revised swiss dividend notification procedure [EN]

gone with the old strict practice of punishing the corporations

the easy answer

as we write our blog for enterpreneurs and business managers, you might not immediately be interested in the deep legal explanations. so let us start with an easy example of the old and new practice for dividend declarations. in the old practice, the police officers were stopping cars driving downhill and gave the drivers a big fine for not adhering to the speed limit for which the sign was hidden behind the bushes. in the new practice, drivers get a warning to stop speeding going forward and pay a small administrative fee. which one would you prefer? yes, the new practice !

the swiss federal tax authorities (police officers in our example) are more friendly now, instead of overly strict. so for dividends you have some more time to tell the tax authorities about it and you will not get a outrageous financial impact from it. this also applies to those hidden dividends that your bookkeeper, accountant or auditor may warn you about (read more below on the perculiar case of deemed dividend).


until 2017, swiss companies were faced with strict rules around dividend declarations in switzerland. failure to notify the tax authorities within 30 days, immediately had severe consequences. under the revised law, application of the dividend notification procedure remains possible even if the 30-day filing period is not observed. as a consequence, late filing of the dividend notification forms no longer results in a denial of the notification procedure and no longer has default interest consequences. this change will apply with full retroactive effect.

previous practice

if the swiss dividend payer failed to file the declaration and notification forms within the 30-day period, the swiss federal tax administration adopted a very restrictive practice and requested the remittance of the full swiss withholding tax of 35% plus levied interest for late payment (5% per year). the Swiss withholding tax was then partly or fully recoverable by the shareholder in the course of the ordinary refund procedure, however, the interest for late payment constituted a final cost for the swiss taxpayer.

the perculiar case of deemed dividend

particularly, in cases of deemed dividends, many companies were unaware of the fact that their payments to shareholders (for instance excess interest on intercompany loans) would later be marked as deemed dividends and consequently, were unable to timely declare these deemed dividends within a 30-day period. in practice, when the swiss federal tax administration assessed that deemed dividends were paid, this immediately had significant tax consequences. for instance, excess interest paid to shareholders could be marked as deemed dividends paid. the net amount of excess interest was determined to be dividend paid, e.g. the amount net of withholding taxes. the gross amount was then calculated (“excess interest”/ (1-35%)) and thereon a 35% withholding tax of the gross dividend was calculated; e.g. 53% of the amount of excess interest paid. in addition, penalty interest quickly added up to large amounts as a result of the long delay between payment of the excess interest compared to the timing of detection. not without good reason, this was an important attention point for many accountants and auditors until recently.

new practice

gone with the old strict practice of punishing the corporations, mostly unaware of their fault. the revised regulations include the following easing for swiss corporate taxpayers:

1) the 30-day period is redefined as an administrative deadline, i.e., the application of the notification procedure remains possible even if the dividend is notified after the 30-day period provided the substantive conditions are fulfilled. as a consequence, non-compliance with the 30-day filing requirement by a swiss taxpayer qualifying for the notification procedure no longer leads to a denial of the notification procedure.

2) no interest for late payment applies as long as the substantive requirements for the notification procedure are met and the dividend is declared and notified to the swiss federal tax administration (regardless of the 30-day period).

3) late filing of the declaration and notification forms is sanctioned by means of a commensurate administrative fine which is limited to chf 5,000.

4) the revised law applies with retroactive effect to all cases where the claims for tax and/or interest for late payment have not passed the statute of limitation or have become legally effective prior to 1 january 2011.

what’s next?

in our experience, we still see companies carrying risk reserves for amounts that are no longer due. instead of carrying these reserves, corporations and their advisors should focus on filing the appropriate forms now. proactively approaching the tax authorities will help greatly to be in good standing. swiss tax payers can now file the forms, even when the 30-day deadline has passed. if applied, the maximum administrative fine may be painful, but definitely much better than the previous practice.

let us know if we can help you or to see how the above applies to you.