On 15 August 2022, the FDF published a media release on the withholding tax reform. With the reform of the withholding tax, Switzerland will increase its attractiveness as a business location and remain competitive. The Federal Council recommends that the amendment to the Federal Withholding Tax Act be approved.
Currently, the federal government levies a withholding tax of 35 percent on interest income from bonds. To avoid this obstacle to Switzerland as a business location, many domestic companies issue their bonds abroad, thereby losing jobs and tax revenue. The reform provides for new domestic bonds to be exempt from withholding tax from January 1, 2023.
Withholding tax remains on dividends, which account for a large proportion of receipts.
The Federal Council expects many companies to borrow money again in Switzerland as soon as the measures are in force. Therefore, in the best-case scenario, the reform could already finance itself in the year it comes into force. At the outset, the loss of revenue from withholding tax and turnover tax is estimated to be in the tens of millions of euros each.
The press release is available here.
