Base rates for CHF denominated loans (see circular letter) remained unchanged from previous years. Due to the current interest rate environment, base rates for non-CHF denominated loans (see circular letter) have changed in some cases. Most importantly, the EUR safe harbor rate has been lowered even further to 0.25% and the USD safe harbor rate has been reduced to 1.25%. Due to the reduced rates for EUR and USD denominated loans, we expect more scrutiny and follow-up questions by Swiss tax authorities during tax assessments or audits if Swiss taxpayers apply higher rates.
For non-CHF denominated loans the interest spread (taxable margin) subject to tax on Swiss level is still 50 bps (i.e., interest spread between related party loan receivables and payables).
The possibility to add an interest spread to the maximum rate is maintained. For loan amounts up to 1 million Swiss taxpayers can add a spread of 2.75% (operating activities) or 2.25% (holding activities), for loan amounts exceeding 1 million a spread of 0.75% (operating activity) or 0.50% (holding activity). For instance, for large USD denominated loans the weighted average rate could be approx. 2.00%, i.e., 1'000'000 x [1.25% + 2.75%] + (principal amount ./. 1'000'000) x [1.25% + 0.75%].
Due to the reduced rates for EUR and USD denominated loans, we expect more scrutiny and follow-up questions by Swiss tax authorities if Swiss taxpayers apply higher rates.
Furthermore, the application of unilateral safe harbor rates falls under hallmark E of the DAC 6 mandatory disclosure rules of the EU. Swiss companies applying the Swiss safe harbor interest rates on transactions with group companies domiciled in an EU member state should therefore be aware that these transactions might be reportable under DAC 6.
You can check the Swiss safe harbor interest rates for Swiss Franc (CHF) denominated transactions and for Non-CHF denominated transactions in the pfd-version.