Switzerland: Update on corporate tax reform

Switzerland: Update on corporate tax reform

The Swiss National Council on 16-17 March 2016 addressed draft legislation for corporate tax reform, known in English as “Corporate Tax Reform III.”

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The National Council responded to certain international developments, in particular the OECD's base erosion and profit shifting (BEPS) project, and reinforced certain recommendations of the Federal Council as well as the decisions of the Council of the States regarding the repeal of certain “privileged” tax regimes such as the holding company and domiciliary and mixed company regimes at the cantonal / municipal levels and the principal company regime at the federal level.

The National Council concluded by approving:

  • The introduction of a patent box regime, a research and development (R&D) “super deduction,” and the introduction of a notional interest deduction—all of which would result overall in a maximum rate reduction of 80% (giving cantons the opportunity to determine a lower limit)
  • Measures to introduce a tonnage tax regime for shipping companies
  • A proposal to allow the cantons to allow a tax reduction based on patents and participations as well intercompany loans
  • Transitional measures in connection with a step-up basis for tax purposes

The National Council voted against: (1) the current rules regarding the partial taxation of dividends; (2) the introduction of a capital gains tax in respect of (privately held) securities; (3) the adaption of the current capital contribution principle; and (4) repeal of the stamp duty imposed on equity (but left this for future consideration in a separate proposal).

 

Read a March 2016 blog article by the KPMG member firm in Switzerland: Corporate Tax Reform III: National Council argues in favor of the economy

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