The Federal Tax Administration of Switzerland has published two separate circulars regarding safe harbor interest rate limits applicable to shareholder and related party loans in 2021. The rates may vary depend on whether the financing is in Swiss currency or in a foreign currency.
The minimum interest rates for loans in CHF granted to shareholders or related parties are on loans financed through equity – at least 0.25%; and on loans financed through debt – at least actual interest expense plus 0.50% for amounts up to CHF 10 million, plus 0.25% for amounts exceeding CHF 10 million. Loans from shareholders or related parties:
- Real estate loans: at most 1.0% to 2.25% depending on the nature of the property and the amount financed.
- Business loans received by industrial and commercial entities: at most 3.0% for amounts up to CHF 1 million, and 1.0% for amounts exceeding CHF 1 million; and holding and asset management entities – at most 2.50% for amounts up to CHF 1 million, and 0.75% for amounts exceeding CHF 1 million.
Financing in Foreign Currency:
For loans to or from shareholders or related parties:
- Financed through debt: actual interest expense plus 0.50%, with a minimum of 0.25% if in EUR, 1.25% if in USD, and between 0.50% and 6.50% for other currencies; and
- Financed through equity: 0.25% if in EUR, 1.25% if in USD, and between 0.50% and 6.50% for other currencies.
