On 29 August 2011 it was reported that changes in withholding tax should allow Swiss companies to issue their bonds under competitive conditions in Switzerland, according to the Swiss federal government, which said that the changes would also apply to the newly created contingent convertible bonds.
Under new proposals announced on August 24, 2011 Switzerland will switch from the ‘debtor principle’ to the ‘paying agent principle’ in the case of withholding tax on interest from bonds and money market paper. This means that in future, the Swiss paying agent and not the issuer should levy the tax. In addition, only interest payments to natural persons domiciled in Switzerland will be subject to the Swiss withholding tax, including interest derived from foreign bonds. Domestic and foreign investors who are not subject to income tax in Switzerland may be exempted from withholding tax.
The legislative amendments could come into force on January 1, 2013 at the earliest.
