On 29 and 30 January 2026, the Swiss Federal Tax Administration (SFTA) published the new circulars on the tax-deductible interest rates for intra-group advances and loans in Swiss francs as well as in foreign currencies. [1] As in previous years, the overall principles remain unchanged; however, the SFTA has adjusted the interest rates in specific areas.
For advances to shareholders or related parties, the SFTA interest circulars distinguish between equity- and debt-financed loans, as well as between loans in Swiss francs and foreign currencies.
The minimum required margin for debt-financed CHF loans is 0.5% (for loans below CHF 10 million) or 0.25% (for loans exceeding CHF 10 million). For loans in foreign currencies, a margin of at least 0.5% must be maintained; however, the interest rate must not fall below the level specified in the circular for the currency at hand.
The updated interest rate circulars lead to the following changes compared to the previous year:
Different maximum interest rates apply depending on the type of loan from shareholders or related parties. For loans in Swiss francs, the following interest rates apply:
For operating loans in foreign currencies, the same spread can be applied as in the SFTA circular on tax-deductible interest rates for advances or loans in Swiss francs (up to an equivalent of CHF 1 million: 2.75% and 2.25%, respectively; above an equivalent of CHF 1 million: 0.75% and 0.50%, respectively).
The spread refers to the difference between the maximum permissible interest rate in Swiss francs for the respective loan and the minimum required margin for loans to shareholders or related parties. The sum of the defined foreign currency interest rate and the spread results in the following maximum interest rates for advances from shareholders or related parties:
In the context of interest on intra-group loans under Swiss tax law, the SFTA interest circulars can be used as a «safe haven». Companies operating within these ranges can generally assume that the tax authorities will consider it commercially justified and therefore accept it. However, a taxpayer is not bound to the published interest rates and may deviate from them if needed, whereby it must be proven that the interest rate applied is consistent with the arm's length principle. In this regard, the Federal Supreme Court issued a controversial ruling in summer 2024, stating that the SFTA «safe haven» interest rates no longer apply if a taxpayer deviates from these rates and bases their calculations on the arm’s length principle. In such cases, the tax authorities are to apply a lower or higher interest rate, provided it complies with the arm’s length principle [2] , with the burden of proof resting on the tax authority. Whether this ruling of the Federal Supreme Court will be strictly applied in practice remains to be seen. It is expected that the tax authorities will only undertake the effort to determine the “actual” arm’s length interest rate in particularly significant cases and will in general continue to rely on the «safe haven» rates as a correction measure.
As mentioned, it is possible to deviate from the interest rates published in the interest rate circulars, provided that the interest rate complies with the arm's length principle. It is recommended that compliance with the arm's length principle be properly documented. In this context, it should be noted that an offer from banks or other financial institutions is generally not sufficient.
If the agreed interest rates deviate from the published rates and are not at arm’s length, the exceeding part qualifies as a deemed dividend. For the paying company a deemed dividend will lead to an adjustment for corporate income tax purposes (partially negating deductibility of paid interest). In addition, the company owes the withholding tax of 35% on the deemed dividend. Withholding tax must be passed on to the beneficial owner of the dividend retroactively. Failure to do so can lead to a so-called hundred-percent adjustment, which may result in a withholding tax of approximately 54%. In the case of a deemed dividend, the withholding tax can regularly constitute a definitive charge if reimbursement is partially or fully denied.
In light of the adjusted interest rates, taxpayers should generally review loans between related parties and, in particular, in intra-group loan relationships. This applies not only to new financing arrangements but also to ongoing loans. If the loan agreements are already structured in a way that the applicable interest rate is based on the ‘safe haven’ rates, the interest payments should be adjusted accordingly. If the interest rate according to the loan agreement is not linked to the SFTA rates, a contractual adjustment of the rates should be considered or – without adjustment – evidence that the rate deviating from the SFTA rates complies with the arm’s length principle should be prepared.
Especially in the case of cross-border financing, larger credit volumes, or loans in foreign currencies, a detailed analysis is advisable to avoid negative tax impact, in particular in the form of deemed dividends with corporate income tax and withholding tax consequences.
The 2026 interest circulars, as expected, do not change the general principles. Companies using the ‘safe haven’ rates continue to benefit from administrative simplification. Those who deviate from the published rates or maintain complex financing structures should carefully review and document the appropriateness of the interest rates.
[1] The circular letters regarding the interest rates recognized for tax purposes are available at this LINK .
[2] Please also see our blog post dated August 23, 2024.
As of 1 January 2026, various tax-relevant legislative and regulatory changes came into effect in Switzerland. Additional provisions will follow over the course of the year. The reforms largely reflect a trend towards increased transparency and the expansion of international tax information exchange. The most important changes are summarized below.
As of 1 January 2026, Switzerland has established the domestic legal framework for the implementation of the automatic exchange of information on crypto assets. To this end, the Federal Act and Ordinance on the International Automatic Exchange of Information in Tax Matters (AEOIA / AEOI Ordinance) were amended. The new reporting framework is based on the OECD’s Crypto-Asset Reporting Framework (CARF).
The international treaty basis [1] has not yet been ratified. The National Council’s Economic Affairs Committee (WAK-N) suspended discussions in November 2025, mainly due to delayed implementation in key markets and unresolved interpretive issues at the OECD level. Parliamentary consideration is expected to resume in 2026. If approved, information exchange could begin on 1 January 2027, with the first data exchange likely occurring in 2028.
In parallel, adjustments to the OECD Common Reporting Standard (CRS) have been decided, particularly concerning:
The Swiss Federal Council has decided that the CRS amendments relating to crypto assets will also apply only from 2027.
Further information can be found at this LINK
Double taxation agreements (DTAs) or related supplementary agreements with Italy and France contain special rules on taxation of cross-border workers and teleworking. These rules are complemented by an automatic exchange of salary data.
Implementing the automatic exchange of information requires new legal provisions under Swiss law. The Federal Act on the International Automatic Exchange of Information on Salary Data (AIALG) provides the necessary domestic legal basis. The Act specifically regulates:
The referendum period for the AIALG expired unused on 15 January 2026. The Act is expected to come into force no earlier than 1 May 2026.
Under this LINK you will find further information on this topic.
The new Federal Act on the Transparency of Legal Entities and the Identification of Beneficial Owners (LETA) aims to increase transparency of corporate structures in Switzerland and to more effectively combat the misuse of legal entities. In the future, legal entities must not only identify their beneficial owners but also report them to a federal transparency register. The transparency register is, in principle, not publicly accessible.
A beneficial owner is a natural person who directly or indirectly, alone or with others, controls a company. Control through ownership exists, in particular, when a person holds at least 25% of the capital or voting rights. Control by other means exists when a person can exert a significant legal or factual influence over the company. Reporting obligations also apply to certain foreign companies with a connection to Switzerland.
The purpose of the transparency register is to provide law enforcement and administrative authorities with targeted access to reliable information, to more effectively combat money laundering, asset concealment, corruption, tax fraud, and tax evasion. Notably, the SFTA and cantonal tax authorities will also have access to the register. In particular, in residence and tax domicile procedures, the new transparency is expected to reduce the information asymmetry between taxpayers and tax authorities.
In parallel, the scope of the Anti-Money Laundering Act (AMLA) is being expanded. In the future, certain advisers – in addition to financial intermediaries – will also be subject to AMLA’s due diligence and reporting obligations. This includes, in particular, individuals professionally involved in real estate transactions or in the structuring of non-operational legal entities.
The referendum period for the LETA and the AMLA amendments expired unused on 15 January 2026. The corresponding legislative and regulatory provisions are expected to come into force in the second half of the year 2026.
Under this LINK you will find more information.
In the context of the OECD minimum taxation rules (Pillar 2), the GloBE Information Return (GIR) has been introduced in Switzerland. To avoid multiple filings, an international agreement allows the automatic exchange of this information between countries.
As of 1 January 2026, corresponding ordinance amendments came into effect. They specifically regulate:
Additionally, on 16 December 2025 the Council of States approved the multilateral agreement on the exchange of GloBE information. Entry into force is expected no earlier than 1 July 2026.
Further information can be found at this LINK
On 19 December 2025, Parliament passed the Federal Act on the Extension of the Loss Carryforward Period. This legislative amendment extends the previous loss carryforward period for self-employed individuals and legal entities from 7 to 10 years. The new rules apply to federal direct tax as well as cantonal and municipal taxes.
The extended carryforward period applies to tax losses arising from the 2020 tax period onwards. Losses from earlier periods remain subject to the previous 7-year carryforward period.
Since losses are generally verified at the time of their utilisation, it is advisable to retain relevant business documents and accounting records until the assessment of the tax period in which the loss is applied becomes final. Due to the newly provided 10-year carryforward period, it may occur that, at the time of offsetting, the statutory minimum retention period for accounting records has already expired. Voluntary extended retention is therefore recommended.
The referendum period lasts until 17 April 2026. Entry into force is expected on 1 January 2028, provided no referendum is called.
The tax changes in 2026 represent another step towards greater transparency and international coordination. Companies, financial intermediaries, and advisers face expanded reporting, due diligence, and compliance obligations. Early engagement with the new rules is crucial to limit legal risks and administrative burdens.
[1] Addendum to the Multilateral Competent Authority Agreement on the Automatic Exchange of Information on Financial Accounts and to the Multilateral Competent Authority Agreement on the Automatic Exchange of Information under the Crypto-Asset Reporting Framework.
Tax-free capital gains are attractive for investors and entrepreneurs in Switzerland. However, what appears to be an advantage at first glance can turn out to be a tax trap. Under certain circumstances, capital gains can be classified as income - with significant tax and social security consequences. This article shows what shareholders and investors should be aware of.
Private capital gains are generally tax-free in Switzerland - a significant advantage for investors and entrepreneurs. However, a recent ruling by the Federal Supreme Court [1] highlights the com-plexity of distinguishing between tax-free capital gains and taxable income. This ambiguity can result in unexpected tax consequences under specific circumstances. The matter becomes par-ticularly complex when commercial securities trading or a self-employed activity is suspected. If a capital gain qualifies as taxable income, it may result in significant and often unanticipated income tax and social security contributions. This article highlights the main issues.
The realization of a tax-free capital gain preconditions the (profitable) sale of private assets. By contrast, gains from the sale of business assets are in any case subject to income tax and social security contributions.
The assumption of business assets presupposes the exercise of a self-employed activity. If no such activity is carried out, no business assets can be assumed against the will of the taxpayer, meaning that all assets held constitute private assets from which tax-free capital gains can be generated. If a taxable person – consciously or unconsciously – is self-employed, it must be determined on a case-by-case basis whether an asset is to be classified as private or business asset. This depends on the individual circumstances, whereby the so-called technical-economic function of the asset in question plays a central role. In this context, it should be noted that the holding and management of assets themselves – be it securities, real estate or other stores of value – could, under certain circumstances, constitute (part-time) self-employment. The intention to actually be self-employed is not decisive in this respect.
The term self-employment is not defined by law, but all income from a trade, business, liberal profession or other self-employed activity is subject to tax. In practice, the term is interpreted broadly. Accordingly, all profits from activities that go beyond the simple management of private assets are considered taxable income. This also includes capital gains from the sale or use of business assets.
The determination of whether a person is self-employed hinges on the specific circumstances of each individual case. The Federal Supreme Court takes the following indicators into account:
Each of these indicators may be sufficient together with others but may also be sufficient on their own to assume self-employment. The fact that typical elements of self-employment are not fulfilled in individual cases can be compensated for by other elements that are particularly pro-nounced. The individual aspects may not be considered in isolation and can also vary in intensi-ty. The decisive factor is that the activity as a whole is aimed at earning income.
The assessment of all the circumstances without a clear hierarchy of the listed indications makes it difficult to assess in individual cases whether or not self-employment is to be assumed. The fact that even a single indication can be sufficient if it is particularly pronounced shows that the hurdle for assuming self-employment is relatively low. This – of course – is particularly relevant when the activity is profitable.
The distinction between private and business assets is made according to the technical and eco-nomic function of the asset in question. This refers to the connection of the asset with a possi-ble self-employed activity.
A sufficiently close connection is generally deemed to exist if an asset is objectively recogniza-ble as being used for business purposes or actually serves the self-employed activity. The ques-tion is therefore whether an asset (e.g. a shareholding) serves to increase income or reduce expenses of the self-employed business activity. If a participation grants significant influence over a company in the same or a related industry as the owner's own company, this is consid-ered an indication that the participation qualifies as business asset. This assumption is in general confirmed, if the participation generates mandates for the owner's own company. This is the case, for example, with an architect who holds shares in real estate companies and acquires ar-chitectural contracts for his own architecting company from these companies.[2]
However, it is important to note that not only shareholdings in the same sector can qualify as business assets. Shareholdings outside the same sector can also be regarded as business as-sets if they are suitable for usefully expanding or supplementing the field of activity of the parent company or for diversifying business activities. In any case, the decisive factor is the intention of the person concerned to use the participation specifically to improve the operating result of their own company or its opportunities on the market.
Against this background, the Federal Supreme Court recently ruled [3] that self-employed lawyers are not prohibited from holding additional securities of their clients as private assets. The Feder-al Supreme Court thus protected the position of the taxpayer and upheld his appeal. In its rea-soning, the court stated that the lawyer's activities, repeated advice, investment activities and membership of the board of directors were not in themselves sufficient evidence to classify the shareholding as (self-employed) business activity. As long as the purpose of the participation is not to increase income or reduce expenses within the scope of the original gainful activity (in this case the activity as a lawyer), there is no room to assume that the participation is a business asset or to assume self-employment. Nevertheless, the qualification as business assets is not excluded, as the participation could also form part of commercial securities trading.
Under certain circumstances, the (profitable) sale of shares can be regarded as commercial se-curities trading and thus as self-employment. In practice, the following criteria are used for this purpose [4]:
In this context, reference should be made to a ruling by the Federal Supreme Court [5], in which it had to deal with the sale of a shareholding that was classified as commercial securities trading by the lower courts. Specifically, a person who was initially still working as an independent man-agement consultant acquired a stake in a holding company that held two subsidiaries operating in the packaging industry. These companies were in financial difficulties, which made restructuring measures necessary. Together with another business partner, the person concerned succeeded in restructuring the companies and then selling them at a profit. The responsible tax office and the Federal Tax Administration were of the opinion that this approach went beyond the scope of private asset management, meaning that the realized increase in value would constitute (subse-quent) remuneration for the intensive restructuring efforts and thus income from self-employment from an economic point of view. In this regard, the Federal Supreme Court stated that, from a tax perspective, owners of participations are not prohibited from attempting to in-crease the value of the participation by participating in the company. [6] In this specific case, there was therefore no basis for a subsequent reclassification of the capital gain as remuneration for work performed, meaning that the gain could be recognized as a tax-free capital gain.
Although the term "trader" is often associated with repeated purchases and sales, the single sale of an asset can also be regarded as self-employment under certain circumstances. From a tax perspective, it is questionable whether the single sale of an asset can lead to the assumption of self-employment as a trader.
According to the case law of the Federal Supreme Court, the mere one-off sale of an asset does not in principle protect against the assumption of self-employment. For example, the sale of a single property or the (partial) sale of a shareholding can lead to the assumption of (part time) self-employed. However, this requires that the asset in question was acquired as part of a planned, acquisition-oriented activity and managed with a view to a future profitable sale. A tax-free capital gain from the sale of an individual asset is therefore only possible if the sale can still be attributed to private asset management. This is invariably the case when a one-time oppor-tunity is taken - whereby the burden of proof lies with the taxpayer. As long as the threshold for self-employment is not exceeded, a certain asset management activity in relation to the asset to be sold should not be detrimental. However, the circumstances of the specific individual case must always be considered.
According to federal court rulings, if an occupation is primarily held as a form of employment, part-time self-employment may be considered in exceptional cases and under specific circum-stances. Indications in this regard include any external financing, risks taken or a particularly sys-tematic or planned approach. The proximity to the profession and the specialist knowledge used are also indications to be considered. The Federal Supreme Court has determined that the amount of profit made is of secondary importance.[7]
A current example is provided by the Federal Supreme Court [8]: In this instance, the revenue de-rived from the one-time sale of a share was classified as income from self-employment. The decisive factor was that the taxpayer was systematically and entrepreneurially involved in the project over a longer period of time, invested considerable financial resources, took entrepre-neurial risks and cooperated with an experienced business partner. Despite the lack of repetition of this activity, these circumstances were sufficient to assume a taxable gainful activity.
The distinction between tax-free capital gains and taxable income is complex in many cases and depends on various indicators. In order to realize a tax-free capital gain, it is important to careful-ly examine the relevant criteria and, if necessary, take measures in good time to avoid tax disad-vantages. Early and forward-looking planning is essential in view of the tax consequences of refusing the benefit of tax-free capital gains. This applies all the more as social security contribu-tions are due on the capital gain in addition to income tax.
[1] Cf. judgment FSC 9C_454/2023 of December 11, 2024.
[2] Cf. judgment FSC 2A.547/2004 of April 22, 2005.
[3] Cf. judgment FSC 9C_454/2023 of December 11, 2024.
[4] Cf. circular letter of the FTA no. 36, section 4.3.2.
[5] Cf. judgment FSC 2C_115/2012 and 2C_116/2012 of September 25, 2012.
[6] Cf. judgment FSC 2C_115/2012 and 2C_116/2012 of September 25, 2012 E. 2.5.3.
[7] See in particular.judgment FSC 9C_403/2023 of June 25, 2024 E. 5.5.
[8] See in particular. judgment FSC 9C_403/2023 of June 25, 2024.
On 16 December 2025, the Zurich Tax Office published two new practice notices on indirect partial liquidation. They concern the relevant balance sheet date and the inclusion of group companies in determining the commercially distributable reserves. In the view expressed here, both notices are declaratory in nature — they clarify existing law rather than introduce any genuine change in practice. They are nonetheless significant for day-to-day transactions.
So-called indirect partial liquidation covers situations in which a shareholder disposes of a participation held as private assets to a corporation or cooperative, or to a natural person holding the participation as business assets, and the target company subsequently distributes substance that would economically have benefited the seller. The legislature seeks to prevent commercially distributable reserves — which would be taxable as a dividend triggering income tax or profit tax for the seller — from being realized tax-free via the interposition of a corporate acquisition.
The provision requires the following elements to be met cumulatively:
(1) Disposal of a participation of at least 20% in a corporation or cooperative,
(2) to a corporation or cooperative (acquiring company),
(3) distribution of commercially distributable, non-operationally necessary substance of the target company within a lock-up period of five years following the sale,
(4) to the extent this distribution exceeds the profits ordinarily generated since the acquisition, and
(5) cooperation by the seller in the distribution.
The legal consequence is that the realized gain is in general re-assessed as income from movable assets in the seller’s hands — the tax-free capital gain is thereby reclassified, to that extent, as taxable income from movable assets.
Two figures are central to calculating the exposure from an indirect partial liquidation: on the one hand, the distributable reserves of the target company at the time of the sale, and on the other, the non-operationally necessary substance. The lower of the two amounts is determinative in each case. It is these calculation parameters — in particular the relevant point in time and the circle of companies to be included — that the Zurich Tax Office clarifies with its new practice notices of 16 December 2025.
In principle, the last annual financial statements (or the last interim accounts) of the target company approved by the general meeting (hereinafter: “AGM”) prior to the sale are to be used to determine the distributable reserves. With its practice notice on determining the point in time of the distributable reserves, the Zurich Tax Office confirms the administrative practice set out in Circular No. 14 of the SFTA as well as the Federal Supreme Court ruling 2C_135/2021 of 2 March 2022.[2]
The supplementary clarification regarding the six-month period is of practical importance: if the sale takes place more than six months after the balance sheet date, the profit of the preceding financial year is deemed to constitute distributable substance — regardless of whether the AGM has already taken place at the time of the sale or not.[3] This must be seen against the civil law background that the AGM is to be held within six months of the balance sheet date. If, contrary to that requirement, no AGM takes place within this period, reference is still to be made to the last balance sheet date even without the annual accounts having been approved by the AGM.
The practice notice illustrates this with three scenarios:
The principle of relying on the last approved annual accounts is not absolute. If a material change in the financial position of the target company occurs between the balance sheet date and the sale — for example through extraordinary distributions, the disposal of significant assets, or substantial losses — it may be justified to use a more current basis or to depart from the last annual accounts approved by the AGM.[4] This applies in particular if, after the AGM but prior to the sale, the commercially distributable reserves are actually distributed to the sellers.
Assessment: This practice notice introduces nothing substantively new. It does, however, create clarity for situations in which closing and AGM occur in close temporal proximity — a frequent occurrence in practice. For transacting parties who can actively control their closing date, the balance sheet date remains a relevant planning parameter, though artificial postponement of the AGM to reduce distributable substance could be treated as tax avoidance.
The second practice notice appears, at first glance, more substantively significant. The Zurich Tax Office states that in determining the distributable reserves, not only the target company itself but also its subsidiaries and sub-subsidiaries under unified management are to be included.[6] The analysis is conducted for each entity individually (single-entity financial statements; no consolidation). Losses of individual group companies cannot therefore be offset against distributable reserves of other companies.
In concrete terms, this means: the determinative amount is the lower of non-operationally necessary substance and commercially distributable reserves — per entity, pro rata according to the ownership percentage. Minority interests (without a majority of voting rights) fall outside the calculation. The potential tax base arising from an indirect partial liquidation can therefore not be artificially reduced by keeping distributable reserves at the target company level low while accumulating reserves in subsidiaries instead.
Assessment: While neither Circular No. 14 nor prior cantonal practice addressed the group-wide entity-by-entity analysis with comparable explicitness, this practice notice, in the view expressed here, merely concretizes a principle of group-wide analysis that was already applicable before its publication and does not bring about any material change in practice. Regardless, it provides welcome clarity on this point.
In the view expressed here, the new practice notices are declaratory in character: they clarify and illustrate principles that already followed from existing law and the established literature. This has consequences for the assessment of existing rulings and already-completed transactions.
For existing rulings, this means: where the calculation of the commercially distributable reserves was the subject of the ruling and was specifically determined — including at group level — the protection of legitimate expectations is evident. The same must apply where the amount of the commercially distributable reserves was fixed — for whatever reason — without regard to direct or indirect subsidiaries. Provided the other requirements for protection of legitimate expectations are met — in particular full and accurate disclosure of the facts and no material change in the legal or factual position — such a ruling that is substantively incorrect remains binding on the authority.
For already-completed transactions without a ruling, the same logic applies: since the group-wide entity-by-entity analysis, in the view expressed here, already applied prior to publication of the practice notice, open assessments may in principle be determined according to these principles. Taxpayers who have to date not included subsidiaries in the IPL calculation bear the risk of a revised assessment, provided the tax assessment has not yet become final.
For ongoing and planned transactions, the IPL analysis must be conducted from the outset at the level of all subsidiaries and sub-subsidiaries under unified management — regardless of where distributable reserves are accumulated within the group. Existing calculations limited to the target company alone should be reviewed.
The timing of the sale relative to the balance sheet date and the AGM remains a relevant planning parameter. In particular for transactions in the second half of the year, the implications of the six-month period should be analyzed at an early stage. An artificial delay of the AGM to reduce distributable substance carries the risk of being treated as tax avoidance. Against this background, it is advisable to schedule the AGM consistently in the second quarter, independently of any potential sale. An ad hoc postponement of the AGM is difficult to defend; a temporally consistent practice offers adequate protection against the allegation of tax avoidance by comparison.
[1] https://www.zh.ch/de/steuern-finanzen/steuern/treuhaender/steuerbuch/steuerbuch-definition/zstb-nr-20a-2.html
[2] See for the same practice in the Canton of Aargau: ATTENHOFER/SCHWARB/BAUMER, in: Klöti-Weber/Schudel/Schwarb (eds.), Kommentar zum Aargauer Steuergesetz, 5th ed., Bern 2023, § 29a N 63a
[3] See also ATTENHOFER/SCHWARB/BAUMER, op. cit., § 29a N 63a in fine in fine
[4] See ATTENHOFER/SCHWARB/BAUMER, op. cit., § 29a N 63
[5] https://www.zh.ch/de/steuern-finanzen/steuern/treuhaender/steuerbuch/steuerbuch-definition/zstb-nr-20a-3.html
[6] See also ATTENHOFER/SCHWARB/BAUMER, op. cit., § 29a N 60
The Swiss Federal Council intends to reduce the administrative burden on businesses. On 19 June 2026, it launched two consultation procedures[1] proposing targeted simplifications in the areas of value added tax (VAT), Swiss withholding tax and stamp duties. The objective is to reduce recurring compliance obligations vis-à-vis the Swiss Federal Tax Administration (SFTA) without altering taxpayers' substantive tax obligations.
The proposal focuses on four measures relating to VAT, Swiss withholding tax and issuance stamp duty
Since the beginning of 2025, businesses with annual turnover of up to CHF 5,005,000 have been permitted to file VAT returns annually rather than quarterly. The draft legislation proposes to abolish this turnover threshold entirely. Consequently, all VAT-registered businesses, irrespective of their annual turnover, would be eligible to opt for annual VAT reporting. The application requirement, instalment payments and filing deadlines would remain unchanged.
The notification procedure would no longer be limited to direct parent-subsidiary relationships. Instead, it would be extended to a broader range of intra-group transactions, including companies that are fully or proportionately consolidated under recognized accounting standards. In certain cases, the procedure could also apply where the shareholding is below 10%.
The current obligation to submit annual financial statements to the SFTA without request once total assets exceed CHF 5 million would be relaxed. For Swiss withholding tax purposes, financial statements would only need to be submitted where taxable distributions (such as dividends or taxable deemed profit distributions (constructive dividends under Swiss tax law)) have actually occurred. For issuance stamp duty purposes, financial statements would generally only need to be submitted upon request by the SFTA, although the authority would retain the right to request them in individual cases.
The current exemption from issuance stamp duty for restructuring contributions is limited to CHF 10 million, subject to the possibility of applying for additional relief. The proposal would abolish this limitation. Both open restructuring measures and hidden restructuring measures would be fully exempt from issuance stamp duty, irrespective of the amount contributed, provided that existing losses are eliminated. The current hardship relief procedure would therefore become obsolete.
An indication of the intended direction can already be seen in the SFTA Practice Notice of 22 June 2026[2], by which the SFTA abolished the obligation for securities dealers to submit nil returns for securities transfer stamp duty purposes. The legislative proposals themselves remain at the consultation stage. Their entry into force is therefore uncertain, and the proposed amendments remain subject to the optional referendum process. Certain amendments at ordinance level could enter into force earlier. However, the extension of the notification procedure is expressly intended to become effective only once the necessary IT adaptations within the SFTA have been completed.
The overall direction of the proposals deserves support. Recurring and largely formalistic filing obligations consume resources for both businesses and the tax authorities without generally generating any meaningful additional information. The extension of the notification procedure is likely to provide significant liquidity benefits, while abolishing the restructuring threshold removes an unnecessary procedural obstacle for companies already facing financial distress.
Under the current wording of the law, the notification procedure is available in particular for dividend distributions and constructive dividends within domestic and cross-border group structures. Rather than requiring the deduction of the 35% Swiss withholding tax followed by a subsequent refund, the notification procedure allows the tax obligation to be fulfilled simply by filing a notification. Despite the wording of the statute, however, the notification procedure is currently available only in direct parent-subsidiary relationships because the implementing ordinance requires a minimum shareholding of 10%. Where this threshold is not met, withholding tax on constructive dividends may currently be settled through the notification procedure only if the taxable benefit is discovered during an official tax audit It should be noted that the notification procedure is available only where it is established that the recipient of the payment is substantively entitled to a refund of the notified withholding tax. If there is any doubt – for example regarding beneficial ownership or old reserves – the withholding tax must still be levied, passed on to the recipient and default interest will accrue. Acceptance of the notification by the Swiss Federal Tax Administration does not prevent a subsequent reassessment, nor does it preclude criminal tax proceedings. Conversely, taxpayers who voluntarily pay the withholding tax lose the possibility of using the notification procedure permanently. Failure to submit a notification, or submitting an incorrect notification, may furthermore result in tax evasion proceedings carrying a fine of up to CHF 30,000 or, if higher, up to three times the amount of tax evaded. It should further be noted that an ordinary notification – i.e. one submitted outside the context of an official audit – must generally be filed within 30 days after the taxable benefit becomes due. For many years, this deadline carried significant consequences, as until February 2017 it constituted a forfeiture period. Taxpayers who filed their notification late permanently lost access to the notification procedure and became liable for default interest, then amounting to 5% of the full withholding tax, even where their entitlement to a refund was undisputed. Since February 2017, however, taxpayers satisfying the substantive requirements remain entitled to the notification procedure even if the notification is filed late, without incurring default interest. Instead of forfeiture, late filing is now punishable by an administrative fine of up to CHF 5,000.
While the reduction of administrative burdens is clearly welcome, it is also worth considering the other side of the coin. The taxes concerned – VAT, Swiss withholding tax and stamp duties – are all based on the principle of self-assessment. Determining the relevant facts, correctly classifying transactions and remitting the tax due remain primarily the responsibility of the taxpayer rather than the tax authorities. The consultation proposal does not alter this fundamental principle. It merely reduces the frequency and density of the administrative filing obligations that have traditionally accompanied it. For taxpayers, this effectively means a shift from routine filing obligations to maintaining documentation that can be produced promptly upon request by the Swiss Federal Tax Administration. Financial statements must therefore remain readily available, even for previous tax periods, and classification errors are more likely to come to light only during targeted audits, potentially covering several years, rather than through the routine review processes that have existed until now. From a practical perspective, this means that administrative simplification should not be mistaken for a relaxation of the taxpayer's duty of care. Where existing administrative control points are removed, businesses should compensate through appropriate internal procedures, such as well-documented analyses of intra-group transactions or robust internal processes for determining whether a taxable event has occurred. Practical experience shows that the breach of what are often perceived as "merely" administrative obligations regularly results in costly consequences, including default interest, administrative penalties and, in more serious cases, criminal tax proceedings – all of which could often have been avoided with comparatively little additional effort. Businesses wishing to benefit from the newly gained flexibility would therefore be well advised to accompany it with a corresponding increase in internal vigilance. Simplifying procedural requirements does not diminish responsibility for ensuring substantive tax compliance. This observation applies equally to issuance stamp duty. The explanatory report expressly reserves cases involving abuse of law, for example excessive write-downs intended to create tax losses or incorporations with manifestly insufficient share capital followed by restructuring contributions. The more generous exemption
[1] Cf. Federal Council press release dated 19 June 2026 (see HERE).
[2] Cf. SFTA announcement of 22 June 2026 (see LINK).
Tax domicile conflicts are decided at the level of the facts, but the procedural level must not be neglected. Anyone who disregards the rules of evidence, the duties to cooperate or the applicable deadlines risks definitive double taxation or substantial cost consequences despite a sound position on the merits. This article summarises the procedural rules as refined and, in part, tightened by the Federal Supreme Court in 2025 and 2026. The substantive questions are addressed in separate articles on the tax residence of individuals, on the tax residence of companies and on the position in an international context.
Tax domicile proceedings are frequently triggered by the filing of a tax return or by notification of a departure that the previously competent authority is unwilling to accept. For companies, the focus is on transfers of the registered office, on the residence and functions of the members of the governing bodies, or on irregularities in the tax file (for example the absence of rental and personnel expenses at the registered office); investigations may also be prompted by information from third parties or by notifications from other tax authorities. Information from criminal proceedings which the tax authorities have transmitted to foreign prosecution authorities by way of mutual legal assistance may likewise form the basis for tax domicile proceedings.
Where the tax administration harbours a suspicion, a formal request for documents (Aktenauflage) generally follows. In the case of individuals, it may call for floor plans, details of the furnishings, electricity and water consumption figures, or complete records of cash withdrawals and card payments. In the case of companies, it may call for evidence of premises, decision-making processes and presence at the registered office.
The scope of such requests can be considerable and at times appears disproportionate, coming close to a “fishing expedition”. In some cases the authorities also carry out their own enquiries and obtain relevant information – consumption data, for instance – themselves, without disclosing this from the outset.
Anyone contesting a canton’s tax sovereignty is, in principle, entitled to formal tax sovereignty proceedings (also referred to as tax domicile proceedings). The pending assessment or supplementary tax proceedings must be stayed, and the authority must first determine, in a binding tax domicile decision, whether it may tax the person concerned at all. The ordinary legal remedies are available against that decision.
The Federal Supreme Court has abandoned its previous practice as regards the effect of that decision.[1] In the Court’s view, the tax domicile decision is a preliminary or interlocutory decision and does not acquire substantive res judicata effect. The question of tax liability may be raised again when the subsequent assessment or supplementary tax order is challenged. This does not, however, apply without limitation: anyone who allows a tax domicile decision to become final without challenging it must cooperate in the ensuing assessment proceedings and cannot contest tax liability again absent a material change in circumstances. [2]
It is frequently overlooked that cantonal tax domicile proceedings cover only the cantonal and communal taxes. For direct federal tax, the principle of the unity of the place of assessment applies: even where connecting factors exist in several cantons, only one single canton may assess the same taxable person for the same tax period.
Where the place of assessment is uncertain or disputed, it is determined by the Federal Tax Administration (FTA) as soon as more than one canton comes into consideration. Such a determination may be requested by the assessment authority, by the cantonal administration for direct federal tax and by the taxable person. The FTA’s order may be appealed to the Federal Administrative Court.
The cantonal tax and tax appeal authorities have no jurisdiction in this respect. Where a cantonal authority nevertheless determines its own jurisdiction to assess direct federal tax although it is obvious that another canton comes into consideration as the place of assessment, its decision and the appeal decisions confirming it are null and void. It makes no difference whether the canton rules on the place of assessment as the principal issue – by way of a tax sovereignty order – or merely as a preliminary issue within the assessment.[3] The nullity is, however, confined to direct federal tax; the tax domicile decision concerning the cantonal and communal taxes remains unaffected.
In practice, two sets of proceedings therefore run alongside one another: the cantonal tax sovereignty proceedings, through the cantonal instances to the Federal Supreme Court, and the determination proceedings under Art. 108 of the Federal Act on Direct Federal Taxation (DBG), through the Federal Administrative Court. How closely the two strands can be intertwined is illustrated by a recent case in which the taxable person filed an objection against the cantonal assessment and, on the same day, requested the FTA to determine the place of assessment, while cantonal tax domicile proceedings were also pending.[4] No coordination takes place: the FTA may not stay its proceedings until the cantonal proceedings concerning the cantonal and communal taxes have become final.[5]Anyone pursuing the cantonal route alone risks not only that the position on direct federal tax remains unresolved, but also that the appeal is declared inadmissible for want of a challengeable decision. [6]
As a matter of principle, facts that establish or increase a tax liability must be proved by the tax administration, while facts that eliminate or reduce it must be proved by the taxable person. Where a canton claims tax sovereignty for the first time or anew, the burden of proof therefore lies with the tax administration.
For legal entities, tax sovereignty attaches to the registered office or to the place of effective management. Where a canton claims tax sovereignty on the ground that the effective management is located on its territory, it bears the burden of proving this, although the reduced standard of the balance of probabilities suffices for that proof.[7] If it establishes that the registered office in the other canton is a mere letterbox domicile, this constitutes a weighty indicium that the effective management is located on its territory. In that case, the legal entity must adduce counter-evidence (de facto reversal of the burden of proof) and demonstrate that it carries on substantial activities at the registered office or that the effective management takes place there.
For individuals, tax sovereignty attaches to the centre of vital interests. Where a canton claims tax sovereignty for the first time or anew after a number of years, it bears the burden of proving the facts establishing the tax liability, and here too the reduced standard of the balance of probabilities suffices.[8] What is decisive is not a presumption in favour of the previous place of residence but an overall assessment of all indicia: the sole question is where the centre of vital interests was actually located. A transfer of residence does not require, in particular, that all ties to the previous place be severed. It is to be assumed as soon as the ties to the new place prevail on balance. [9]
Since the authorities are frequently unable to establish the relevant facts themselves, they depend on the cooperation of those concerned. Under the case law of the Federal Supreme Court, a certain duty to cooperate exists even before tax sovereignty has been established with final effect. Where the authority identifies sufficient indicia, it is for the person concerned to rebut them. To that extent, the burden of proof gives rise to a de facto duty to cooperate.
In addition, insufficient cooperation in tax domicile proceedings that have been legitimately initiated may, according to settled case law, be taken into account as an indicium to the detriment of the person concerned.[10] Silence can therefore cost more than an uncomfortable disclosure.
Where the circumstances are personal in nature, the duty to cooperate extends even into the private affairs of the shareholder. In the case of one-person companies, that person forms the “epicentre” of the enquiries. Private credit card and bank account statements may therefore, in principle, also be requested.
Failure to comply with the duty to cooperate may be sanctioned by a fine. The ordinary range extends to CHF 1,000, and in serious cases or in the event of a repeat offence to CHF 10,000. In our view, however, there is no breach of procedural duty where the person concerned submits other documents that are objectively suitable for clarifying the tax domicile and the documents called for are no longer available or could be obtained only by disproportionate means.
Where the tax domicile is determined contrary to the taxpayer’s own view and the taxes have already been assessed with final effect in the other canton, actual double taxation arises. Such double taxation is prohibited under constitutional law (Art. 127 para. 3 Cst.) and must be eliminated. As a rule, the route to elimination leads via the Federal Supreme Court, which has the power to set aside assessment orders of the other canton even where these have already become final.
The Federal Supreme Court has recently tightened the formal requirements for lodging an appeal. In a recent judgment it held that the prayers for relief must be framed in “bidirectional” terms.[11]
In addition to the principal prayer directed against the one canton, a complementary alternative prayer directed against the other canton (which has already issued a final assessment) must be filed within the appeal period, together with an application for the refund of, and where applicable interest on, the taxes paid there.
The Federal Supreme Court has expressly abandoned its former practice, under which “no high requirements” were to be placed on the joint challenge to the other canton and an implicit alternative prayer sufficed. A presumption of an implicit joint challenge no longer applies as a matter of course. An alternative prayer submitted after expiry of the appeal period will be disregarded. Anyone taking only one canton to court therefore risks being left to bear the taxes paid in the other canton.
Under the more recent case law, the right to have double taxation eliminated is forfeited only in the event of a qualified abuse of rights, such as the construction of an elaborate web of lies or the misrepresentation of facts. The threshold is high – but conduct contrary to good faith, or even merely unclear conduct, may be taken into account by the Federal Supreme Court when allocating costs:
In a judgment of 23 June 2026,[12] the successful company was ordered to bear all court costs notwithstanding that the assessments of the canton of its registered office were set aside; in addition, it had to pay the canton of Zug, against which it had prevailed, a party costs award of CHF 2,600. The same applies to a judgment of 22 July 2026:[13] the Federal Supreme Court rejected the second canton’s plea of forfeiture and set aside that canton’s final assessment – yet the successful taxpayer bore the court costs (CHF 3,000) and was awarded no party costs. Success on the merits therefore offers no protection against the cost consequences where a party’s own conduct in the proceedings gives cause for criticism.
Some cantons have included the elimination of intercantonal double taxation in their tax legislation as a statutory ground for revision.[14] It was long disputed whether double taxation could, beyond this, be eliminated on the basis of the Federal Constitution by way of an “extra-statutory” revision. The Federal Supreme Court provided clarity on this point in a judgment of 1 May 2025.[15] No entitlement to an extra-statutory ground for revision can be derived from the Federal Constitution. Apart from the statutory grounds for reopening a final assessment (revision, correction and supplementary taxation), there are no others.
The cantons are nevertheless free to reconsider final assessments in cases of intercantonal double taxation for as long as the route to the Federal Supreme Court remains open. Unlike revision, however, there is no entitlement to have the request taken up by the authority at all.
The cantons may, moreover, subject reconsideration to a time limit; a period of 90 days from notification of the other canton’s tax domicile decision is compatible with federal law. Anyone intending to rely on reconsideration must therefore keep this deadline in view from the outset.
If the tax domicile is not situated at the place previously declared and no taxes have been paid at the relevant place to date, the objective elements of the offence of tax evasion may be made out. The fact that the taxes were properly declared and paid elsewhere makes no difference. Only culpable conduct is punishable, however; in tax domicile cases there will as a rule – if at all – only be attempted tax evasion, the punishability of which requires intent. In practice, that proof is likely to succeed only in exceptional individual cases.
Nevertheless, some tax authorities combine tax domicile proceedings (in particular in the context of supplementary tax proceedings) with the opening of penalty proceedings; and where the taxable person has behaved improperly, the Federal Supreme Court expressly refers the cantons to the instruments of criminal tax law. There is thus a risk that, even where (legal) double taxation has been successfully eliminated, an economic double burden will remain if a fine for tax evasion is imposed. Finally, it should be noted that a fine exceeding CHF 5,000 in respect of direct federal tax entails the risk of an entry in the criminal record.
The case law of 2025 and 2026 has significantly sharpened the procedural requirements in tax domicile cases. The following basic rules can be derived for practice:
In the event of a dispute at the latest, it is advisable to involve a specialist – because in tax domicile proceedings the conduct of the case increasingly determines the outcome. Here too, it is better to be safe than sorry.
[1] Vgl. BGE 151 II 657.
[2] Vgl. Urteil BGer 9C_602/2024 vom 25. März 2025.
[3] Vgl. BGE 150 II 244.
[4] Vgl. Urteil BVGer A-6994/2025 vom 21. Juli 2026.
[5] Vgl. Urteil BVGer A-6987/2025 vom 3. Februar 2026.
[6] Vgl. Urteile BGer 9C_706/2024 und 9C_154/2025 je vom 27. August 2025.
[7] Vgl. BGE 150 II 321.
[8] Vgl. Urteil BGer 9C_157/2025 vom 19.3.2026.
[9] Vgl. Urteil BGer 9C_73/2025 vom 2. April 2026.
[10] Vgl. zuletzt Urteile BGer 9C_702/2024 vom 13. Januar 2026; 9C_558/2024 vom 29. April 2025 und 9C_570/2024 vom 29. April 2025.
[11] Vgl. Urteil BGer 9C_652/2025 vom 9. Juni 2026.
[12] Vgl. Urteil BGer 9C_452/2025 vom 23. Juni 2026.
[13] Vgl. Urteil BGer 9C_391/2025 vom 22. Juli 2026.
[14] Konkret: Appenzell Ausserrhoden, Luzern, St. Gallen, Solothurn und Tessin.
[15] Vgl. BGE 151 II 673.
