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Nexia Ebner Stolz


Swiss Voters Reject Corporate Tax Reform

On Fe­bru­ary 12, 2017, Swit­zer­land re­jec­ted Cor­po­rate Tax Re­form III with a ma­jo­rity of nearly 60% of vo­ters. One of the cor­ner­sto­nes of this re­form is the ab­oli­tion of tax pri­vi­le­ges, in­clu­ding those for hol­ding com­pa­nies (spe­cial tax sta­tus), which will pro­bably be highly re­le­vant for for­eign in­ves­tors as well.

The re­form also in­clu­des tax breaks. In­come from pa­tents and rights will be lar­gely sub­ject to tax breaks at can­to­nal le­vel using a pa­tent box re­gime. In ac­cor­dance with the re­gu­la­ti­ons of the in­di­vi­dual can­tons, re­se­arch and de­ve­lop­ment ex­pen­ses in Swit­zer­land will be de­duc­tible in the amount of up to 150% of the ac­tual costs in­cur­red. The no­tio­nal in­te­rest de­duc­tion gran­ted on ex­ces­sive share­hol­ders‘ equity at fe­deral le­vel will also be pos­si­ble at can­to­nal le­vel. Howe­ver, up­wards of a cer­tain mi­ni­mum share­hol­ding, at least 60% of di­vi­dends will be ta­xed.

Swiss Voters Reject Corporate Tax Reform© Thinkstock

Ma­thias Josi from our Swiss Ne­xia part­ner T + R AG an­swers all of our ques­ti­ons on what will hap­pen next.

Mr. Josi, were you sur­pri­sed that Swiss vo­ters re­jec­ted the cor­po­rate tax re­form?

No, the wi­des­pread un­cer­tainty re­gar­ding the spe­ci­fic ef­fects in­di­ca­ted some time be­fore the re­fe­ren­dum that the re­form would pro­bably be re­jec­ted.

So what will hap­pen next? Is cor­po­rate tax re­form in Swit­zer­land now off the ta­ble?

Po­li­cy­ma­kers agree that a new draft must be drawn up as quickly as pos­si­ble. The spe­cial ta­xa­tion re­gime for what are known as “spe­cial sta­tus com­pa­nies” will be ab­olis­hed. Which other ele­ments will be in­te­gra­ted into a new draft re­mains a to­pic of po­li­ti­cal dis­cus­sion. The Fe­deral Fi­nance De­part­ment is ex­pe­diting work on a new ver­sion of the re­form un­der the title Steu­er­vor­lage 17. The ba­sic pa­ra­me­ters of the new bill are ex­pec­ted to be pre­sen­ted to the Fe­deral Coun­cil in June 2017 for de­ci­sion. Howe­ver, an amen­ded re­form is un­li­kely to come into force be­fore 2020.

What ef­fects will the pro­po­sed le­gis­la­tion have for for­eign in­ves­tors, say for­eign com­pa­nies with Swiss sub­si­dia­ries?

None in the short term, but at the mo­ment there is na­tu­rally a cer­tain de­gree of le­gal un­cer­tainty, which is to be re­dres­sed as swiftly as pos­si­ble th­rough Steu­er­vor­lage 17.

Matthias Josi, T + R AG, Fürsprecher, Dipl. Steuerexperte, Vizedirektor, T+R AG, Schweiz © Matthias Josi, T + R AG

Will this tem­porary halt to the re­form plans hurt Swit­zer­land as a busi­ness lo­ca­tion?

It cer­tainly won’t help. It is now up to the po­li­ti­cal de­ci­sion-ma­kers and ul­ti­mately again up to vo­ters, per­haps, to off­set any po­ten­tial ad­verse ef­fect as quickly as pos­si­ble.

Are there other plan­ned chan­ges in tax law that are re­le­vant for for­eign com­pa­nies which are ac­tive in Swit­zer­land?

No other chan­ges in tax law are plan­ned at pre­sent. The fo­cus is on Steu­er­vor­lage 17, which – as men­tio­ned above – will eli­mi­nate the spe­cial tax sta­tus that is im­port­ant for many for­eign com­pa­nies. It will be in­te­res­ting to see whe­ther in­di­vi­dual can­tons make per­cep­ti­ble cuts in pro­fit tax ra­tes of their own ac­cord in the me­an­time. The at­trac­tiv­en­ess of in­di­vi­dual lo­ca­ti­ons from a tax per­spec­tive is ex­pec­ted to re­main un­chan­ged with ef­fec­tive mi­ni­mum tax ra­tes of 12% or 13%.

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