Increase in interest rates for advances and loans
Attention, the tax-approved interest rates for advances or loans to participants or related third parties have risen sharply as of 01.01.2023. Do you have to take any action?
If related parties or shareholders take out loans from a company, then these loans usually were subject to an interest rate of only 0.25% for several years. This led to the fact that in some cases larger loans were left standing because the interest was negligible. Also, in the case of succession arrangements, we have many cases where the tax authorities demanded a minimum interest rate in accordance with the respective circular regarding tax-recognized interest rates for advances or loans.
Since 1 January 2023, loans or current accounts in Swiss francs must be charged interest at a new rate of 1.5%. This is 6 times the previous interest rate. If you also have such loans in your books, the question now arises whether dividends are to be paid out or other refinancing can be carried out in order to avoid these interest charges. If the loan is financed with borrowed capital, an even higher interest rate may have to be applied.
However, the maximal possible interest rates that companies pay for loans from related parties or shareholders have also increased significantly. For real estate and operating loans, 2.0% to 3.5% are now permitted (previously 1% to 3%). The amount depends on the type of loan granted. If the borrowed capital is considered as hidden equity, then this part may still not be subject to interest.
If it can be shown that the agreed interest rates correspond to a third party comparison, interest rates can also be applied which differ from the interest rates according to the federal guidelines. However, the tax authorities are very cautious and set high requirements to prove this.
If necessary, now is the time to check whether the existing loan agreements comply with the new regulations or whether refinancing should be performed.
André Hegglin will be happy to advise you on this and help you find a solution that makes sense from a tax point of view.
+41 41 226 30 56
