Modified procedure for reporting the withholding tax

Since February 15, 2017, the amendments to the Federal Law on Withholding Tax have been in effect. These amendments have adjusted the reporting procedure for intra-group dividend distributions. Now, no default interest is charged anymore, but a penalty of up to 5,000 Swiss Francs applies.

Background of the Amendment

The origin of this legislative amendment is a Federal Court decision from the year 2011 (BGer 2C_756/2010). In this decision, the Federal Court stated that the reporting procedure for intra-group dividend distributions can only be utilized if the payment is reported to the Federal Tax Administration (FTA) within the 30-day deadline after its due date. This reporting procedure simplifies the distribution of dividends within a group, as no withholding tax has to be paid on the distribution in this case. If this reporting was not done within the deadline, the withholding tax plus default interest had to be paid. The tax could be reclaimed, but not the default interest. This led to the parliamentary initiative Gasche (13.479), which was approved by Parliament on September 30, 2016.

Content of the Amendment

‍This changed with the adjustments that came into effect on February 15, 2017. The submission deadline remains at 30 days. However, the reporting procedure can still be applied after this period has expired, provided that the substantive deadlines are still met. Instead of default interest, a penalty of up to 5,000 Swiss Francs is now imposed. The changes also apply retroactively. Companies that paid default interest, but which would have been eligible for the reporting procedure under the new legislation, can reclaim this default interest. The limit of the retroactivity is reached when the tax demand or the default interest demand is time-barred or was already legally established before January 1, 2011. The application must be submitted within a year of the enactment using the Form 1 RVZ. A payout by the office does not occur automatically. However, default interests that have been invoiced but not yet paid will be canceled by the office. Once this is done, the companies will receive a written confirmation from the FTA. Source: Announcement of the Federal Council (Mitteilung-004-V-2017-d from 02.01.2017 by the Federal Tax Administration)