Swiss Tax – The One Pager

Related Parties or Beneficial Owners

Under Swiss tax law, related parties or beneficial owners include both direct and indirect shareholders, as well as individuals or entities with a close economic or personal connection to a company. This includes direct and indirect shareholders, notably owners of parent or subsidiary companies, members of the board of directors and executive management, as well as affiliated companies under common control.

Swiss Francs

The minimum interest rate for advances to shareholders or related third parties in CHF is reduced from 1.5% to 1.0%. This rate applies to advances financed entirely by equity. The interest margin for advances to shareholders or related third parties financed with borrowed capital remains unchanged at 0.5% (up to CHF 10 million) or 0.25% (over CHF 10 million). For advances in CHF provided by shareholders or related third parties for operating loans (from CHF 1 million), the maximum rate is reduced by 0.25% to 1.75% (trading and manufacturing companies) or 1.5% (holding and asset management companies). For operating loans below CHF 1 million, the corresponding rates are set at 3.5% and 3.0% respectively.

Foreign Currencies

In Europe, the interest rates for advances or loans in EUR will remain unchanged in 2025 at 2.5%. The interest rates for advances and loans in USD will also remain stable at 4.25%, as in the previous year. However, the “safe haven” rates for advances and loans in GBP will be increased from 3.75% to 4.5%.

Take aways

The new FTA circulars make it advisable to review existing loans and advances to avoid unexpected tax adjustments in 2025. Corresponding contracts, invoices, and recorded income must be reviewed and, if necessary, adjusted by the end of the 2025 financial year. Since the stated interest rates are “safe haven” rates, deviations are generally possible. However, the Swiss Federal Supreme Court ruled on July 17, 2024 (9C_690/2022) that tax authorities are not bound by FTA interest rates if a company deviates from them. If the taxpayer fails to provide proof of compliance with arm’s length principles, the tax authority may determine a market-based interest rate, which does not have to follow the maximum “safe haven” rates. Companies setting interest rates outside the “safe haven” range should ensure that their rates are backed by solid economic evidence and third-party benchmarks. Properly structuring loan agreements is crucial to minimizing tax risks.