Whistleblowing

Tax consequences of bribery

Bribes paid to public officials are not deductible for tax purposes. The Federal Act on Direct Federal Taxation and the harmonisation law expressly exclude the deduction of payments of bribes within the meaning of Swiss criminal law, which include bribes to Swiss or foreign public officials.¹ Since 2022, fines and financial sanctions with a penal character are also not deductible. The treatment of compensation claims, which have the function of removing the proceeds of the offence, has been the subject of discussion. A trader that has paid bribes through intermediaries, and has deducted the payments as commissions, faces, in addition to the criminal proceedings, the correction of its tax assessments and possibly tax criminal proceedings.

Whistleblowing

Many of the corruption cases in the commodity trade came to light through whistleblowers, employees or former employees who reported the misconduct to the authorities or to the press. Swiss law offers whistleblowers in the private sector limited protection. There is no general statute on the protection of whistleblowers: a draft law was rejected by Parliament in 2020.² An employee who reports misconduct to the authorities without first raising it internally may breach his duty of loyalty and his duty of confidentiality to the employer. A dismissal in retaliation may be abusive, although the remedies are modest.

The traders of Zug are, however, exposed to the whistleblowing regimes of other jurisdictions. The United States offers substantial financial rewards to whistleblowers who report violations of the Foreign Corrupt Practices Act and of the commodity laws. In the European Union, the directive on the protection of whistleblowers requires companies in the Union with 50 or more workers to establish internal reporting channels.³ A trader in Zug with employees in these jurisdictions, or whose conduct falls within the jurisdiction of the American authorities, must expect that misconduct may be reported to foreign authorities. It therefore has every interest in maintaining an effective internal reporting system that allows it to learn of and address misconduct first.

Notes

1. Art. 59 para. 2 DBG (SR 642.11), swissrights.ch: not business-justified are in particular (a) payments of bribes within the meaning of Swiss criminal law, (b) expenses enabling or rewarding offences, (c) fines and (d) financial administrative sanctions with a penal purpose; lit. a inserted by the Federal Act of 22 December 1999 (AS 2000 2147) and reworded by the Federal Act of 19 June 2020, in force 1 January 2022. Art. 25 para. 1bis StHG (SR 642.14), droit-bilingue.ch: identical list for cantonal taxes, inserted by the Federal Act of 19 June 2020 on the tax treatment of financial sanctions, in force since 1 January 2022. ↩
2. Federal Office of Justice, "Kündigungsschutz / Whistleblowing", bj.admin.ch: on 5 March 2020 the National Council decided for the second time not to enter into the bill (partial revision of the Code of Obligations, 13.094), which thereby failed. ↩
3. US SEC, "Whistleblower Program", sec.gov: awards of 10 to 30 per cent of the money collected for information on violations of the federal securities laws leading to sanctions of over USD 1 million; the program rests on the Dodd-Frank Act. CFTC, whistleblower.gov: monetary incentives for reporting violations of the Commodity Exchange Act. Directive (EU) 2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union law, eur-lex.europa.eu, Art. 8: legal entities in the private sector with 50 or more workers must establish internal reporting channels. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.