1. Swiss Franc (CHF) Loans

Based on a circular of the Swiss Federal Tax Administration (“FTA”) dated 23 February 2016, the following safe harbor interest rates for intragroup loans in Swiss Franc are applicable from 1. January 2016:

Loans to related parties (in CHF):

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Loans from related parties (in CHF):

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A taxpayer can apply an interest rate that deviates from the published safe harbor rate, but in the event of a tax audit, the taxpayer would have to demonstrate that the interest rate applied meets the arm’s length standard.

2. Foreign Currency Loans

Based on a circular of the Swiss Federal Tax Administration (“FTA”) dated 24 February 2016, the following safe harbor interest rates for intragroup loans in EUR and USD are applicable from 1. January 2016:

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If the safe harbor rate for a foreign currency loan is lower than the CHF safe harbor rate, the CHF safe harbor rate is considered the maximum allowable rate on loans payable by a Swiss entity. In addition, thin capitalization rules must be considered; see circular No. 6 dated 6 June 1997.

A taxpayer can apply an interest rate that deviates from the published safe harbor rate, but in the event of a tax audit, the taxpayer would have to demonstrate that the interest rate applied meets the arm’s length standard.