Share issuance or capital contribution is a vital part of a business. It is a way business owners may put their own financial assets or resources into the company in order to increase its equity capital and improve its liquidity.
In Switzerland, however, there are instances that these share issuance and capital contribution may be subject to tax, specifically Stamp Duty Tax. This article will elaborate and discuss the conditions that one may be subject to Stamp Duty Tax and guide you on how to compute and file your Stamp duty Tax.
Stamp duty tax on share issuance (also known as Issuance Stamp Tax) on capital contributions is imposed on Swiss Entities when the Swiss Entity issues new shares (or participation certificates) when the total value of new shares issued exceeds CHF 1 Million (whether made initially or subsequent contribution). The first CHF 1 Million is exempt from the stamp duty tax.
Stamp duty tax is levied at a rate of 1% of the market value of the capital contribution in excess of CHF 1 Million.
Who is liable to pay for Stamp Duty Tax?
The Swiss Entity who received the capital contribution is liable for the stamp duty tax. Needless to say, the Company is also responsible to compute, declare, file and pay the tax.
The deadline for the submission and payment of the stamp duty tax is 30 days after the end of the quarter in which the capital contribution was received and registered with the commercial register.
How to file Stamp Duty Tax on Share Issuance
Filing the stamp duty tax for the unfamiliar may be intimidating, we will be walking you through the process step by step to make the filing simple and efficient.
Step 1: Download the Form
- In order to file the Stamp Duty Tax, first you need to download the form online.
- Click on this link:
- After downloading, you will need to download an application called Snapform Viewer in order to open and fill out the form. Click on this link to download Snapform Viewer:
Step 2: Fill Out the Form
- Here you will need to fill up the basic details of the Company including Company name, registered address, UID number, telephone number and email address.
- Please note that if it’s marked with “!”, it means it is a required field.
- Here you will need to tick a box for the reason for submission of this form, may it be as a result of founding an AG company, founding of a GMBH company or due to increase in share capital.
- If it’s due to the latter, you will need to input the amount of share capital (at par value) before and after the additional capital contribution.
- In addition, you are also required to input the date of publication to the Swiss Commercial registry of the capital contribution. You can search the business name at https://www.zefix.ch/en/search/entity/welcome, all publications to the commercial registry should be disclosed there.
- First let’s discuss the three columns (Column A, Column B and Column C). Column A mainly pertains to the Par/Nominal value of the shares issued. Column B pertains to shares issued ABOVE par/nominal value. Column C pertains to shares issue AT par/nominal value.
- At first glance, the above form looks intimidating as it has plenty of boxes to fill-up. However, in reality, you will only need to fill-up lines 9.1, 9.2 and 10 (only applicable if the payment method used was Cash and Offsetting against company liabilities). Once you fill-up those 3 lines, the form will automatically populate and compute the Stamp Duty Tax payable.
- Line 9.1 – This refers to increase in share capital paid in CASH. Fill-up Column A for the Par Value of the share increase. Then fill-up EITHER Column B or Column C depending if it’s paid ABOVE par value (input amount paid in Column B) or paid AT par value (input nominal value at Column C – the amount should be the same with Column A).
- Line 9.2 – Refers to increase in share capital paid as a result of offset against company liabilities.
For example, Company A has an outstanding payable of CHF 500K against Company B, both companies agreed that Company A issue CHF 100K of share capital against the CHF 500K payable to company B. In this example, CHF 100K should be in Column A of line 9.2, then CHF 500K should be in Column B of line 9.2.
- Line 10 – pertains to unclaimed amount of allowance of CHF 1M for share capital.
To continue our example above, if currently (before the additional CHF 500K capital) the Company has CHF 800K in share capital, then in Line 10 we should put CHF 200K (1M less 800K).
- After filling-up the above, notice that the form automatically populates and calculates the tax payable in Line 16.
Step 3: Submit the Form
With the form complete, we are now ready to submit the form to the Federal Tax Administration (FTA).
- Print the form
- Submit the form to the address located on page 1 of the form.
- Be mindful of the deadline which is 30 days at the end of the quarter in which the additional share capital was received.
- Enclose required attachments depending on the payment method when the share capital was issued.
Step 4: Payment of the Tax Due
Payment details are disclosed at the last page of the form. See below:
Creation of equity is a crucial part of one’s business, however, it is important to consider the tax implication of the newly created equity. It may trigger Stamp Duty Tax if equity is above the exemption of the first CHF 1 Million. As stamp duty tax is based on the principle of self-declaration, the transaction must be declared spontaneously to the FTA and the payment must be made into the FTA's account, without the company being prompted to do so. Nevertheless, filing of Stamp Duty Tax may not be too difficult as one may initially perceive.