Switzerland: Swiss corporate tax reform to be subject to a referendum

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

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

Switzerland: Swiss corporate tax reform to be subject to a referendum

Sponsored by

Sponsored_Firms_deloitte.png
intl-updates-small.jpg

Switzerland's Tax Reform and AHV Financing Bill (TRAF, formerly known as Swiss Tax Reform 17 and Swiss Corporate Tax Reform III) will officially be subject to a referendum, as a largely left wing alliance made up of junior green and socialist parties has secured more than 50,000 signatures against the proposed law. The public vote is now scheduled for May 19 2019.

Sunset of all special Swiss corporate tax regimes

Under the reform, all special Swiss corporate tax regimes such as the mixed company, the holding company, the domiciliary company, the principal company (governed by Federal Circular Letter No. 8), and the finance branch regime, are likely scheduled to sunset from January 1 2020. These regimes will be replaced with measures that are both internationally accepted and that ensure Switzerland will remain attractive for multinational companies.

Transitional rules for sunsetting regimes

The sunset of these special tax regimes is subject to transitional rules. These rules should enable companies benefitting from such regimes to maintain their existing level of taxation by way of a special release of hidden reserves for another five years after the sunset of the regimes from January 1 2020, depending on their specific facts and circumstances.

Main replacement measures for corporate taxpayers

  • Reduction of general tax rates: at the discretion of the individual cantons, where the majority of cantons will be in the 13–14% tax rate range (effectively combined federal/cantonal/communal tax rate, ETR) with some cantons with an ETR as low as 12%, such as Zug, Schwyz and Lucerne;

  • Introduction of a patent box: following the so-called modified nexus approach by the OECD on a cantonal level, with a tax relief for qualifying incomes of up to 90%;

  • Introduction of a R&D super-deduction: at the cantonal level, up to a maximum of 150% of the effective qualifying expenses;

  • Step-up on migration of a company, or of activities and functions to Switzerland: A step-up would be allowed for direct federal and cantonal/communal tax purposes (including on self-created goodwill) for companies or additional activities and functions migrating to Switzerland;

  • Reduction of the cantonal/communal annual capital tax: in relation to participations, patented intellectual property, and intercompany loans at the discretion of the individual cantons; and

  • Cantons with a 'high' cantonal tax rate may introduce a notional interest deduction (NID) on a cantonal level: This may only benefit the canton of Zurich and potentially very few additional selective cantons with high enough tax rates.

The bill is well supported by almost all of the relevant stakeholders ranging from business associations to unions and the whole political party spectrum, including the major left wing parties, who were formerly critical of the reform. We therefore currently deem the odds to be more likely than not that the bill will be confirmed in the public vote. However, the decision will be with the Swiss voter.

more across site & shared bottom lb ros

More from across our site

It follows a court case concerning a Freedom of Information request lodged by the founder of a software company
After years of deafening silence, the UK tax authority is taking overdue action against corporates that fail to prevent the facilitation of tax evasion
The US president has raised India’s tariff rate to 50% because of its importation of Russian oil; in other news, firms made key international tax partner hires
Tax auditors themselves had not been aware of the new TP ‘transaction matrix’ requirements, ITR hears as five German partners share their client experiences
Its features include a built-in AI assistant as well as expert insights and commentary from Deloitte specialists
AI is rapidly finding its way into tax advisory services. But how can AI be deployed responsibly, reliably, and in compliance with legal standards?
Specified taxpayers will have to apply a 19% VAT rate on services offered by third parties through their platforms; in other news, Donald Trump imposed 30% South African tariffs
A ‘quiet revolution’ in HMRC’s compliance strategy has caused Adam Craggs to rethink how to advise clients, he tells ITR
If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
Gift this article