Swiss Corporate Tax Reform - 4. Dividend Withholding Tax Impact Of Holding Own Shares

PLEASE NOTE: THIS ARTICLE WAS ORIGINALLY SUBMITTED BY REVISUISSE PRICE WATERHOUSE, SWITZERLAND

Companies may have an interest or even be required commercially to hold own shares for the purpose of employee stock option plans or for meeting conversion claims of convertible bonds issued, etc. Commercial law allows companies to hold own shares up to 10% of the nominal amount of the share capital. For tax purposes, however, the holding of own shares is limited to a period of up to six years. If such shares are held longer than six years a partial liquidation of the company is deemed to arise. Thus the difference between the purchase price of the company's own shares acquired and the nominal amount of the shares held will be subject to 35% dividend withholding tax.

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