2022 Safe Harbour Interest Rates for Swiss Tax Purposes

On 27 and 28 January 2022, the Swiss Federal Tax Administration SFTA posted the 2022 editions of the two circulars on safe harbour interest rates. The rates for CHF denominated loans between related parties remain on the same levels as ever since 2015.

The minimum lending rate is 0.25% (if refinanced by equity). The maximum borrowing rate for operating entities corresponds to the weighted average of 3.00% for the first CHF 1 million of related party borrowing and 1.00% for any additional amounts of related party borrowing. As usual, any rates beyond the safe harbour should be accepted to the extent substantiated by third-party comparison.

The table of the rates for loans in foreign currencies reflects the current turnaround of interest rates in most of the major economies. The rates for EUR and GBP loans climb 25 bps, the USD rate gains 75 bps. JPY and CNY rates stay flat.

Important to note: unilateral safe harbour rates are a ‘hallmark’ under EU Council Directive 2018/822 (DAC 6). I.e., relying on the SFTA rates for cross-border financing to/from the EU – if permissible at all under foreign law – may trigger reporting requirements.

A major change has recently occurred to the standard capitalization rate used by tax authorities for company valuations. Due to a change in the computation method, the standard capitalization rate for 2021, as published in December 2021, amounts to 9.5%. Between 2015 and 2020, it was 7.0%. The change leads to a significantly lower valuation of shares in non-listed companies.

Click here for the 2022 circular on safe harbour interest rates for CHF denominated loans.

Click here for the 2022 circular on safe harbour interest rates for loans in foreign currencies.