Switzerland: Revised draft legislation on Corporate Tax Reform III introduced into parliament

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: Revised draft legislation on Corporate Tax Reform III introduced into parliament

kistler.jpg

zulauf.jpg

Jacques Kistler


Rene Zulauf

On June 5 the Swiss federal government introduced revised draft legislation on Corporate Tax Reform III (CTR III), which would sunset all special corporate tax regimes, such as mixed or holding company regimes. The draft legislation contains various measures to compensate for the elimination of beneficial tax regimes:

  • Reduction of headline tax rates on a cantonal/communal level at the discretion of cantons;

  • Introduction of a patent box applicable to patented IP for which the R&D spend occurred in Switzerland (in line with the OECD's modified nexus approach);

  • Introduction of excess R&D deductions at the discretion of cantons;

  • Allowing a step-up (including for self-created goodwill) for direct federal and cantonal/communal taxes upon the migration of a company or of additional activities and functions to Switzerland;

  • Tax privileged release of hidden reserves for cantonal/communal tax purposes for companies transitioning out of tax privileged cantonal tax regimes (such as mixed or holding companies) in a manner that this would reduce the cantonal/communal tax rate over a period of five years, such that in some cantons the previous tax privileged rate could be achieved for a period of five years.

  • Reduction of the cantonal/communal capital tax in relation to holding of participations and patented IP at the discretion of cantons;

  • Abolition of the 1% capital issuance tax on equity contributions;

  • Extension of the eligibility for foreign tax credits to Swiss permanent establishments of foreign entities.

The revised draft legislation is in some ways more attractive and in other ways more restrictive than the initial draft legislation introduced last year. CTR III is, however, still a work in progress and may change depending on the success of stakeholder lobbying.

The two-chamber Swiss parliament should vote on CTR III in autumn 2015 and spring 2016 respectively. There may also be a national referendum to allow the public to vote on the issue. Cantonal tax laws would subsequently have to be amended to reflect the changes, so that the most likely date for the law to become effective would be January 1 2019.

Jacques Kistler (jkistler@deloitte.ch) and Rene Zulauf (rzulauf@deloitte.ch)

Deloitte

Tel: +41 58 279 8164 and +41 58 279 6359

Website: www.deloitte.ch

more across site & shared bottom lb ros

More from across our site

India also brokered its first-ever multilateral APA last year, the Central Board of Taxes announced
A global tax framework may not materialise anytime soon, but a common set of principles is becoming increasingly necessary, Rudolf Winkenius also tells ITR
Kingsley Napley’s claimants are arguing that taxing the provision of education breaches the European Convention on Human Rights
While pillar two can progress without the US, it won’t reach the same heights without American involvement, argues Renáta Bláhová, founding partner of BMB Partners Taxand
There are unanswered questions as to how foreign investors could reclaim money via tax credits, advisers suggested
Amid an ever-changing tax environment, India’s advisory market is bustling with competition ahead of the 2025 World Tax rankings and ITR Awards
The deal comes after PwC had accused Paul McNab of using confidential information; in other news, McDermott hired a new London tax head from a US rival
Looking at transfer pricing simplification is “obviously helpful”, but it should be done in line with current standards, a senior government figure reportedly said
The UK Government’s plans to close the tax gap via increased HM Revenue and Customs investment have failed to impress local tax advisers
Under the merged scheme for R&D tax relief introduced last year, rules on contracted out R&D have changed. James Dudbridge argues for a proactive approach when reviewing companies’ commercial arrangements
Gift this article