Offsetting of losses after transition from holding privilege to ordinary taxation
Tax losses incurred during the seven financial years preceding the tax period may be deducted from the net profit of the respective tax period, insofar as it was not possible to take these into account when calculating the taxable income. According to common practice in most of the Cantons, holding companies who suffered losses could not offset these losses after transition to ordinary taxation against taxable profits achieved after transition to ordinary taxation. The restriction for the offsetting of losses at the level of direct federal tax was not affected.
On 12 March 2012, the Federal Court of Justice decided that losses incurred by companies during their holding company status cannot be offset, even after transition to ordinary taxation, unless there is a contrary cantonal legal provision (such as currently existing in the Cantons of Zug and Jura). For numerous companies, this decision of the Federal Court of Justice means that their supposedly lost losses can now nevertheless be offset.
For tax periods which have not been finally assessed, we recommend filing adjusted tax returns declaring tax loss carry-forwards also for cantonal and municipal taxes. For tax periods which have been finally assessed, the possibility of subsequent declaration of loss carry-forwards has to be examined in each individual case.
Duly declaration of dividend payments
In general, the withholding tax obligation on dividend payments within a group of companies can be fulfilled by notification instead of payment with subsequent reclaim, provided that form 106 or 108, respectively, of the Federal Tax Administration (FTA) is filed within 30 days after the dividend payment was due.
So far, the notification procedure has also been granted by the FTA after expiration of the 30 days period. Since in its decision of 19 January 2011, the Federal Court of Justice considered this period to constitute a forfeiture period, the FTA now insists on payment of the withholding tax plus interest on arrears of 5% p.a., before reclamation of the withholding tax becomes possible, if the 30 day’s time to file the forms was missed.
With regard to the dividend payments soon becoming due for numerous companies, necessary attention should be paid to the tightened practice in this regard. It is essential that the notification procedure is filed before expiration of 30 days after payment of dividend. Since the debtor of the dividend has to prove the timeliness of the notification of the dividend payment, the notification request should be filed by registered mail.