SWITZERLAND: To ensure financial stability, the Federal Council decided at its meeting on 29 October 2020 to exempt the interest on too-big-to-fail (TBTF) instruments from withholding tax until the end of 2026. The dispatch on this law will now go before Parliament.
TBTF instruments are an important tool used by banks to meet regulatory capital requirements. Therefore, Parliament has already exempted the interest on TBTF instruments from withholding tax until the end of 2021. By extending the exemption for another five years, the Federal Council is seeking to further strengthen financial stability.
In the Federal Council's view, a more comprehensive reform of withholding tax (to strengthen the debt market) should be a medium-term priority. The Federal Council has already conducted a consultation in this regard, with controversial results. It will therefore not be possible for this reform to enter into force in 2022. Extending the withholding tax exemption for TBTF instruments from 2022 to the end of 2026 provides the banks with certainty in this area. This approach has been welcomed by the majority of consultation participants.