Switzerland: Swiss CTR III - Latest draft legislation issued by the Federal Council
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Switzerland: Swiss CTR III - Latest draft legislation issued by the Federal Council

zulauf.jpg

weder.jpg

Rene Zulauf


Diego Weder

Overall the draft legislation (released after public consultation) for Switzerland's Corporate Tax Reform III (CTR III) remains very attractive, in particular given the following favourable developments as compared to the original proposal:

  • The proposed introduction of a capital gains tax for individuals was dropped;

  • The draft legislation will newly introduce some sort of R&D incentives, which were not in the original proposal, in addition to the patent box regime;

  • The so-called step up for tax purposes that would essentially lead to a grandfathering of the effective tax rates of existing cantonal tax regimes that sunset as part of the tax reform presumably in 2019 or 2020, for many years should now be structured in such a way as also to provide a financial statement benefit, that is, for US GAAP and IFRS purposes, not just for cash tax purposes; and

  • The planned abolition of the 1% capital issuance tax on equity contributions was confirmed.

The proposed peripheral measures that were dropped, such as the change of the participation regime, were not necessarily favourable to the taxpayer and did not find enough support.

The one negative development is that the notional interest deduction (NID) on equity was dropped. Without this NID regime Switzerland would no longer be attractive for financing activities. Accordingly, a lobbying effort can be expected to bring this regime back into the legislation.

The main replacement measures for the tax regimes that sunset in 2019 or 2020, depending on the time needed for the legislative process, are:

  • Step-up for tax purposes;

  • Patent box; and

  • General tax rate reduction.

Although a public vote on the legislation by the Swiss voters is likely, we are confident that the legislation would pass such a referendum.

Rene Zulauf (rzulauf@deloitte.ch) and Diego Weder (diweder@deloitte.com)

Deloitte

Tel: +41 58 279 6359 and +1 917 573 6783

Website: www.deloitte.ch

more across site & bottom lb ros

More from across our site

Despite the relief, Brazil’s government has also presented a bill which seeks to re-impose a tax burden on companies’ payroll, one local tax specialist told ITR
Jeremy Brown arrives at the firm after a near 16-year career with Deloitte
PwC could elect a woman into the senior leadership position for the first time; in other news, KPMG Australia has extended its CEO’s term
The Senate report into PwC’s scandal is titled ‘The cover up worsens the crime’
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
The firm’s tax business generated a quarter of HLB’s overall revenues in 2023
While successful pillar two implementation will require collaboration across all units, a combination of internal and external tax advice is at the centre of the effort
Binance has also been accused of manipulating foreign exchange rates via currency speculation and rate-fixing
Six individuals should have raised questions over information they received but did not breach professional standards, according to the firm
The partnership of KPMG UK has installed Holt for a second term as CEO and senior partner; in other news, a Baker McKenzie partner has sued the IRS
Gift this article