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2015/03/24 00:00:00 GMT+1

Statement from the Swiss Bankers Association: Change from a withholding tax system

  • The Swiss Bankers Association is generally in favour of a change from a withholding tax to a paying agent tax system. On the one hand, this is the only means by which to promote the capital market in Switzerland, which among other things, brings significant advantages in terms of capital raising for Swiss companies and public entities such as municipalities, cities or cantons. On the other hand, bail-in bonds, which are essential for the implementation of the TBTF requirements, can continue to be issued in Switzerland.
  • A variety of options were analysed based on the following assumptions:
    • No additional liability risks for the bank and its employees.
    • No additional costs for the banks in the case of a change of system.
    • No interim solution for the duration of only a few years.
    • Simplification for customers.
  • Taking into account these conditions, the Board of Directors of the SBA has expressed its support for a solution that foresees an automatic notification procedure for Swiss taxpayers for interest from bonds and foreign dividend income. The current withholding tax system will remain in place for interest earned on bank accounts or income from Swiss dividends. Thanks to this restriction, retail banking customers without securities accounts will not be subject to the notification procedure. Incidentally, the automatic notification procedure is not new in Switzerland. Salary statements and payment notifications from insurance companies are, for example, already sent directly to the tax authorities in certain cantons.
  • The SBA is aware of the political dimension of this decision. In light of international developments in recent years and the requirements associated with a change of system, the decision is, however, logical. In particular, it also prevents the banks from having to introduce highly complex systems for what would likely only be a short period of time.
  • The SBA thanks the overall economy for also having spoken in favour of this solution through its representative economiesuisse.
  • Parallel to the suggested change of system, the SBA encourages that the existing procedure to obtain tax compliance in Switzerland undergo a critical review and be simplified to the greatest degree possible.

You can find the complete draft legislation response here.