Switzerland discontinues effort to overhaul withholding tax system, proposes extending exemption for some bonds

 

Switzerland’s Federal Council announced June 24 that it will no longer pursue reforming the withholding tax system applicable to bond interest and other income by switching from the debtor principle to the paying agent principle. Feedback from a consultation on reform of the withholding tax system, launched December 17, 2014, revealed lack of support for the proposal, the government said.

Instead, the government proposes to extend the temporary withholding tax exemption for interest paid on contingent convertible bonds (CoCos) and write-off bonds of systematically important banks another five years, beginning January 1, 2017, and to establish a similar exemption for bail-in bonds.

The paying agent principle should be discussed again before the planned exemptions for CoCos, write-off bonds, and bail-in bonds expire, the government said.

Related MNE Tax articles:

• Switzerland proposes to adopt paying agent system for withholding