Swiss Withholding Tax: Extension of the Notification Procedure to Liechtenstein Foundations and Establishments.

Stefan Quaderer | Mato Bubalovic

The topic at hand

Dividend distributions made by Swiss companies are subject to Swiss withholding tax of 35%. In principle, the withholding tax must be paid by the distributing company and reclaimed by the recipient of the dividend in the refund procedure. In the interest of administrative and liquidity-related simplification, it is possible to replace the payment and reimbursement of withholding tax between qualifying related companies by the application of the exemption at source (so-called “notification procedure”; Meldeverfahren).

On 4 May 2022, the Swiss Federal Council adopted amendments to the Withholding Tax Ordinance in this regard, which will enter into force on 1 January 2023.

Extension of the scope to (Liechtenstein) foundations and foundation-like establishments (Anstalt)

Currently, the notification procedure is limited to corporations and cooperatives. As of January 2023, the scope of application of the notification procedure will now be extended to all legal entities. In the domestic context, this means, for example, that foundations and associations may also apply for the notification procedure.

In the international context, the application of the notification procedure now requires a "company" within the meaning of the applicable double taxation agreement. Consequently, Liechtenstein foundations and foundation-like establishments also fall within the extended scope of the notification procedure, provided that the general requirements for a withholding tax refund are met (in particular, companies that are taxed as private asset structures under Art. 64 of the Liechtenstein Tax Act are denied residence under the double taxation agreement with Switzerland).

Reduction of the required participation quota in a Swiss group relationship to 10%

The application of the notification procedure between qualifying related Swiss entities currently still requires a 20% participation. From 1 January 2023, a participation of 10% will suffice.

For international group relationships, a participation quota of 10% already applies in principle, unless the applicable double taxation agreement provides for a different participation ratio for tax relief. If no minimum participation is stipulated in a double taxation agreement, the minimum participation rate of 10% will apply as of 1 January 2023, whereas it has been 20% up to now.  The double taxation agreement between Switzerland and Liechtenstein also provides for a participation quota of 10%.

Extension of the withholding tax clearance (Form 823) in international relations to 5 years

The application of the notification procedure in international group relationships requires an authorisation, which is valid for 3 years. As of 1 January 2023, newly issued notification certificates will be valid for 5 years before they have to be renewed.


We recommend that shareholders of Swiss participations verify whether the benefits of the new regulations can be claimed as of 1 January 2023. In particular, Liechtenstein foundations and foundation-like establishments will have the opportunity to benefit from this administrative relief and the associated liquidity advantages as of next year.