In its communication of 10 July 2018, the Swiss Federal Tax Administration (FTA) explains the withholding tax requirements for the simultaneous posting of dividends in group relationships. In particular, it defines the conditions for the proper accounting of the dividend received for the purposes of the refund of the withholding tax and for the implementation of the reporting procedure.
In accordance with the FTA Communication "Simultaneous Dividend Recognition in Intercompany Relationships" of 10 July 2018, a domestic parent company may recognize the investment income of its subsidiary (i.e. its dividend declared in fiscal year n+1) as income on a deferred basis in the fiscal year in which the subsidiary earned it. In this context, this is referred to as simultaneous or congruent dividend accounting.
Correctly, the parent company posts the investment income to the income statement in its accounting in fiscal year n (posting: Prepaid expenses to investment income) and reverses it by means of a reverse posting (posting: Investment income to prepaid expenses) when opening the accounting for fiscal year n+1. If the parent company makes the final booking of this income to the income statement at the time of the dividend distribution (booking: asset account [bank] to investment income), this constitutes proper booking for the purposes of the refund of withholding tax (Art. 25 para. 1 VStG) and for the implementation of the reporting procedure (Art. 26a VStV).
The FTA's communication "Simultaneous Dividend Recognition in Group Companies" is available here.
Further announcements of the FTA are available here.
