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New Rules for Exemption at Source of Swiss Withholding Tax to Start Effective January 1, 2023

New Rules for Exemption at Source of Swiss Withholding Tax to Start Effective January 1, 2023

Monday, 23 May, 2022

The Swiss Federal Council has announced additional improvements to the exemption at source from Swiss dividend withholding tax. Starting January 3, 2023, no taxes will be imposed on dividends distributed by a Swiss corporation. To qualify for the exemption, the taxpayer must hold at least 10 percent of the capital or stocks of the dividend-paying company or an equivalent shareholding under a tax treaty. The current requirement to present a valid Form 823 for three years has been extended to five years. The requirements are expected to enter into force on January 1, 2023.

 

May 4, 2022, is when the Swiss Federal Council made changes to its withholding tax laws. The current requirements for applying for the exemption at source were relaxed.

 

The new rules, which take effect on January 1, 2023, aim to make it easier to get the source exemption:

  • If you are a Swiss resident and own over 10% of a company, you may be able to take advantage of the withholding tax exemption.
  • If there's no minimum tax treaty, at least 10% of shareholdings will be subject to notification.
  • Unlike in the past cross-border dividends withholding tax clearance was valid for three years; its validity will be extended to five years.

 

The revisions also allow other legal organizations other than corporations to benefit from the source exemption. Foundations and cooperatives, for example, are now exempt from the scope in an international context, although foundations and cooperatives have a large number of assets in Swiss firms.

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