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Thomas Nabholz
On 29 and 30 January 2024, the Swiss Federal Tax Administration published the 2024 editions of the two circulars on safe harbour interest rates. The revised rates in the circulars reflect the sharp drop in long-term interest rates in the major currency areas in the last quarter of 2023. The rate for EUR denominated loans declined to 2.50 % (previous year: 3.00 %), the rate for GBP dropped to 3.75 % (previous year: 5.25 %). The JPY rate remains unchanged at 0.50 %, while the USD rate climbs to 4.25 % (previous year 3.75 %).
The minimum interest rate for CHF loans to related parties remains unchanged at 1.50 % in 2024, to the extent refinanced by equity. The maximum rate for borrowing from related parties by operating entities corresponds to the weighted average of 3.75 % (unchanged) for the first CHF 1 million of related party borrowing and 2.00 % (previous year: 2.25 %) for any additional amounts of related party borrowing. As usual, any rates beyond the safe harbour should be accepted to the extent substantiated by third-party comparison.
An important side aspect is that the use of unilateral safe harbour rates constitutes a ‘hallmark’ under EU Council Directive 2018/822 (DAC 6). This means that relying on the SFTA rates for cross-border financing to/from the EU – if permissible at all under foreign law – may trigger reporting obligations.
The standard capitalization rate used by tax authorities for business valuations has also moved downwards again. This interest rate is based on the moving average of the market interest rates of the three previous years. The standard rate for valuations with a balance sheet date from 1 January 2023, as published in December 2023, is now 7.75 % (previous year: 8.50 %). The change leads to higher valuations of shares in non-listed companies.
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