Corporate Tax Reform III: Council of States took position

in Tax, 15.12.2015

In view of the international developments in connection with the pressure exerted by the OECD, Switzerland is being forced to redesign its corporate income tax system. After the consultation procedure ended in January 2015, the Swiss Federal Council issued the draft legislation and the dispatch on the Corporate Tax Reform III on 5 June. During summer the Commission for Economy and Taxes of the small chamber pre discussed certain aspects of the reform behind closed doors. Now, on 14 December 2015 the Council of States openly discussed the Corporate Tax Reform III and took position.

It is undisputed that Switzerland needs to make changes to its corporate tax legislation. In particular, the privileged tax regimes such as the holding, domiciliary and mixed company at cantonal/municipal level as well as the principal company status at federal level will need to be abolished. Further, the Swiss finance branch/company regime will also cease to exist. Several measures have been proposed in order to mitigate or ease the effects of abolishing the above-mentioned privileges and to stay competitive as a business location.

In a nutshell, the small chamber of the Swiss parliament concluded the following:

  • The Patent Box regime as proposed in the dispatch and in line with international standards shall be introduced as a measure to stay competitive on an international scale. This should result in an effective tax rate of approx. 10% on patent-related income.
  • In addition to the Patent Box regime, the cantons shall be allowed to introduce an R&D Super Deduction. However, the super deduction shall be not higher than 150%.
  • The transitional measures in connection with the step-up for tax purposes were also undisputed, as they help companies absorb the fiscal shook of an otherwise sudden increase of their tax burden.

Further, the small chamber voted against the following propositions:

  • The Stamp Issuance Duty of 1% shall currently not be abolished. This is in line with what most stakeholder groups from the business sector already stated in the hearings, since they wanted to neither overload the reform and nor risk the lack of acceptance in the course of a likely referendum.
  • The room for maneuver of the cantons for reduced taxations of dividends with stakes above 10% shall not be restricted and shall not be taxed as standard at 70%.
  • Unfortunately, the small chamber decided against a reintroduction of a formerly proposed Notional Interest Deduction. In the recent past, the cantons’ Finance Departments clearly disapproved the introduction of such a measure due to its unforeseeable costs. As for now, the small chamber largely followed the cantons’ arguments.

The reform package will likely be discussed in the large chamber in spring 2016. In January 2017 the law is foreseen to enter into force. However, in view of a highly likely referendum the entry into force will be postponed to sometime 2018/2019. The cantons will generally have two years’s time to change their cantonal legislation. During that time frame, according to the Federal Tax Administration, the principal status as well as the finance branch/company regime shall still be applicable.



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  1. Thommen Andre

    Sehr schade, dass diese Analyse nur in englischer Sprache vorliegt. die darin enthaltenen Begrifflichkeiten sind für einen Unternehmer in der für die Schweiz gültigen Landessprache nicht sehr geläufig.
    Wurde der Bericht wirklich nur für ausländische Investoren geschrieben?
    Herzlichen Gruss

    • KPMG Zürich

      Sehr geehrter Herr Thommen,

      vielen Dank für Ihr Interesse. Der Artikel ist nun auch auf Deutsch verfügbar – die Sprachwechselfunktion finden Sie auf der rechten Seite unterhalb des Autorenprofils.
      Wir wünschen eine spannende Lektüre.

      Beste Grüsse,
      KPMG Schweiz

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