Tax-recognized interest rates for advances/loans in CHF

The Swiss Federal Tax Administration (ESTV) has announced the tax-recognized interest rates for advances/loans in CHF effective from January 01, 2013. More details can be found in this blog post.

In addition to reasonably interest-bearing advances or loans, zero-interest or insufficiently interest-bearing advances or loans to participants or to persons closely associated with them, as well as monetary contributions by participants or those closely associated with them in the actual sense, are subject to a withholding tax of 35%. The Swiss Federal Tax Administration (ESTV) regulates a reasonable interest rate for advances or loans between capital companies and participants or persons closely associated with them. By defining minimum and maximum interest rates, criteria for determining the market conformity of a service are established.

The ESTV has defined the applicable interest rates for advances or loans in CHF effective from January 01, 2013 as follows:

Minimum interest rates for advances/loans to participants or closely associated parties in CHF

• financed from equity and if no external capital needs to be interest-bearing: 1.50%
• financed from debt capital (up to and including CHF 10 million): cost price plus 0.50%, but at least 1.50%
• financed from debt capital (over CHF 10 million): cost price plus 0.25%, but at least 1.50%

Maximum interest rates for advances/loans from participants or closely associated third parties in CHF

• Real estate loans up to a loan in the amount of the first mortgage (2/3 of the market value of the property): 1.50% - 2.00% depending on the industry
• Other real estate loans: 2.25% - 2.75% depending on the industry
• Operating loans for trading and manufacturing companies: 3.75%
• Operating loans for holding and asset management companies: 3.25%

The circular from the ESTV regarding the tax-recognized interest rates 2013 for advances or loans in CHF can be found here.