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Swiss Safe Haven Interest Rates for 2025

What are the tax-recognised interest rates for intra-group financing in 2025 and what factors will determine their level?

In the case of loans and advances (hereinafter referred to as “loans”) granted within a group of companies or between a company and a related party, e.g. a shareholder, the question always arises as to what interest rate is appropriate. In principle, the Swiss tax authorities accept the interest rate agreed between the related parties, provided that it is in line with the market. For loan relationships within Switzerland or for loans granted by Swiss companies to related parties domiciled abroad, the “safe haven interest rates” of the Federal Tax Administration (FTA) can also be used as a basis for Swiss tax purposes. These published interest rates are assumed to be in line with the market.

The FTA’s circulars determine minimum interest rates for loans granted by a company domiciled in Switzerland to its shareholders or related parties (active loans). If, on the other hand, such a Swiss company receives a loan from its shareholders or related parties (liabilities), maximum interest rates are provided. The applicable interest rate essentially depends on whether the loan is an asset or liability loan and whether the loan is granted in Swiss francs or a foreign currency.

In addition to these “safe haven” interest rates, it is also possible to apply a different interest rate if it can be proven that this interest rate is in line with the market. Proof can be provided, for example, by means of a study or on the basis of the concrete financing of a loan (e.g. in the case of back-to-back loans). In order to check whether a loan interest rate stands up to the third-party comparison, the Swiss tax authorities also rely on the transfer pricing guidelines of the Organisation for Economic Co-operation and Development (OECD), in particular on Chapter X on financial transactions contained therein.

It is important to note that the “safe haven” interest rates published by the FTA are binding only for the tax authorities in Switzerland. In the case of loans granted to companies domiciled abroad, it is therefore important to ensure that the interest rates are also accepted by the tax authorities abroad. Most foreign tax authorities also base their assessment on the above-mentioned transfer pricing guidelines of the OECD and accept the interest expense if it stands up to a third-party comparison.

Furthermore, the financing situation of the borrower must also be taken into account. In this context, it must always be checked whether an independent third party would also grant the borrower a loan. In particular, the borrower must not be underfunded. To determine whether a company is underfunded, the Swiss and foreign tax authorities rely on so-called “thin cap rules”, which are used to calculate the minimum equity capital of a company. If, on the basis of these schematised calculation methods, it is determined that the group company receiving the loan does not have sufficient equity, part of the loan granted is reclassified into the borrower’s equity (hidden equity). As a result, interest paid on this part of the loan is not deductible for tax purposes. For tax purposes, this part of the interest is treated as a dividend payment. In addition, certain countries, such as Germany, only allow interest expenses in a certain ratio to net profit or EBIT(DA).

Loans in Swiss francs

In the case of loans in Swiss francs, the interest rates published by the FTA in an annual circular apply to such advances or loans. The following interest rates refer to the year 2025.

Minimum interest rate: If the loan is granted by a Swiss company to a related party or company, the interest rate is required to cover at least the lender’s cost price, e.g. the interest rate of debt financing, plus a margin. However, the interest rate must be at least 1.00%.

Margin and minimum interest rate for the year 2025 according to “Safe Haven” Rules:

CHF Loan

Margin at cost

Interest rate

Up to and including CHF 10 million

0.50 %

1.00 %

From CHF 10 million

0.25 %

Maximum interest rate: If a Swiss company takes out a loan from a related party, the amount of the maximum interest rate accepted for tax purposes differs depending on whether (i) it is a real estate or a business loan and (ii) whether the loan is granted to a trading and manufacturing company or to a holding and asset management company.

If the borrower is a trading and manufacturing company, the following “safe haven” interest rates apply to a business loan for the year 2025:

Maximum interest rates for operating loans granted to trading and manufacturing companies for the year 2025 according to “Safe Haven” Rules:

CHF Loan*

Safe Haven Interest Rate

Margin at minimum interest rate

Up to CHF 1 million

3.50 %

2.50 %

From CHF 1 million

1.75%

0.75 %

If the borrower is a holding and asset management company, the following “safe haven” interest rates apply to an operating loan for the year 2025:

Maximum interest rates for operating loans granted to holding and asset management companies for the year 2025 according to “Safe Haven” Rules:

CHF Loan*

Safe Haven Interest Rate

Margin at minimum interest rate

Up to CHF 1 million

3.00 %

2.00 %

From CHF 1 million

1.50%

0.50 %

* For the calculation of the aforementioned limits, the loans of all participants and related parties must be added together.

Loans in foreign currency – Example of a loan in euros

For loans in foreign currencies, the interest rates also published by the FTA in an annual circular apply to such advances or loans.

Minimum interest rate: If the loan is granted by a Swiss company to a related party or company, the interest rate must cover at least the lender’s cost of ownership, i.e. the interest rate of the debt financing, plus a margin. However, the interest rate must be at least equal to the minimum interest rates for loans in foreign currency published by the FTA. For such loans, the FTA provides for different “safe haven” interest rates depending on the currency. These are published annually in the FTA’s circular. If the applicable interest rate for a foreign currency is below the minimum interest rate for Swiss francs, the minimum interest rate for Swiss francs must be applied. From the lender’s point of view, it is again relevant that the interest rate covers the cost of debt financing plus a margin, but at least reaches the minimum interest rate intended for the foreign currency. For loans or advances in euros, the published minimum interest rate for the year 2025 is e.g. 2.50%.

Margin and minimum interest rate for the year 2025 according to “Safe Haven” rules for loans granted in euros without foreign currency risk (e.g. lender has euros as functional currency):

Foreign currency loans

Margin at cost

Interest rate

Up to and including CHF 10 million

0.50 %

2.50 %

From CHF 10 million

0.25 %*

*If there is a foreign currency risk, the minimum margin is always at least 0.50%

Maximum interest rate: If a Swiss company takes out a foreign currency loan from a related party, the amount of the maximum interest rate is determined on the basis of the minimum interest rate defined for the currency and the permissible margin at the minimum interest rate. The allowable margin is identical to the margin that applies to loans in Swiss francs. If a Swiss company takes out a loan in foreign currency, it must also be explained to the Swiss tax authorities why no obligation was entered into in low-interest Swiss francs.

Maximum interest rates for operating loans granted to trading and manufacturing companies in euros for the year 2025 according to “Safe Haven” Rules:

Foreign currency loans*

Safe Haven Interest Rate

Margin at minimum interest rate

Up to CHF 1 million

5.00 %

2.50 %

From CHF 1 million

3.25 %

0.75 %

Maximum interest rates for operating loans granted to holding and asset management companies in euros for the year 2025 according to “Safe Haven” Rules:

Foreign currency loans*

Safe Haven Interest Rate

Margin at minimum interest rate

Up to CHF 1 million

4.50 %

2.00 %

From CHF 1 million

3.00 %

0.50 %

*For the calculation of the aforementioned limits, the loans of all participants and related parties must be added together.

As mentioned above, the “safe haven” interest rates are only binding for the Swiss tax authorities. If the borrower is a company based in the EU, it should also be noted that the application of unilateral “safe haven” interest rates under the so-called “Hallmark” E.1. disclosure rules of the European Union (reporting obligation for certain cross-border arrangements or DAC 6). Swiss companies that apply the Swiss “safe haven” interest rates to transactions with group companies domiciled in an EU member state should therefore be aware that these transactions may be reportable in the EU.

Summary and recommendation

The “safe haven” interest rates, which are published annually, are a welcome administrative relief for Swiss companies that grant loans to or receive loans from related parties. The “safe haven” interest rates are generally binding for the tax authorities in Switzerland. However, according to the Federal Supreme Court’s landmark decision published last year, the Swiss tax authorities are only bound by the minimum and maximum interest rates published by the FTA if a company adheres to these interest rates itself (9C_690/2022 of 17 July 2024). If affiliates or individuals do not adhere to the “safe haven” interest rates, tax authorities may determine the level of the market-conforming interest rate in other ways, but the tax authorities must always provide proof of the third-party comparison.

However, as soon as loans are granted to companies domiciled abroad, the foreign tax laws must be observed and the consultation of a local tax advisor should be considered.

In individual cases, e.g. in the case of loans granted by companies domiciled abroad whose interest rate exceeds the “safe haven” rates or in order to do justice to the individual financing situation, the market-compliant interest rate must be determined on the basis of the specific circumstances. The Swiss tax authorities accept interest rates that are above or below the “safe haven” interest rates, provided that it can be proven that they stand up to the third-party comparison. From our experience, it is worthwhile to contact the responsible cantonal tax administration in such situations and to record the permissible interest rate or its calculation in writing in a tax ruling. Questions regarding the calculation of the tax-required equity capital can also be clarified at the same time.

Since the interest rates in the FTA’s circulars change annually, we recommend that a clause be included in intra-group loan agreements according to which the agreed interest rate can be adjusted annually. If contracts provide for such a clause, it must be ensured that the interest rates used are actually reviewed annually.

We will be happy to assist you in drafting financing contracts, determining the tax-permissible interest and confirming the tax consequences of planned financing by obtaining tax rulings.

By Vischer, Switzerland, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact switzerland@transatlanticlaw.com

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