Swiss tax reform

What is the income tax in Switzerland? Certain cantons have already announced or decided on new rates. With headline tax rates of - in most cantons, which can be reduced to as low as with instruments such as the patent box, Switzerland will remain attractive to foreign investors.

With TRAF, Swiss tax practices and laws are to be harmonized with internationally required taxation standards. Elga Reana Tozzi of Niederer Kraft Frey Lt looks at the reforms and what they mean for multinational enterprises in Switzerland.

Swiss tax reform – Tax accounting implications of cantonal tax law changes Several cantons have finalized the cantonal legislative process and published the new cantonal tax laws. TRAF introduces major changes in the Swiss tax system by abolishing certain current preferential tax regimes and replacing them with new measures that are in line with international standards. In a May referendum, voters will decide whether to accept or reject a new corporate tax regime to replace the special tax breaks that multinational companies now enjoy.

Switzerland is trying to hold on to its appeal as an attractive place for companies. Background For some time now, Switzerland has been in the political focus of the EU and the Organization for Economic Co-operation and Development (“OECD”) in order to abolish the internationally no longer accepted tax privileges granted at cantonal level. Parliament amended the Tax Proposal put forward by the Federal Council to include a social equalization measure concerning AHV financing.

According to the majority of international company effective tax rate at which Switzerland would cease to be attractive is over. After a long and drawn-out reform process, the Swiss Federal Act on Tax Reform and AHV Financing (TRAF) is reaching the final stages of maturity.

Swiss Corporate Tax Reform III: Latest developments. Nearly all companies are affected by the most significant overhaul of the Swiss tax system in decades. In a considerable step forward in reforming its tax law, Switzerland has abolished the cantonal and federal tax privileges.

On the Swiss public will vote on the Federal Act on Tax Reform and AVS Financing (TRAF). While there are still a few obstacles to be overcome at the cantonal level, the cantons have already decided or at least announced the parameters of their implementation for the individual measures. Like its predecessor, the new tax reform pursues the same three main objectives: to maintain the attractiveness of Switzerland as a business and tax location, to promote international acceptance of the Swiss corporate tax legislation and to ensure sufficient tax revenues to finance public activities. One instrument that will continue to be available after CTR is the Swiss holiday tax.

The Swiss Patent Box. Switzerland’s attempts to overhaul its corporate tax regime have suffered a setback after voters decisively rejected reforms to bring the country’s practices in line with international standards. Swiss voters reject corporate tax reforms. Contribution by Following the adoption of the Federal Act on Tax Reform and AHV (Old-Age and Survivors Insurance) Financing (TRAF) by popular vote in all Swiss cantons are required to align their cantonal tax laws and ensure conformity with TRAF-regulations.

In Zurich, a vote will take place in order to validate the decrease of the corporate income tax rate which should. There is also the possibility that more intragroup financing activities will be located in Switzerlan which will strengthen the Swiss debt market. Resident legal entities suppose to apply these changes. Despite the resistance, the Swiss Parliament has decided to adopt the notional interest deduction as an optional measure for high- tax cantons.

This leads to a disadvantage for. Almost every company will be affected by this change to the Swiss taxation system, including holding companies, administrative companies and mixed companies.

Swiss who voted approved the bill on Swiss tax reform and an increase in State Pension (AHV) financing. From Switzerland replaces its preferential tax regimes for holding and domicilary companies, thereby adhering to modern international standards, at the same time as claiming to remain one of the most stable, and attractive business and tax locations. Two years after voters rejected a similar idea to overhaul corporate tax rules,. To counter balance this they would allow for certain deductions for RD and patent revenue IIRC.

Swiss companies currently applying a preferential tax regime can benefit from a tax -neutral step-up mechanism. Current rules for an income tax -neutral step-up (Depreciation Model) significantly. At the same time, the tax framework is intended to secure an appropriate level of tax revenue.