Interest on bonds issued by Swiss companies is currently subject to a withholding tax of 35%. Such bonds cannot be placed on the international capital market. Exceptions currently exist only for regulatory instruments of systemically important banks (AT1 bonds and TLAC). Therefore, bonds of Swiss groups are usually issued via foreign group companies. The proposed amendment to the law will make it possible to issue bonds from Switzerland without withholding tax consequences.

Withholding tax on bonds shall be abolished completely. Thus, not only capital market issues will benefit from the planned reform, but also credit financing, since the restrictions on syndication (10/20 non-bank rules) will no longer be necessary.

It is envisaged that from the entry into force of the amendment, not only new issues will benefit from the exemption, but also bonds already issued with reference to future interest due dates.

However, the withholding tax on interest from bank deposits will be retained. In addition, bonds secured by domestic real estate are still subject to a withholding tax of 13% to 33%.

Income from domestic investment funds also continues to be subject to withholding tax of 35%.

The turnover stamp duty of 0.15%, which is levied on secondary market transactions with domestic bonds, is also to be abolished. However, the turnover stamp duty of 0.3% on bonds of foreign issuers will be retained. Domestic bonds will therefore enjoy a tax privilege in the future.