Art. 5 Federal Law of 13 October 1965 on the Withholding Tax (WHTA)

The following are not subject to withholding tax: a. the reserves and profits of a capital company as per Art. 49, para. 1, let. a of the Federal Law of 14 December 1990 on Direct Federal Tax (DFTA) or of a cooperative society which, during a restructuring as defined in Art. 61 of the aforementioned law, are transferred into the reserves of a Swiss acquiring or newly formed capital company or cooperative society; b. capital gains realized in a collective investment scheme within the meaning of the CISA and the income from its real estate held as direct property, as well as the capital contributed by investors, if the distribution is made through a separate coupon; c. interest on client assets, provided the interest amount does not exceed 200 Swiss francs for a calendar year; d. interest on deposits intended to establish and maintain an asset in the event of survival or death at institutions, funds, and other entities serving old-age, invalidity, or survivors' insurance, or for social welfare; e. ... f. Voluntary contributions by a public limited company, a limited liability company, or a cooperative society, provided these contributions constitute justifiable commercial expenses within the meaning of Art. 59, para. 1, let. c, DFTA; g. interest from banks or companies affiliated with financial groups for the borrowing instruments referred to in Art. 11, para. 4, and 30 b, para. 6, of the Banking Act of 8 November 1934 (BA) and approved by the Swiss Financial Market Supervisory Authority (FINMA) to meet regulatory requirements, if the borrowing instrument was issued between 1 January 2013 and 31 December 2026; h. interest paid by participants to a central counterparty as defined by the Financial Market Infrastructure Act of 19 June 2015 and those paid by a central counterparty to its participants; i. interest from banks or companies affiliated with financial groups for borrowing instruments referred to in Art. 30 b, para. 7, let. b, BA, if: 1. FINMA has approved the borrowing instrument to meet regulatory requirements: – for banks without systemic importance or for companies affiliated with financial groups: at the time of issuance – for systemically important banks as defined in Art. 7, para. 1, BA: at the time of issuance or during the transition from a foreign issuer to a Swiss issuer, 2. the borrowing instrument is issued between 1 January 2017 and 31 December 2026 or a change of issuer as per section 1 occurs during this period.

The refund of reserves arising from capital contributions made by equity holders after 31 December 1996 is treated in the same way as the refund of share capital or cooperative capital if the capital company or cooperative society records the reserves arising from capital contributions in a special account in its commercial balance sheet and reports any changes to this account to the Federal Tax Administration (FTA). Para. 1 ter is reserved.

When refunding reserves arising from capital contributions pursuant to para. 1 bis, capital companies and cooperative societies listed on a Swiss stock exchange must distribute additional reserves at least in an equivalent amount. If this condition is not met, the refund is taxable up to half the difference between the refund and the distribution of other reserves, but up to the amount of other available reserves that can be distributed under commercial law. The other reserves that can be distributed under commercial law must be credited with an equivalent amount to the special account of reserves arising from capital contributions.

Para. 1 ter does not apply to reserves arising from capital contributions: a. that were created after 24 February 2008 in the context of concentrations economically equivalent to mergers, through the contribution of equity or partnership rights in a foreign capital company or cooperative society as per Art. 61, para. 1, let. c of the Federal Law on Direct Federal Tax or during a cross-border transfer to a Swiss capital company according to Art. 61, para. 1, let. d of this law; b. that already existed within a foreign capital company or cooperative society at the time of a cross-border merger or restructuring as defined in Art. 61, para. 1, let. b, and para. 3 of the Federal Law on Direct Federal Tax or of the relocation of the registered office or effective management after 24 February 2008; c. that are refunded to Swiss or foreign legal entities that hold at least 10% of the share capital or cooperative capital of the paying company; d. in the event of liquidation or relocation of the registered office or effective management of the capital company or cooperative society abroad.

The company must record the reserves arising from capital contributions referred to in para. 1 quater, let. a and b, in a special account and report any changes to this account to the FTA.

Paras. 1 ter to 1 quinquies apply by analogy in the case of the use of reserves arising from capital contributions for the issuance of bonus shares or the free increase of the nominal value.

Para. 1 bis does not apply to contributions and agios paid during the duration of a capital fluctuation margin as defined by Art. 653 et seq. CO, except to the extent that they exceed the refunds of reserves within the framework of said capital fluctuation margin.

The ordinance may prescribe that the interests of multiple client assets held by the same creditor or by the same person entitled to dispose of them in the same bank or savings bank must be aggregated; in the case of manifest abuse, the FTA may order such aggregation.