Canton of Vaud – lowering corporate tax to 13.79%

in Tax, 22.09.2014

With the intention of sending a clear signal to the many multinational companies located in the Lausanne/Geneva area, the Canton of Vaud has provided an intermediary report of its plan on how to lower its current corporate tax rate of 21.65% to 13.79%.

Basically, special-status companies, which benefit from a preferential taxation, will see their taxes increase, while companies taxed at standard rates will enjoy significantly lower tax rates. The total tax income from corporations for the canton and the communities will be reduced from the current CHF 440 million to CHF 390 million.

An independent study showed that in 2009, 246 companies in the Canton of Vaud benefited from a mixed-tax status (322 companies in 2013), among them many multinationals but also some Swiss companies which conduct their activities mainly outside Switzerland, both generating about CHF 147 million corporate tax for the canton. These companies employ around 10,200 persons who paid roughly CHF 150 million in personal income tax and contributed CHF 120 million to social insurance funds. Another 11,200 jobs are indirectly created through these companies. It was estimated that the direct employees and indirect jobs generated a total added value of close to CHF 3 billion for the canton. It should be highlighted that these figures do not include the tax and social impacts of the companies benefiting from the holding tax status in Vaud (379 companies in 2013).

It should be noted that at the same time the Canton of Vaud is also planning to raise the contribution from corporations to the funding for family allowances and the children day care (FAJE), which will add another CHF 100 million

The changes in the cantonal tax law will enter into force in 2018 or 2019, in accordance with the reform of the Federal Corporate Tax law currently under discussion. To be noted, that at the same time Canton of Vaud is also planning to raise the contribution from corporations to the family allowance by and the children day care system (FAJE) by 100 million per year. Currently these contributions are at around 2,2% of the gross salary volume per company and might moderately raise by 2018.



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