BASEL: In a recent decision (2C-404/2015, 15 September 2016), the Swiss Federal Supreme Court (SFSC) ruled that a Swiss regulated and tax-exempt pension fund is entitled to reclaim Swiss federal withholding tax deducted from dividends of publicly traded shares of Swiss companies.
The pension fund had invested in these shares only indirectly, via an Irish contractual fund acting as an investment vehicle for several local pension funds of a multinational enterprise. The SFSC reasoned that the Irish investment fund was comparable to a Swiss contractual fund, treated as a fiscally transparent entity for Irish tax purposes and thus had to be treated as fiscally transparent for pur-poses of the Swiss double taxation treaty with Ireland and of the Federal With-holding Tax Act as well.
Accordingly, the SFSC concluded that the Swiss pension fund had to be recognized as the ultimate beneficial owner of the dividends de-rived through the transparent Irish fund.
