Safe Harbor Interest Rates 2016

Withholding Tax, Income Tax

The Federal Tax Authorities have published the Safe Harbor Interest Rates for Swiss Franc Loans as well as Foreign Currency Loans for 2016. For CHF-, EUR- and USD-denominated loans, they remain unchanged compared to 2015.

Please download the complete information here (PDF, 371 Kb).

Swiss Franc (CHF) Loans

Based on a circular of the Swiss Federal Tax Administration (“FTA”) dated 23 February 2016, the following safe harbor interest rates for intragroup loans in Swiss Franc are applicable from 1. January 2016:

Loans to related parties (in CHF): in minimum

  • Equity financed: ¼ %
  • Debt financed: actual interest + ¼ - ½ % (up to CHF 10 Mio. ½ %; exceeding CHF 10 Mio. ¼ %); in minimum ¼ %

Loans from related parties (in CHF): in maximum

  • Business loans up to CHF 1 Mio.: trading and production: 3 % ** / holding and asset management: 2 ½ % **
  • Business loans exceeding CHF 1 Mio.: trading and production: 1 % ** / holding and asset management: ¾ % **

** Thin capitalization rules must be considered; see circular No. 6 dated 6 June 1997

A taxpayer can apply an interest rate that deviates from the published safe harbor rate, but in the event of a tax audit, the taxpayer would have to demonstrate that the interest rate applied meets the arm’s length standard.

Foreign Currency Loans

Based on a circular of the Swiss Federal Tax Administration (“FTA”) dated 24 February 2016, the following safe harbor interest rates for intragroup loans in EUR and USD are applicable from 1. January 2016:

  • EUR: 1%
  • USD: 2.25% 

Other foreign currencies are published in a table (see document below). 

If the safe harbor rate for a foreign currency loan is lower than the CHF safe harbor rate, the CHF safe harbor rate is considered the maximum allowable rate on loans payable by a Swiss entity. In addition, thin capitalization rules must be considered; see circular No. 6 dated 6 June 1997.

A taxpayer can apply an interest rate that deviates from the published safe harbor rate, but in the event of a tax audit, the taxpayer would have to demonstrate that the interest rate applied meets the arm’s length standard.

 

Please download the complete information here (PDF, 371 Kb).

Your team

Contact

In need of legal or tax advice? We look forward to contacting you.