February 2021 / Switzerland

The Ministry of Economy and Finance has issued a Ministerial Decree providing implementing rules on the local consumption tax for Campione d'Italia (imposta locale sul consumo di Campione d'Italia, ILCCI), introduced by the Budget Law for 2020.

The ILCCI applies to supplies of goods and services to final consumers taking place in Campione d'Italia and on importations of goods carried on by final consumers. Certain supplies are exempt, including supplies made for medical, social or educational purposes. Taxable persons are individuals and companies that exercise a business activity, art or profession and make qualifying supplies. However, the tax burden is imposed on the final consumer.

The ILCCI rates are identical to those of the Swiss value added tax. In particular, the standard ILCCI rate is 7.7%. The reduced ILCCI rate of 3.7% applies to supplies of hospitality services (provisions of breakfast included) while the reduced ILCCI rate of 2.5% applies to supplies of alimentary products, newspapers and books, medicines and other qualifying products consumed on a daily basis.

The Ministerial Decree of 16 December 2020 was published in Official Gazette No. 33 of 9 February 2021.

Note: The ILCCI was introduced following the implementation of Council Directive 2019/475 of 18 February 2019, under which Campione d'Italia is part of the EU Customs Union and subject to the EU rules on excise duties, but it remains outside the scope of application of the EU value added tax. In particular, the ILCCI aims at ensuring a level playing field between enterprises established in Campione d'Italia and Switzerland.

The Federal Tax Administration published 2 Circulars and announced the safe haven interest rates applicable to shareholder and related party loans in 2021.

Circular of 28 January 2021: Loans denominated in CHF

The minimum interest rates for loans in CHF granted to shareholders or related parties are:

• on loans financed through equity: 0.25%; and
• on loans financed through debt: the interest incurred (prime costs) plus 0.5% on amounts up to CHF 10 million, or plus 0.25% on amounts exceeding CHF 10 million; in all cases, however, at least 0.25%.

Conversely, the maximum interest rates payable for loans in CHF given by shareholders or related parties are:

• on real estate loans: 1.0% to 2.25% (depending on loan type and level of debt financing); and
• on operational loans received by a Swiss trading or production company: 3.0% for loans up to CHF 1 million and 1.0% on the excess; by a Swiss holding or administration company: 2.5% for loans up to CHF 1 million and 0.75% on the excess.

Circular of 29 January 2021: Loans denominated in foreign currencies

For loans in foreign currencies (e.g. EUR and USD) given to shareholders or related parties, the minimum interest rates are:

• on loans financed through equity: EUR: 0.25%, USD: 1.25%; in all cases, however, at least the safe haven interest rate for loans denominated in CHF, i.e. 0.25%; and
• on loans financed through debt: the interest incurred (prime costs) plus 0.50%; in all cases, however, at least 0.25% for loans denominated in EUR, or 1.25% for loans in USD.

These safe haven interest rates are also applicable to loans in EUR and USD received from shareholders or related parties. However, higher interest rates based on the arm's length principle can be paid if they are justified by a business purpose.

The Federal Tax Administration published the Circulars and announced the safe haven interest rates on 29 January 2021.