Swiss Tax Aspects of Debt Financing: A Guide on Contractual Arrangements Required to Mitigate Swiss Interest Withholding Tax and Their Practical Implications

Abstract

Switzerland is one of the few European countries to apply a strict set of complex tax rules to debt financing which may even apply if a debt instrument is issued by a non-Swiss issuer. For corporate and banking lawyers involved in debt financing transactions with a nexus to Switzerland, dealing with Swiss withholding tax rules as well as the corresponding language in the loan documentation and agreements is inevitable. This article focuses on providing an overview to non-tax focused lawyers in order to facilitate the understanding of the Swiss interest withholding tax system applicable to debt financings and to raise awareness of recent changes in practice introducing more relaxed safe harbours. debt financing, Swiss withholding tax reform, tax law