On 29/30 January 2024 the SFTA has published the Circular Letters No. 207 and 208 defining the applicable safe-harbor interest rates for intercompany (“IC”) advances and loans denominated in Swiss Francs (“CHF”) and in foreign currencies. In line with the market trend, there were only minor changes in the interest rates compared to the significant increase in 2023.
Minimum and maximum safe-harbor interest rates applicable in 2024
At the beginning of each year, the SFTA updates the list of applicable safe-harbor interest rates. This is an important exercise since many taxpayers rely on this guidance to set the prices of many of their intragroup transactions for the year.
The minimum lending rate in CHF is again at 1.50% as in 2023, whereas the maximum borrowing rate decreased from 2.25% to 2.00% for loans above CHF 1 Mio. and remained constant at 3.75% for loans below CHF 1 Mio. For EUR, the safe-harbor minimum lending rate has decreased from 3.00% in 2023 to 2.50% in 2024. For USD, the minimum lending rate has again increased from 3.75% in 2023 to 4.25% in 2024. For avoidance of doubt, the previously mentioned safe-harbor minimum lending rates apply to transactions financed entirely by equity.
For debt-financed loans made by Swiss entities, the minimum rate is set at the respective debt interest rate plus a margin of 0.50% (0.25% for the portion of loans above 10 million in CHF only). The final interest rate should however not be lower than the minimum safe-harbor lending rate in the published currency.
For the determination of the maximum interest rate payable by Swiss entities under the safe-harbor rules, a spread is to be added. The spread stipulated in the Circular Letter No. 207 for CHF (Digit. 2.2) also applies on IC advances and loans denominated in foreign currencies. For example, for operating loans received by trading and manufacturing companies, a spread of 2.25% can be added to determine the safe-harbor maximum allowable rate for the portion of loan up to the equivalent of CHF 1 Mio., and this spread is then reduced to 0.50% for the portion above. In the case of holding and asset management companies, the applicable spreads are 1.75% and 0.25%, respectively.
Consequently, the maximum borrowing rates for loans from related parties denominated in CHF, EUR and USD can be summarized as follows: