Switzerland eases rules on dividend tax
When a subsidiary pays a dividend to its parent company the dividend withholding tax that is due can be limited by application of a double tax treaty. In most countries the reduction of the withholding tax can be applied already by the subsidiary when it pays out the dividend.
Switzerland was one of the few exceptions to that rule. When a Swiss subsidiary paid out a dividend, the company should withheld 35% withholding tax in all cases. If the parent company was entitled to a lower rate (for dividend paid to a Dutch parent the rate is 0%) this company must reclaim the excess tax withheld.
This time-consuming process can now be avoided! As from January 2005 Swiss companies can distribute dividends and immediately apply the correct dividend withholding tax rate. The Swiss company has to meet certain formal obligations and a reporting procedure. Dividends to a Dutch parent can thus take place without any withholding.
Elaborating to this development Fisconti Tax Consulting filed a request with the Dutch Ministry of Finance, asking to apply the same simplified procedure for dividends paid by a Dutch subsidiary to its Swiss parent.
