The Swiss Federal Tax Administration has published two circulars detailing the safe harbor interest rate limits for shareholders on 27 January and related party financing on 28 January in 2025. The rates vary depending on whether the financing is in Swiss francs or foreign currencies.
For financing in Swiss francs, loans to shareholders or related parties financed through equity must have a minimum interest rate of 1.0%. Loans financed through debt will have an interest rate based on the actual expense plus a margin, starting at 0.50% for amounts up to CHF 10 million, and 0.25% for amounts exceeding CHF 10 million, with a minimum of 1.0%.
Loans from shareholders or related parties are subject to specific limits depending on the nature of the loan. For real estate loans, the rate can range from 1.25% to 2.50%. For business loans, commercial companies can pay a maximum of 3.5% for amounts up to CHF 1 million, while holding and asset management companies face a rate cap of 3.0% for amounts up to CHF 1 million.
For financing in foreign currencies, equity-financed loans are subject to rates ranging from 2.50% for EUR to 4.25% for USD, with other currencies having rates between 1.25% and 15.50%. Debt financing will require actual interest expenses plus a 0.50% margin, with the same minimum rates applied depending on the currency.
The tax administration allows deviations from the safe harbor rates if it can be demonstrated that the rates are arm’s length and appropriate for the circumstances. Otherwise, excess interest paid will be considered a hidden profit distribution, subject to tax as a deemed dividend.
