- About Us
- Contact Us
On May 19, 2019, the Swiss Corporate Tax Reform was approved in a popular vote. Most of the new measures are expected to become already effective as of January 1, 2020.
The reform brings an unprecedented change to the Swiss corporate tax landscape. Nearly all companies are affected by the most significant overhaul of the Swiss tax system in decades. The implementation period is short, which is why the implications of the reform need to be analysed urgently now.
Reduction of corporate tax rates:
Lower income tax burden for a wide array of businesses without the need to meet special requirements (in addition to participation relief, which continues to exist and exempts dividends and capital gains derived from qualifying participations). The reduction of cantonal income tax rates is not directly covered by the Tax reform, but is necessary to remain attractive for companies that did benefit from a preferential tax regime.
Companies benefiting from a preferential tax regime are generally subject to a lower capital tax rate. To compensate for the loss of this tax advantage, the cantons may reduce the capital tax rate on equity relating to patents and comparable rights, qualifying participations, and intra-group loans.
Based on the official announcements of the cantonal governments, it is anticipated that most Swiss cantons will provide for attractive tax rates of 12% to 14% applicable to the pre-tax income (including federal income tax).
In connection with the new tax relief tax rate of about 10% can be reachable.
Tax neutral step-up of tax basis upon relocation to Switzerland
Enterprises moving assets, functions, business operations, permanent establishments, or their registered office or place of effective management to Switzerland may reevaluate all assets (other than participations of at least 10%) newly becoming subject to taxation in Switzerland at fair value. This step results in an income tax neutral step-up of the tax basis. In the years following this income tax neutral asset step-up, the assets can be amortised tax effectively and thereby reduce the taxable income.
Upon transition from the preferential tax regimes to ordinary taxation, the two rate model is applied. Profits attributable to the realisation of built-in gains generated under the preferential regimes, are subject to a reduced tax rate. The cantons can determine the reduced tax rate at their own discretion. The two rate model ensures a competitive income tax burden over the five-year transition period.
Based on currently applicable practices, a lot of the cantons offer already today the option of a tax-neutral disclosure of hidden reserves in case of a transition from preferential regimes to ordinary taxation under the current law (“old law step-up”).
The subsequent amortisation of the stepped-up goodwill and built-in gains results in a low tax burden (max. 10 years). The old law step-up is relevant for companies that voluntarily waive the preferential regimes before entry into force of the new tax legislation.
The impact and the alternatives should be analysed in detail.
Abolishment of the existing privileged tax status for holding companies, administrative companies, mixed companies, principal companies, and finance branches. Companies with existing privileged tax status have the following options:
Participation relief continues to exist; especially dividends and capital gains derived from qualifying participations remain exempt from corporate income tax.
A main element of the reform is the introduction of a patent box regime in accordance with OECD standards. The Patent Box income derived from domestic and foreign patents and comparable rights is taxed separately with a maximum reduction of 90%.
The cantons may provide that up to 150% of the expenses for research and development activities in Switzerland can be deducted for cantonal and municipal income tax purposes.
The regime of the Patent box and the R&D super-deduction can be combined.
Notional Interest Deduction
High tax cantons (higher than 18%) have the option to introduce a notional interest deduction on surplus equity. Based on the announced intentions of the cantonal governments to reduce the cantonal tax rates, only the canton of Zurich meets the requirements for the introduction of a notional interest deduction. This is a tax deduction of an arm’s length interest rate on equity exceeding the equity required for the long term business activity.
Cap for tax reliefs of 70%
A company’s maximum cantonal income tax reduction resulting from the patent box, R&D super-deduction, and the notional interest deduction may not exceed 70% in total (i.e., minimum tax burden at cantonal level of 30% of the ordinary tax burden). The cantons may introduce a more restrictive threshold. At the moment it is unclear whether and how the amortisations on disclosed hidden reserves upon a status change under current law will be recognised for the tax relief.
Increase in dividend taxation
For direct federal tax purposes, 70% of the income from qualifying participations (at least 10% investment) is taxed at shareholder´s level and for cantonal and communal tax purposes at least 50% of such income shall be taxable.
The current law stipulates a 60% taxation if the income is derived from private wealth, and a 50% taxation in case of shares held as business asset, in some cantons the taxation is currently lower than 50% (eg. Canton Glarus).
Adjustment of capital tax (optional)
the cantons may reduce the capital tax rate on equity relating to patents and comparable rights, qualifying participations, and intra-group loans.
Reduction of cantonal income tax rates (optional)
The reduction of cantonal income tax rates is not directly covered by the Tax reform, but is necessary to remain attractive.
Based on the official announcements of the cantonal governments, it is anticipated that most Swiss cantons will provide for attractive tax rates of 12% to 14% applicable to the pre-tax income (including federal income tax). Some of the cantons/Communes will be even blow 12%.
Need for action
Every company should now take action and evaluate the impact of the changes to the tax position.
A timely preparation for the tax reform will prevent unwelcome surprises and competitive disadvantages.
The following four questions have to be answered:
The tax reform will influence the Swiss tax landscape for the years to come. It is therefore important for companies to prepare for the future now and implement the necessary measures. We will be happy to provide you with further information on the tax reform and to assist you in shaping your future tax position together with you.
Dr. Manuel Vogel, Dipl. tax expert
By Liza Robbins. If you were a carpenter frustrated because your team didn’t want to wear safety masks, where might
By Liza Robbins. Friends who use Facebook – I don’t! – mentioned to me that their experience has changed considerably
By Liza Robbins. January 2020 was less than five months ago. But it feels like a different lifetime, doesn’t it?
By Liza Robbins. It was 1665, and the Great Plague of London was in full force. Isaac Newton, then a
By Liza Robbins. It was the recession of 1991. In America, McDonald’s saw its sales decline by 28%. Meanwhile, Pizza
By Liza Robbins. Is your firm ready for the Coronavirus? The last few months have exposed just how vulnerable our
By Liza Robbins. Last month, Marie-Laure Delarue became EY’s first Global Vice Chair – Assurance. Her appointment brought the share
By Liza Robbins. “Liza, who do we have in the Ukraine?” Kreston Ioannou & Theodoulou, a firm in Cyprus, had
By Liza Robbins. Two Kreston firms… At opposite ends of the European continent… Both looking to uncover * why *
By Liza Robbins. If you walk into Exco Poland this week, you’ll find a colourful scene. The firm has literally
By Liza Robbins. “People used to be focused on doing their job. But now they see things differently. They’re here
By Liza Robbins. What makes Apple products so compelling and so popular? After all, they’re just computers, phones and smartwatches…
By Liza Robbins. It’s that time of the year when people are thinking about the passage of time… Looking back
By Liza Robbins. We’re coming towards the end of the year… So just before we move on to new topics
By Liza Robbins. Do you know the 2nd quickest way for your firm to grow? I know, I know. It
By Liza Robbins. Once a month, if you walk into the WeWork LaFayette offices in Paris, you’ll see a familiar
By Liza Robbins. Rich Howard had a client doing business in 5 countries. Because he had visited several of the
By Liza Robbins. “This programme was one of the reasons I sold my firm to you.” “I was able to
By Liza Robbins. When something isn’t running smoothly in your business, you might look in different directions for a solution.
On May 19, 2019, the Swiss Corporate Tax Reform was approved in a popular vote. Most of the new measures
By Kreston CEO, Liza Robbins. As you know, part of our long-term vision is for all Kreston firms to bear
By Kreston CEO, Liza Robbins. Let me ask you… When was the last time you went to a networking event,
The UK has recently released the first full year’s figures for the Diverted Profit Tax (DPT) – the so-called ‘Google
December 2018 saw changes in many tax regulations, to be initiated that month or in January 2019. These included:
The UK has previously set out a number of scenarios which might possibly reduce friction in terms of the customs
Why you should offer cybersecurity services to your clients (and an easy way to start) Cyber security, and the
By Kreston CEO, Liza Robbins. Kreston members – Did you catch my announcement earlier this week? Drumroll please… The Kreston
By Kreston CEO, Liza Robbins. How many times have you felt the pain of rejection from a potential client? You
By Kreston CEO, Liza Robbins. If you’re thinking of doing more business internationally, this probably isn’t the first region you
By Kreston CEO, Liza Robbins. How much of your business is taken by the Big 4? Losing out on business
By Kreston CEO, Liza Robbins. “We all want to grow to the level of the Big 4, but it’s difficult
By Kreston CEO, Liza Robbins. Benjamin Franklin supposedly once said: “If you fail to plan, you plan to fail.” But
By Kreston CEO, Liza Robbins. Last week I received an email from the chair of a large Kreston firm, telling
By Kreston CEO, Liza Robbins. “I was very attached emotionally to my firm, and it was difficult to let go.”
By Kreston CEO, Liza Robbins. ‘I should have started sooner’… We’ve all felt that regret. When you assess risk for
By Kreston CEO, Liza Robbins. Last week I left you with a question . When all your competitors claim that
By Kreston CEO, Liza Robbins. “We provide high-quality accounting and taxation services.” “Our mission is to provide top-quality financial advice.”
By Kreston CEO, Liza Robbins. Recently, a Kreston firm in Asia was looking to help a business they work with
By Kreston CEO, Liza Robbins. What’s the connection between muesli…. taxi cabs…. And Kreston? In theory, nothing! But in 2014,
By Kreston CEO, Liza Robbins. Over the past few weeks, we’ve been talking about what accountancy firms have to do
By Kreston CEO, Liza Robbins. For the past three years, the average annual growth rate of Kreston GCG in the
By Kreston CEO, Liza Robbins. Petra Uylen’s client had a problem. They needed a tax advisor, an accountant and a
By Kreston CEO, Liza Robbins. Since I became CEO last year, I have been visiting Kreston firms across the world.
Kreston member Duncan & Toplis is now an accredited centre for the Institute of Leadership & Management (ILM) and will
Irish accountancy firm BFCD recently moved from its existing accountancy association to join Kreston International. We spoke to partners Margaret
Kreston Iberaudit has updated its Spanish regional fiscal guides for 2019. You can access all the guides here: Fiscal Guide
By Elena Bargados Varela, Tax Manager at Kreston Iberaudit S.L. Due to the recent surge in the number of software
From 1 April most VAT registered businesses with turnover above £85,000 will have to file VAT returns through new Making
Author: Sarjit Singh, Executive Chairman at Kreston member firm, Ardent Associates LLP. The future of work is not just about learning a
By Andrew Griggs, Kreston Board Director and Senior Partner of UK member firm Kreston Reeves. In February, the Institute of
“The China One Belt, One Road is going to be the new W.T.O – like it or not.” These are
“A crushing, horrible, unfair disaster”. That’s how President Trump described inheritance tax; he aims to abolish it by 2025. Other
Artificial Intelligence (AI) has been garnering a lot of media attention of late. And for good reason – its potential
Earlier this month, the Senate voted in Donald Trump’s controversial $1.4 trillion tax reform bill by the narrow margin of
To say that there’s been a backlash against globalisation in recent years would be an understatement. From demonstrations in France
“May you live in interesting times” goes the Chinese expression. In fact, it’s actually more of a subtle barb to
Earlier this month, the Slovenian Prime Minister, Miro Cerar, stated that he “want[s] to position Slovenia as the most recognised
In the UK, they’re known as Generation Y, in Germany Generation Maybe, and China has labelled them as the generation
Rodney Sutton, head of manufacturing at Kreston Reeves, recently shared his thoughts on the UK manufacturing industry following the referendum
The adoption of international accounting standards has brought many benefits to the private and public sectors. This being said, there
Remote working is becoming a way of life for many professionals and the ability to work in a variety of
A common global language for business affairs, IFRS Standards are required by more than 120 jurisdictions in the world. Recently,
Automated technologies and artificial intelligence in our society will challenge many professions in the future. Some of them may be
Crowdfunding is still relatively new but should still be considered as a viable source of equity. Nowadays, it is providing
A legal amendment to the Finance Bill recently accepted by the UK government may pave the way for big changes
In the business world, there are bumps on the road and financial setbacks. In this situation, it is easy to
Day by day, technology is becoming an essential part of our lives, as the way we manage our financial life,
A new generation is coming to challenge the market. The Millennials make up a quarter of the US population and
Managing change is one of the biggest challenges for businesses as it requires a huge effort from managers and organisations
Sustainability reports are released by companies and organisations of all types, sizes, and sectors, from all over the world. A
Accounting is an indispensable tool for entrepreneurs to manage their business. The data provided by competent
Thinking about the risks involved in business has become an essential part of an enterprise’s strategy. Risk management enables organisations
When a business does not achieve its expected results, it may be time to think about implementing change. In these
The Financial Times recently reported the dispute in the courts between the UK supermarket chain Sainsbury’s and MasterCard. The Competition
For many, the accounting profession may not seem the most attractive in the world. But with technology and innovation at our hands, this is about to change.
By following these five steps, communication has everything it needs to flow better, regardless of where your business is located and where the people you
The need to go global is something that has emerged over the past decade and promises to challenge business for the next coming years.
Recently a considerable change in the SME market was announced through business news on the internet. The Big Four have
There are five topics that we must remember when dealing with working personal relationships in international business…
Slowly, one of the last socialist countries in the world is preparing to make changes to its economy, but how will this be done?
Developing countries attract the attention of investors by offering good opportunities and new markets, making them attractive for anyone thinking of expanding their
Through a mobile app, a small business can promote its brand, products, and services, expand its sales channels, interact with the target audience and get
Last month, experts at the Milken Institute Global Conference in Los Angeles looked at certain megatrends and predicted several economic scenarios for 2040 to
Your browser (Internet Explorer) is out of date.
It is no longer supported by Microsoft and therefore may not display all features of this and other websites. Learn how to update your browser here