Introduction

For businesses in Switzerland, access to affordable financing is essential for growth and expansion. Central to the borrowing process are interest rates, which significantly impact the cost of capital and ultimately affect a company's bottom line. In this guide, we'll explore the intricacies of business loan interest rates in Switzerland, covering the types of rates available, key factors influencing them, and strategies for securing favorable terms to fuel your business's success.

2024 interest rate admitted for tax purposes on advances or loans in foreign currencies

When a company grants advances or loans without interest or against insufficient interest to its shareholders or to third parties close to them, it grants them an appreciable monetary benefit.The same applies when a company pays interest at an inflated rate on debts held by holders of participation rights or by third parties close to them. These significant monetary benefits are subject to withholding tax of 35% in accordance with articles 4, paragraph 1, letter b of the federal law of October 13, 1965 on withholding tax (LIA) and 20, paragraph 1 of the The execution order ofDecember 19, 1966 (OIA) of the LIA. Appreciable monetary benefits must be declared spontaneously, within 30 days from their due date, and the withholding tax due must be paid within the same period. The same criteria are valid in matters of direct federal tax for the calculation of appreciable monetary benefits of capital companies and cooperative societies (art. 58, al. 1, let. b of the federal law of December 14, December 1990 on the direct federal tax [LIFD]).using form 102.

To determine whether the remuneration for advances or loans granted in foreign currencies by –or to – shareholders or third parties close to them is appropriate, the Federal Tax Administration (FTA),Main Division of the Since January 1 , 2024, the direct federal tax, withholding tax and stamp duties have applied the interest rates indicated below (indicative values).

When the interest rate for the foreign currency is lower than the interest rate set according to the AFC circular letter concerning the rates concerning 2024 interest allowed for tax purposes on advances or loans inSwiss francs of January 29 2024, at least the interest rate applicable for Swiss francs must be taken into account.

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2024 Rates for loans in foreign currency

For the company valuation, the current capitalization rates should be applied in accordance with paragraph 60 of Circular No. 28 of the Swiss Tax Conference CSI,“Instructions on the valuation of unlisted securities in view of the wealth tax” as well as the last comment relating thereto.

2024 interest rate admitted for tax purposes on advances or loans in Swiss francs

When a company grants advances or loans without interest or against insufficient interest to its shareholders or to third parties close to them, it grants them an appreciable monetary benefit. The same applies when a company pays interest at an inflated rate on debts held by holders of participation rights or by third parties close to them. These significant monetary benefits are subject to withholding tax of 35% in accordance with articles 4, paragraph 1, letter b of the Federal Law of October 13,1965 on withholding tax (LIA) and 20, paragraph 1 of the ordinance of execution ofDecember 19, 1966 (OIA) of the LIA. Valuable monetary benefits must be declared spontaneously, within 30 days of their due date, using form 102 and the withholding tax due must be paid within the same period. The same criteria are valid in matters of direct federal tax for the calculation of appreciable monetary benefits from capital companies and cooperative societies (art. 58, al. 1, let. b of the federal law of December 14, 1990 on direct federal tax [LIFD]).

To determine whether the remuneration for advances or loans granted in Swiss francs by – or to – shareholders or to third parties close to them is appropriate, the Federal Tax Administration (FTA), Main Tax Division direct federal tax, withholding tax, stamp duties has applied the following interest rates since January 1 , 2024:

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Loans to shareholders or third parties close to the company (in Swiss francs)

• If loan is financed from the company or persons's own funds a minimum interest of 1.5% should be applied.
• If loan is financed by means of third party funds then the interest rate is 1.5% plus an additional 0.25-0.5% of own expenses.

Loans to shareholders or third parties close to the company for Real Estate (in Swiss francs)

• If loan is financed to purchase real estate than the interest is 2.75%

Where to find 2024 interest rates? 

Interest rate can be found on the FTA website. Please note to check this website for consistent up to date rates as this article is only looking at 2024 rates and the rates are updated each year.

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