Reimbursement in international circumstances - current practice and problem areas

Case 1: Family foundation

1. facts of the case

In 2010, Mr. X, a resident of Germany with unlimited tax liability, established the Y Foundation, a family foundation domiciled in the Principality of Liechtenstein. On the occasion of the establishment of the foundation, Mr. X donated to the Y Foundation a 100% shareholding in SwissCo, a corporation domiciled and effectively managed in Switzerland, which he had previously held as part of his private assets.

The Y Foundation is subject to ordinary profit tax in the Principality of Liechtenstein (and therefore not subject to taxation as a private asset structure). During his lifetime, Mr. X is the sole beneficiary of the Y Foundation and a member of the Board of Trustees. Based on the articles of association, he also has the right to dissolve the Y Foundation at any time and to return the foundation assets to himself.

In March 2024, the General Meeting of SwissCo resolves a dividend distribution in the amount of CHF 100,000 due on 15.4.2024. On 1.4.2024, SwissCo declares the dividend to the FTA using Form. 103 and applies for the reporting procedure on the dividend to the Y Foundation by simultaneously submitting the application on Form. 823B.

Questions

Will the FTA grant the request for notification instead of payment of SwissCo?
Would it have been possible to claim a refund of withholding tax on SwissCo's dividends even before the DTA-FL came into force on January 1, 2017?

‍

Case 2: Loan agreement

1. facts of the case

On January 1, 2022, X Holding AG, which is domiciled and has unlimited tax liability in Germany, sold its previously directly held 100% interest in SwissCo, a corporation domiciled and effectively managed in Switzerland, at fair value in return for a loan to its subsidiary Y AG, which is domiciled and has unlimited tax liability in Germany.

The loan agreement concluded between X Holding AG and Y AG states that Y AG must pay X Holding AG interest as at December 31 in the amount of the gross dividend(s) declared by SwissCo in the corresponding calendar year.

On 1.6.2023, SwissCo declares a gross dividend of CHF 100,000 in favor of Y AG. On 31.12.2023, Y AG pays interest of CHF 100,000 to X Holding AG in accordance with the contract.

Questions

Can Y AG be granted a full refund of the withholding tax in accordance with Article 10 paragraph 3 DTA-D or SwissCo be granted the application of the notification procedure?
How would the facts of the case be assessed if X Holding AG had its registered office in France rather than Germany?

‍

Case 3: Old reserve practice

1. facts of the case

Mr. X, a natural person domiciled in Monaco, contributes the previously directly held 100% stake in SwissCo, a corporation domiciled and effectively managed in Switzerland, to Y SA, a corporation domiciled and subject to unlimited tax liability in France, as of 1.1.2023 by means of a contribution in kind at a market value of CHF 1 million.

The corporate purpose of Y SA is to hold and manage investments. It is not subject to any contractual obligation to pass on dividends from SwissCo. Y SA does not hold any other investments apart from the investment in SwissCo. Its equity capitalization ratio is 100%.

At the time of the contribution to Y SA, SwissCo has distributable, non-operating funds in the amount of CHF 200,000.

On 15.4.2024, SwissCo distributes a gross dividend of CHF 100,000 to Y SA and applies for the application of the reporting procedure on the basis of the DTA-F by means of an application on Form 823B.

Questions

Is this an application of the old reserve practice?
Would the facts be assessed differently if Y SA only had an equity ratio of 30%, but also held other investments in Spain, Germany and the UK with a total market value of CHF 5 million?

‍

Case 4: Old reserves at a subsidiary

1. facts of the case

As part of an intra-group restructuring, X Ltd, a corporation domiciled in the Cayman Islands, transfers a previously directly held 100% interest in the domestic HoldCo to Y NV, a corporation domiciled and subject to unlimited tax liability in the Netherlands, as of March 31, 2024.