In 2017, Switzerland continued to be an ever more attractive
tax location for multinational and domestic enterprises alike,
while at the same time becoming more aligned with international
tax legislation, a trend that will continue for 2018.
The dominant topic in 2017 was the so-called Swiss Tax
Reform 17 (STR 17) under which all special tax regimes, such as
the mixed company regime, will sunset, accompanied by a
transition mechanism of five years, and be replaced by other
measures, such as a significant reduction of cantonal tax
rates, the introduction of a patent box, or R&D incentives.
While the Swiss voter rejected the original version of the
reform in a referendum on February 12 2017, the Swiss Federal
government on September 6 2017 issued a revised draft
legislation. The final legislation is expected to be discussed
by the Swiss Parliament in the spring of 2018. Since this is
considered a well-balanced legislation brought about with the
inclusion of all stakeholders, a referendum on the legislation
may be considered unlikely, so that STR 17 could enter into
force as soon as January 1 2019.
A cornerstone of the tax reform is a reduction of cantonal
tax rates, where most cantons expect to be in the 12-14% ETR
range (effective combined federal/cantonal/communal rate). On
November 1 2017, the canton of Vaud became the first canton to
officially reduce its tax rate to an ETR of 13.79% as of
January 1 2019.
As of January 1 2018, the Swiss VAT rate will be reduced
from 8% to 7.7% (standard rate) and from 3.8% to 3.7% (special
rate), while the reduced rate of 2.5% will remain
The Swiss government enacted tax friendly withholding tax
legislation on February 15 2017 under which the notification
procedure on intra-group dividends applies if the respective
conditions are met, even if the 30-day deadline is missed, and
no-late interest will be applied. Taxpayers who already paid
late interest may claim such late interest back if the
conditions are met.
On the international front, Switzerland on June 7 2017
signed the Multilateral Instrument (MLI) on the implementation
of tax related measures against base erosion and profit
shifting (BEPS) with a first batch of 14 countries. The
agreement will allow Switzerland to adapt double taxation
agreements to the minimum standards as agreed under the OECD
And finally, from 2018, the Swiss tax authorities will start
to exchange tax rulings internationally. Rulings will be
exchanged that are still in force as of January 1 2018 and were
entered into after January 1 2010. Switzerland does not share
rulings retroactively. Taxpayers who do not wish to share their
rulings have the opportunity to withdraw their rulings before
the end of 2017.
With the enacted and upcoming changes in its tax legislation
Switzerland seems well equipped to continue to play a major
role as an attractive tax and business location for
multinationals in the years ahead.
Jacques Kistler (firstname.lastname@example.org)
and René Zulauf (email@example.com)
Tel: +41 58 279 6359 and +41 58 279 8164