In January 2020, the Swiss corporate tax reform enters into force. What are the major changes and who should take action?
Andreas Müller
Tax & Legal Partner
On 19 May 2019, the Swiss citizen voted with a large majority in favor of the Federal Tax Reform (TRAF). This is a major change in the Swiss tax landscape. The new law enters into force in January 2020. Old tax regimes will not be available anymore and Switzerland is fully compliant with the international OECD and EU tax standards.
The main benefits of the new tax system amongst others are:
Reduction of statutory tax rates. Many cantons are currently planning to reduce or have already reduced their statutory tax rate. Some cantonal votes in this regard are still outstanding. The lowest federal, cantonal and communal combined statutory tax rate is around 12%.
Introduction of a R&D incentive and a new patent box system. All new incentives are available only upon application.
If no actions are taken, companies basically will be subject to the new statutory tax rate applicable as of January 2020.
MME recommends certain companies to take immediate action:
Companies with a cantonal tax privilege (Holding, Domicile or Mixed Company) must analyze their future income and capital taxation. Especially, a tax neutral step up to fair market value should be evaluated to improve the income taxation for the coming years.
Companies with strong IP- and R&D activities should analyze whether the new tax incentives result in substantial tax benefits.
Ordinary taxed companies with operations in high tax cantons should evaluate alternatives within Switzerland.
Overall, the Swiss tax system remains very attractive and the tax competition between the cantons still persists to the benefit of the tax payer.
Due to the fast changeing international tax environment, MME recommends that all companies reassess their international tax structure and review their set up in Switzerland. The future in tax lies in a combination of a robust structure with a strong defense strategy. Switzerland is a very successful and business friendly location right in the middle of Europe and the MME tax team is very experienced in advising international corporate clients in Switzerland and Liechtenstein - let’s talk.
