The capital range is a new option for increasing/decreasing capital which means 50% increases/decreases in capital are possible within a five-year period. This amendment has also made it necessary to update the law governing withholding tax and stamp duty.
- Where contributions and premiums are made within a capital range, only the portion of reserves that exceeds the repayments of reserves within the same capital range are deemed capital contribution reserves (KER).
- As a result of this net principle, the KER cannot necessarily be confirmed annually any more, but only at the end of the term of the capital range. Details of implementation are expected in the new version of Circular 29c.
- The net principle also applies to issuance tax. In other words, issuance tax only has to be paid on the net amount at the end of the term of the capital range. Needless to say, this is only the case if a capital increase has taken place and the threshold of CHF 1 million has been exceeded.
Restriction on the purchase of own shares; f more than 10% of the capital range is acquired, this is permissible provided the position is reduced to a maximum of 10% again within two years. Reputable commentators are of the view that this should not trigger any consequences for withholding tax, but the relevant Circular 5 is still being revised.
The ability to denominate share capital in foreign currency has resulted in the need to deal with capital contribution reserves that are also in foreign currency. Existing capital contribution reserves must be converted from CHF into the chosen foreign currency at the applicable rate of the day under commercial law.
There is also a simplification in tax collection. With financial statements in a foreign currency, the taxable net profit is translated into Swiss francs at the average rate (bid rate); for capital tax the bid rate on the reporting date is taken. Whether tax returns can be submitted directly in foreign currency or the taxation factors have to be translated has not yet been made clear.
Our specialists will be happy to answer your questions or advise you on whether it makes sense to denominate your share capital in a foreign currency given your personal situation.
