Non-bank lender 10/20/100 rule (Switzerland)

Under Swiss tax practice, a loan granted by several non-bank lenders is requalified as a bond, subject to 35% Withholding tax (Switzerland), once it is granted on identical terms to more than 10 non-bank lenders for a total amount of at least CHF 500,000. If terms vary from one lender to another, the requalification threshold rises to 20 lenders.

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A third threshold applies to deposits a company takes from the public: beyond 100 depositors and CHF 5,000,000 of cumulative deposits, these sums are requalified as deposits generating taxable bank interest, a regime distinct from the already more conventional Shareholder Loan (Switzerland).

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This 10/20/100 rule partly explains why financing through private debt from a limited number of institutional lenders, rather than from a large pool of private lenders, remains the norm for sizeable Swiss acquisition structures, a topic explored further in our article on private credit.

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For a Swiss startup or SME considering financing through multiple loans rather than a capital increase, anticipating these three thresholds as early as the financial structuring stage avoids a costly and unexpected tax requalification.