Weiland AG, Zurich, concludes a share purchase agreement with Rossi II BV, Amsterdam, regarding 100% of the shares in Koch AG, Baden. Rossi II BV is a 100% personal holding company set up specifically for this purpose by Fabio Rossi, who is resident in Italy and benefits there from the"Imposta forfettaria" (the equivalent of Swiss taxation based on expenditure).

The purchase price for the shares amounts to CHF 65 million and takes into account, among other things, that Koch AG will distribute the profit for 2024 of CHF 10 million to Weiland AG after the share purchase agreement has been completed.

On June 12, 2025(variant: on June 30, 2025), the Annual General Meeting of Koch AG will approve a dividend of CHF 10 million, payable on July 1, 2025, based on the annual financial statements for the financial year ending December 31, 2024. In accordance with the contractual agreement, the dividend will be distributed in full to Weiland AG.

The share purchase agreement is executed on June 14, 2025. With regard to future dividends, Rossi II BV submits a ruling application to the FTA regarding its entitlement to a refund of withholding tax.

On October 18, 2025, Rossi II BV, as the new sole shareholder of Koch AG, approves an interim dividend from current profits since January 1, 2025 in the amount of CHF 5.5 million. Koch AG reports the dividend to the FTA on October 30, 2025 on forms 103 and 108. Rossi II BV has not yet submitted an application on form 823B at this time.

Questions

• Who is generally entitled to a refund of withholding tax in the main case with regard to the dividend of June 12, 2025 and which procedure applies? What is the situation in the variant?
• Will the FTA deal with the ruling application regarding the refund entitlement of Rossi II BV?
• What requirements must Rossi II BV fulfill in order to be able to request a full refund of withholding tax or the application of the reporting procedure?
• Assuming that Rossi II BV is entitled to a full refund of withholding tax, can it apply the notification procedure with regard to the dividend of October 18, 2025?

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Case 5: (Negligent?) non-declaration

1. facts of the case

Mr. and Mrs. Smith have lived in Meggen (LU) since 2018 and are taxed there according to expenditure. Since taking up residence, the couple have held two properties in Meggen via a real estate company, ImmoSmith GmbH: a luxurious villa with a small private beach and a terraced apartment on a hillside with a view of the lake and mountains.

ImmoSmith rents the villa to the couple at the taxable imputed rental value. ImmoSmith rents the terrace apartment to the son of a married couple friend who is studying in Lucerne at a friendly price below the imputed rental value for tax purposes.

In the control account for the tax return, the Smiths declare seven times the imputed rental value of the villa as the minimum assessment basis or control amount. As ImmoSmith does not distribute any dividends, the Smiths do not declare any (further) income from Swiss assets.

In 2024, the tax authorities of the Canton of Lucerne will initiate supplementary tax proceedings for the tax periods 2019 and 2020 that have already been definitively assessed and will offset a hidden profit distribution by ImmoSmith in the amount of the difference between the market rent and the rent charged for the terrace apartment for the tax periods 2021 and 2022 that have not yet been assessed.

The tax returns for 2023 and 2024 have not yet been submitted at this time.

Mr. and Mrs. Smith have no knowledge of whether or when the tax authorities of the Canton of Lucerne will report the matter to the FTA.

Question

• What procedure is recommended for Mr. and Mrs. Smith with regard to the refund of withholding tax and why?