Reimbursement in international circumstances - current practice and problem areas

Case 1: Establishment of a personal holding company

Facts

Jan Modaal (JM) is resident in the Netherlands and is subject to unlimited tax liability there on the basis of personal affiliation. He has been the sole shareholder of Modaal AG, domiciled in Zurich, for many years. Jan Modaal now intends to establish Modaal Holding NV with its registered office and effective management in the Netherlands. Modaal Holding NV will be subject to unlimited tax liability in the Netherlands on the basis of personal affiliation and will also not be exempt from corporate income tax. On the occasion of the establishment of Modaal Holding NV, the participation rights of Modaal AG are to be contributed to the equity capital at fair value as a contribution in kind, whereby Modaal Holding NV will have an equity capitalization ratio of 100%. Modaal Holding NV will not employ any staff, will not have its own business premises and will not hold any other participations or assets.

Questions

What legal bases are available to Modaal Holding NV to claim relief from withholding tax on future dividends of Modaal AG?
What conditions must Modaal Holding NV meet in order to be granted relief from withholding tax by the FTA?
What other problem areas must also be taken into account with regard to the intended target structure?

Case 2: Contribution of an active company

Facts

Based on the premises of case 1, Jan Modaal (JM) has implemented his plan as of June 30, 2022 and contributed the shareholding in Modaal AG to the newly established Modaal Holding NV.

Modaal AG is an operating company. The last annual financial statements as of 31.12.2021 were as follows (in CHF):

Modaal AG subsequently filed an application with the FTA on Form. 823B for approval of the reporting procedure on future dividend payments to Modaal Holding NV.

Question

Will the FTA grant Modaal AG's request?

Case 3: Contribution of an inactive company

Facts

Based on the premises of case 1, Jan Modaal (JM) has implemented his plan as of January 1, 2022 and contributed the shareholding in Modaal AG to the newly established Modaal Holding NV.

After having pursued an operational business activity in Switzerland for many years, Modaal AG has already discontinued its activity three years ago. The balance sheet as of December 31, 2021 was as follows (in CHF):

On January 10, 2022, Modaal AG will be put into liquidation by a resolution of the General Meeting of Shareholders.

Modaal AG subsequently filed an application with the FTA on Form 823B for approval of the reporting procedure on the payment of the liquidation surplus to Modaal Holding NV.

Question

Will the FTA approve Modaal AG's application?

Case 4: Change of residence of the unitholder

Facts

Based on the premises of case 1, Jan Modaal (JM) has implemented his plan as of March 1, 2022 and contributed the shareholding in Modaal AG to the newly established Modaal Holding NV.

Shortly before the contribution, Jan Modaal had all distributable retained earnings of Modaal AG distributed to him as dividends in accordance with commercial law. After the contribution, Modaal AG continues to operate in Switzerland. The FTA subsequently granted Modaal AG permission to apply the reporting procedure on the dividends to Modaal Holding NV for three years on the basis of an application on Form. 823B.

In January 2025, Jan Modaal breaks his tents in the Netherlands and moves his residence to Monaco.

In February 2025, Modaal AG submits a new application on Form. 823B to the FTA, requesting an extension of the previous authorization for the reporting procedure. In the cover letter accompanying the new application, Modaal Holding NV points out the new residence of Jan Modaal.