Statute of Limitation for Swiss Withholding Tax Reclaims – Clarifications from Swiss Tax Authorities

Summary

On 13 September, in accordance with the Swiss legal provisions, the Swiss Tax Authorities issued an explicative note regarding the statute of limitation applicable in Switzerland when an informal decision (in absence of a formal decision) is taken by the Tax Authorities on withholding tax refunds.

In Switzerland, the standard rule allows the Taxpayer to claim the withholding tax refunds until three years after the distribution year of the income, except if a specific provision in the Double Tax Treaties applies. This period of three years corresponds to the expired date of the withholding tax refunds rights and cannot be interrupted or extended.

Following the issuance of the explication note, the Tax Authorities have clarified that a limitation period of five years is also applicable which starts to run when the Taxpayer exercised his refund right of three years.

Concretely the Taxpayer must submit a claim within three years after the distribution year of the income. In addition, the limitation period of five years begins the day following the claim submission. This rule is also applicable when additional documents are provided to the Tax Authorities to complete the claim initially filed.

The explicative note confirms that any informal decision or any request of additional information/documents by the Tax Authorities does not interrupt the limitation period of five years.

Only the claimant has the right to interrupt by providing additional documents considering that the first submission took place within the three years.

Illustrative example:

• Swiss dividend payment on 15/01/2019
• Claim filed to the Swiss Tax Authorities (SFTA) on 31/01/2019
• SOL period (3 years) end on 31/12/2022
• Initial statutory limitation period (5 years) end on 01/02/2024
• Informal decision from the SFTA on 01/09/2021
• Additional documentation submitted by the Taxpayer on 15/09/2021
• Statutory limitation period (5 years) end on 16/09/2026

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Impact on investors

All non-residents investing in Switzerland are impacted by this measure.
The effects of the change are immediate.

Action(s) required

The Taxpayer may consider filing tax reclaims in Switzerland within the statute of limitation of three years to safeguard the rights to refunds.

The limitation period of five years is applicable each time the taxpayer provides additional information/documents to support the claims already submitted to the Tax authorities.

As a reminder, some Double Tax Treaties have specific provision regarding the claim certification (i.e. the tax form should always include an administrative certificate of the State of which the taxpayer is a resident, with respect to the fulfilment of the conditions for the unlimited tax liability in that State).

If this condition is not met when the claim is filed, the Tax Authorities will not accept any tax certificate submitted after the statute of limitation of three years.

For further details, please find the link of the newsletter published by Deloitte Switzerland:
https://blogs.deloitte.ch/tax/2022/10/swiss-wht-reclaims-a-recent-sfta-practice-guidance-on-the-statutory-limitations-provides-clear-guida.html

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