Switzerland: Swiss corporate tax reform 2017: Swiss Senate approves revised version of the reform

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Switzerland: Swiss corporate tax reform 2017: Swiss Senate approves revised version of the reform

Sponsored by

Sponsored_Firms_deloitte.png
intl-updates-small.jpg

On June 7 2018, the Swiss Senate passed the revised so-called Swiss Corporate Tax Reform 17 Bill following the recommendations of its Ways and Means Committee.

On June 7 2018, the Swiss Senate passed the revised so-called Swiss Corporate Tax Reform 17 Bill following the recommendations of its Ways and Means Committee. The version approved by the Swiss Senate contains the following elements.

Abolishment of all Swiss special income tax regimes

All special Swiss income tax regimes, such as the mixed company or holding company regimes, will be replaced with measures that are both internationally accepted and that ensure Switzerland will remain attractive for multinational companies.

Replacement measures

  • Reduction of the general tax rates at the discretion of the individual cantons, where the majority of cantons will be in the 13% to 14% tax rate range (effective combined federal/cantonal/communal tax rate, effective tax rate [ETR]) with some cantons, such as Zug, Schwyz and Lucerne, with an ETR as low as 12%;

  • Introduction of a patent box, which follows the so-called modified nexus approach by the OECD on a cantonal level with tax relief for qualifying income of up to 90%;

  • Introduction of a research and development (R&D) super-deduction at the cantonal level up to a maximum of 150% of the effective qualifying expenses;

  • Tax-privileged release of reserves for companies transitioning out of tax privileged regimes. This should enable companies to more or less maintain their existing level of taxation for another five years after the sunset of the regimes in 2019 or 2020;

  • Step-up upon migration of a company or of activities and functions to Switzerland. A step-up would be allowed for direct federal and cantonal/communal tax purposes (including on self-created goodwill) for companies or additional activities and functions migrating to Switzerland;

  • Reduction of the cantonal/communal annual capital tax in relation to intercompany loans and patented intellectual property at the discretion of the individual cantons; and

  • Cantons with a 'high' cantonal tax rate may introduce a notional interest deduction (NID) on a cantonal level. This may only benefit the canton of Zurich and potentially very few selective cantons with high enough tax rates.

Revenue raising measures

The Bill contains the following revenue raising measures:

  • Listed companies, when repaying qualified capital contribution reserves (which can be repaid tax free), must now pay at least an equal amount in dividends;

  • The partial taxation of dividends for qualifying Swiss shareholders is increased to 70% at a federal level, respectively to at least 50% at a cantonal level; and

  • The tax reform will be combined with Swiss social security reform, with an increase of social security contributions by employees and employers.

Next steps

The Swiss House of Representatives is expected to vote on the legislation in its autumn 2018 session. The final reform is expected to pass by September 2018.

If there is no referendum, some elements of the tax reform, such as the automatic termination (sunset) of regimes with respective transition measures could become effective as soon as in the first quarter of 2019, with the bulk of the reform being effective as early as January 1 2021.

more across site & shared bottom lb ros

More from across our site

JBS, the biggest meat company in the world, allegedly used Luxembourgian ‘mailbox companies’ to avoid taxes between 2019 and 2022
Despite the conviction of Jessa Dabalos, the Tax Practitioners’ Board’s investigative work continues with five outstanding PwC scandal probes
Heads of tax need to push their teams forward as strategic business advisers to add value across their organisations, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Australia’s conservative opposition will repeal controversial tax agent reporting rules if elected in the country’s May general election
Shapley would be the fourth person to hold the job this year; in other news, UK tax advisory firm MHA raised fewer funds than expected from its London IPO
Gift this article