Stamp duty on foreign insurance premium payments

Tax law, Stamp duty, Corporate tax

The payment of insurance premiums by a Swiss policyholder to a foreign insurer may result that the Swiss policyholder has to declare and pay stamp duty to the Swiss Federal Tax Administration (SFTA). Foreign permanent establishments of Swiss companies may also qualify as Swiss policyholders. We therefore recommend periodically checking the insurance premiums paid with respect to the liability to pay and declare Swiss stamp duty.

What is it about?

Insurance premiums from Swiss insurers are subject to Swiss stamp duty unless the insurance is covered by the statutory exemptions. The stamp duty amounts to 5% of the cash premium or 2.5% of the cash premium for certain life insurance policies.

In case the insurance premium is subject to Swiss stamp duty, the stamp duty is usually charged by the Swiss insurance company to the policyholder and paid to the SFTA by the insurance company.

Often missed is the fact that the payment of insurance premiums by a Swiss policyholder to a foreign insurer may also be subject to stamp duty.

If the foreign insurance premium payment is subject to Swiss stamp duty, the Swiss policyholder must declare and pay the stamp duty to the SFTA (self-declaration procedure).

It should be noted that the SFTA applies a formal approach with respect to the definition of the term “Swiss policyholder”. If, for example, a Swiss company has a foreign branch which is the policyholder, the policy is attributed to the Swiss head office according to the practice of the SFTA. Accordingly, the Swiss head office is deemed to be the policyholder. This means that the insurance premium paid by the foreign branch may be subject to Swiss stamp duty.

If the Swiss policyholder is liable to pay stamp duty, the tax has to be declared and paid to the SFTA within 30 days of the end of the quarter in which the insurance premium was paid.

We therefore recommend to periodically review the insurance premiums paid (for example in connection with the finalization of the 2020 annual financial statements) and document the review as preparation to any stamp duty audits by the SFTA.

Do you need any support?

Does your entity or branch pay foreign insurance premiums (for example, for insurance policies for the entire group) and do you need support in analysing insurance policies from a stamp duty perspective or support in preparing a tax audit? Please feel free to contact us, we are happy to support you.

March 2021 | Authors: Roland Reding, Christina Stocker

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