On 28 March 2018, the Federal Council adopted a dispatch as well as a draft law according to which the withholding tax is to be refunded even if the income was negligently not declared in the tax return.
The aim of the proposal is to limit double taxation of withholding tax and income tax to cases of attempted tax evasion. In recent years, the practice regarding incorrect declarations has become more stringent as a result of several Federal Court rulings (see in particular the article "When forfeiting the right to restitution under Art. 23 VStG, the Federal Court remains strict" by Bucher Tax AG). This led to criticism from the political and business communities, to which the Federal Council has now responded.
In principle, the bill was received very positively in the consultation process (see the report on the results of the consultation procedure on the Federal Law on Withholding Tax). In contrast to the consultation draft (cf. our contribution of 30 June 2017), the Federal Council proposes in the dispatch that the competent tax authority may refuse to refund the tax without waiting for criminal proceedings. In addition, the Federal Council is proposing a more extensive transitional arrangement than that proposed in the consultation draft. Accordingly, refunds can be claimed under the new regulation if the period for objection has not yet expired when the amendment to the law comes into force.
The bill also contains a new regulation for winnings in kind from money games (e.g. certain competitions). If the Money Gaming Act passed in September 2017 comes into force (referendum vote on 10 June 2018), a reporting procedure will be introduced for winnings of CHF 1,000 or more. The organiser could thus report the profit to the authorities instead of paying 35 percent withholding tax. The tax authority checks in the tax return whether the profit has been declared. This reduces the administrative burden for all parties involved.
The text of the law is available here.
The press release and all documents are available here.
