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Urgent Forfeiture Deadline: Capital Contributions

Switzerland

The capital contribution principle was introduced as of 1 January 2011. Since then contributions, share premiums (agios) and informal contributions to equity which have been paid by shareholders since 1 January 1997 or will in the future be paid, may be repaid to the shareholders free of withholding tax by means of a dividend resolution. The time limit for notifying the Federal tax administration of capital contributions made between 1 January 1997 and 31 December 2010 expires no later than 30 days after the approval of the annual financial accounts for 2011 or 2010/2011. Taxand Switzerland discusses the urgent deadline for existing capital contribution reserves and actions that companies need to take to ensure their tax position is within the capital contribution principle.

Capital contribution principle
When the capital contribution principle was introduced as of 1 January 2011, the system shifted from the nominal value principle to the capital contribution principle. Since then contributions, share premiums (agios) and informal contributions to equity which have been paid by shareholders since 1 January 1997 or will in the future be paid, may be repaid to the shareholders free of withholding tax by means of a dividend resolution. Such repayments are generally no longer subject to income tax for individuals who are Swiss residents.

The time limit for notifying the FTA of capital contributions made between 1 January 1997 and 31 December 2010 expires no later than 30 days after approval of the annual financial statements for 2011 or 2010/2011.
 

Taxand's Take


Swiss corporations which have not yet notified existing capital contribution reserves should take the following measures as a matter of urgency:

  • Capital contributions made after 1 January 1997 must be identified and determined using the annual financial statements and other documents
  • The capital contributions must be converted or entered into the 2011 commercial balance sheet as "capital contribution reserves". Capital contribution reserves constitute a separate sub-account of the legal reserves
  • The capital contribution reserves established in the period between 1 January 1997 and 31 December 2010 must be reported to the Swiss Tax Administration within the time limit, i.e. no later than 30 days after approval of the annual financial statements for 2011 or 2010/2011

Your Taxand contact for further queries is:
Roger Dall'O
T. +41 44 215 77 77
E. roger.dallo@taxpartner.ch

Watch out for Taxand Switzerland's full update on forfeiture deadlines and how they impact MNCs in our upcoming March Taxand's Take

Taxand's Take Author