Preventive Tax: Assets within a group

5 February, 2019

Clarification of administrative practice, and more specifically of cases in which a repatriation of neutral assets is admitted within a group pursuant to Article 14a paragraph 3 of the Ordinance of 19 December 1966 on Preventive Tax (OIPrev; 642 211).

Article 14a OIPrev has been amended with effect from 1 April 2017. Since then, subject to the fulfillment of certain conditions concerning foreign loans secured at national level, the repatriation of assets in Switzerland is permitted, without the foreign issuance of an obligation is attributed, for the purposes of the withholding tax, to the Swiss guarantor.

The administrative practice applicable so far is clarified as follows. The assets existing between the companies of a group are not considered, for the purposes of the withholding tax, neither obligations nor assets of customers (regardless of their duration, their currency and their interest rate), insofar as, in In the case of the issuance of a foreign bond guaranteed by a Swiss group company, the volume of the repatriation of assets to the Swiss companies of the group (usually the guarantor) does not exceed the total amount of own capital of all the foreign companies of the group group in question (according to Article 14a paragraph 2 OIPrev) (so-called variation of equity). If there is no 100 percent participation,

This repatriation of assets to the Swiss company of the group may alternatively

  • be directly performed by the issuing foreign company or,
  • when the issuing foreign company initially transfers the assets in question to the group’s foreign companies, it must be carried out further by these foreign companies of the group by transferring assets for a maximum amount corresponding to the sum of their own capital.

Furthermore, there is no repatriation of neutral assets when the sum of the assets that are transferred to Switzerland in terms of nationally guaranteed foreign issues does not exceed the sum of the loans granted by the Swiss companies of one group to the foreign companies of the same group (so-called compensation variant). The variant of the compensation and the variant of equity can be combined with each other.

If a company wishes to make use of the variant of equity and / or variant of the compensation, it must submit a request for approval in the context of a preliminary tax agreement (ruling) to the Federal Tax Administration (AFC). In this preliminary tax agreement the procedural requirements of the revision of the chosen variant will also be specified. A once chosen procedure must be maintained (continuity principle).

This change in practice takes effect with its publication on the FTA homepage.

Press release of the Swiss Federal Government of 5 February 2019 –