Switzerland: Increases its competitive edge – on the verge of abolishing issuance stamp duties
René Zulauf and Manuel Angehrn of Deloitte Switzerland discuss the benefits of abolishing issuance stamp duty in Switzerland.
The Swiss stamp duties are one of Switzerland’s oldest federal taxes (introduced long before income taxes at federal level). The tax, together with customs duties, provided the federal government with a continuous revenue on equity issuance of corporations.
Today, Switzerland levies stamp duties on the issuance of equity, the trade of securities and insurance premiums. While stamp duties on the issuance of equity have diminished over time (tax revenue of approximately CHF250 million per annum ($272 million)), stamp duties on securities transfers and insurance premiums remain an important source of income for the federal government.
Plans to abolish all stamp duties have been the subject of controversial discussions in parliament for more than a decade and opposition to the reform package has been strong, halting and delaying such plans time and time again.
In the wake of COVID-19, the ongoing discussions for a global minimal taxation and under consideration that issuance stamp duties have been abolished in neighbouring jurisdictions for quite some time, the Swiss Parliament did move forward with part of the three-step legislative programme to abolish Swiss stamp duties.
On June 18 2021, after more than a decade of parliamentary negotiations, the Swiss Parliament approved legislation to abolish the Swiss issuance stamp duties on equity issuance.
Considering that tax is of a formal nature and impacts predominantly small and mid-sized enterprises, the abolishment would not only lift a heavy burden on start-ups and small and mid-sized enterprises, it would allow entrepreneurs to attract equity investors at reduced costs and focus on innovation and business opportunities.
The abolishment would further allow business owners to increase the equity of their company and increase the resilience of their business with strengthened equity positions.
In connection with the already approved reform of the Swiss corporate law (to enter into force as of January 1 2022) and the foreseen implementation of share-capital bands, the abolishment of Swiss issuance stamp duties would increase the possibilities with regard to equity investments and ease the administrative compliance burden of companies.
Together with the federal council’s draft legislation introduced to parliament and its intention to abolish Swiss withholding taxes on interest payments (with very limited exceptions) and the plan to ease the trading of Swiss issued bonds, the current legislation will again boost the business location Switzerland. This will allow the country to keep its competitive edge in an ever-changing global tax environment and attract businesses through both a reduction of administrative burdens and reduced costs for companies of all sizes.
The new legislation may allow the federal council to abolish the Swiss issuance stamp duty as soon as January 1 2022, unless opposing interest groups seek a popular vote to stop the abolishment.
Considering the more than a decade long history of the law and the continuous discussions in parliament, such a popular vote is highly likely and a respective delay into 2022 a possibility.
Should the legislation be progressing (following approval of a popular vote), the direct issuance of equity would no longer be subject to issuance stamp duties and parliament could progress with reviewing its stance towards the remaining stamp duties (securities transfer taxes and insurance premiums).
Partner, Deloitte Switzerland
Senior Manager, Deloitte Switzerland