Switzerland publishes updated safe harbour interest rates for 2025

In the circular letters dated 27 January and 28 January 2025, the SFTA published the safe harbour interest rates applicable to shareholder and intercompany loans, denominated in Swiss Francs and foreign currencies, applicable for 2025. Some of the Swiss Franc transaction safe harbour interest rates included in this year’s circular have decreased whilst most foreign currency transaction rates have increased compared to the interest rates that were applicable for 2024.

The following are the main changes for transactions denominated in Swiss Francs:

• Minimum interest rates for loans financed through equity: Reduction from 1.50% in 2024 to 1.00% in 2025. 
• Minimum interest rates for loans financed through debt: Reduction from 1.50% in 2024 to 1.00% in 2025.
• Maximum Interest Rates for Real Estate Loans: Reduction for both housing/agriculture and industry/commerce categories. 
• Maximum Interest Rates for Operating Loans: Reduction for both trading or production companies as well as holding or asset administration companies.

For transactions denominated in foreign currencies, these are the main observations:

• Notable changes in the safe harbour interest rates applicable in 2025 for foreign currency denominated transactions. Whilst most foreign currency transaction rates (in 14 currencies out of a total of 24 published currencies) have increased, four foreign currency transaction rates have decreased and six remained unchanged compared to the interest rates that were applicable for 2024 (more details below). 
• Safe harbour interest rates for transactions denominated in EUR and USD remained unchanged (2.50 % for EUR transactions, 4.25% for USD transactions)

Swiss taxpayers have the flexibility to apply different interest rates, provided they can substantiate that these rates comply with the arm's length principle. In practice, this means that the interest rates must be validated by a transfer pricing study.

Foreign Currency transactions

The SFTA has also published the safe harbour interest rates for loans denominated in 24 foreign currencies for 2025. These are depicted in the table below, together with the safe harbour interest rates that were applicable in 2024.

As a general observation, whilst most foreign currency transaction rates (in 14 currencies out of a total of 24 published currencies) have increased, four foreign currency transaction rates have decreased and six remained unchanged compared to the interest rates that were applicable for 2024. 

For loan receivables of a Swiss company, these are the minimum rates that must be charged to a related party (note: if the CHF safe harbour rate is higher, then this higher rate has to be charged). If a loan is debt financed, then a minimum spread of 0.50% has to be applied.

These interest rates are basically also the maximum interest rates that a Swiss entity can pay to a related party. However, the difference between the CHF minimum and maximum interest rates can be added i.e., for operating loans of a trading company a spread of 2.50% (for loans up to CHF 1m) respectively of 0.75% (for loans exceeding CHF 1m).

It is important to note that whilst the interest rates listed above are safe harbours from a Swiss perspective, if a transaction is between a Swiss company and a foreign counterparty, a transfer pricing study will need to be performed to demonstrate that the selected interest rates are at arm’s length.

Taxpayers should also be mindful that transactions between a Swiss company and an EU based counterparty that utilise the safe harbour rates will need to disclose the transaction in the counterparty location as part of the DAC 6 regime.