International Business Articles
FTA, Late Interest, Re-Payment
By Thomas Lindner, Tax Partner
On 15 February 2017, the amendment to the Federal Law on Withholding Tax enters into force. Within one year from the date of entry into force, companies are now entitled to demand repayment of interest, which they had to pay because they had reported intra-group dividend payments after expiry of the 30-day period of the Federal Tax Administration (FTA).
The retroactive effect of the new provision applies to matters which arose before the entry into force of the amendment in the notification procedure. Unless the tax or default interest is already statute-barred or already legally fixed before 1 January 2011.
Correction of the previous practice for withholding tax
The amendment to the law passed by Parliament on 30 September 2016 and is based on the Gasche parliamentary initiative (13,479). The federal court ruled that the so-called reporting procedure for intra-group dividend distributions can only be claimed if the payments are reported within 30 days after the due date of the FTA. The reporting procedure facilitates dividend payments within the group by not paying any withholding tax on such distributions. If a company missed this deadline, the withholding tax was due and interest on arrears fell. The tax paid could, however, be reclaimed, but not the default interest.
No interest due in the future
The filing deadlines remain unchanged. In the future, however, the notification procedure may still be applied after expiry of the 30-day notification period provided that the material requirements are met. However, no default interest is payable. The late notification will be punished with a fine of 5000 francs in maximum.
Repayment of paid interest
Companies, which have already paid late interest, but would be entitled to apply the notification procedure according to the new rules, need to file a request for repayment with the FTA.
A form was published to file such request (Form 1 RVZ / Snapform Viewer). The repayment will only be done based on this form.
Within one year from the date of entry into force, companies are now entitled to demand repayment of interest, ie until 15 February 2018. No repayment will be performed without request.
Cancellation of not yet paid invoices
The FTA will cancel not yet paid invoices. The companies will receive a confirmation in writing.
Suspension of objections
If objections had been filed against invoices, it is recommended to file a corresponding request with the FTA.
Open court cases (Bundesverwaltungsgericht / Bundesgericht)
For open court cases, it is also recommended to file a corresponding request with the FTA in order fulfill respective deadlines. However, a decision by the FTA on the repayment will only be possible after a court ruling reaches legal effect.