Our Swiss firm comments on the amendment of the notification procedure in group structures.
Between Swiss entities, the required participation quota for the application of the notification procedure will be reduced from currently 20% to 10%. In addition, the notification procedure will be available for all legal entities and is no longer limited to corporations, collective investment schemes as well as governmental institutions. This will enable e.g. foundations to apply the notification procedure.
In international group structures with participations in Swiss corporations, the relevant participation quota of the foreign entity and dividend recipient for an additional or full relief from Swiss withholding tax is primarily depending on the applicable double tax treaty. In case these treaties do not include a definition of the required minimum participation (e.g. treaties with India and Chile), the minimum quota from a Swiss perspective will now be set at 10% (currently 20%). Furthermore, the notification procedure is no longer limited to corporations but can be applied by all “companies” according to the definition in the respective applicable double tax treaty.
The application of the notification procedure in an international group structure still requires the approval by the Swiss Federal Tax Administration. With the new amendments, such an approval will be valid for five years (currently three years).
These amendments will enter into effect on January 1, 2023. Any applications pending at this point in time will still be subject to current law.
The above changes will bring important relief for both the entities as well as the tax administration. For the dividend recipients, the payment and (partial) refund of Swiss withholding tax will no longer be required.
Thank you to our Swiss firm, TaxPartner Taxand, for this analysis.
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