Federal Government sets Parameters

Christoph Rechsteiner

As supported in the consultation process, the legislative proposal still centers on the abolishment of the special tax regimes. To remain an attractive location, an IP box regime, tax rate reductions and possibly R&D incentives shall be introduced. Further, it is the plan to abolish the capital issuance tax and to introduce a tonnage tax as incentive for shipping companies.

A change in the participation relief, different loss carry forward rules or capital gains tax on securities held by individuals a shall no longer be part of the bill. Additionally, formalized step-up rules on status changes might prolong the benefits from the privileged regimes for up to ten years.

However, some useful and necessary aspects of the original “CTR III” package have been given up in the process, mainly the notional interest deduction. Unfortunately for financing activities, without a notional interest deduction the level of taxation would not be internationally competitive. On the other hand, the introduction of a super deduction or tax credit for R&D expenses would boost Switzerland as a location for innovative businesses and it would have a positive effect for all the many Swiss companies that are already today engaged in R&D.

In view of the international and EU-wide developments in the field of taxation (especially action plan on Base Erosion and Profit Shifting), the Swiss Corporate Tax Reform III is unavoidable to strengthen Switzerland’s position in an rapidly changing international tax landscape and to grant legal and planning security for companies.

The current stage of the political process shows the effort to slag the CTR III to the maximum consent to proceed as fast as possible. This is to be welcomed as the attractiveness and competitiveness of Switzerland as a business location would suffer from a long legislative procedure and would stay behind other countries in the international and European context. However, in our point of view, it is necessary to re-consider a notional interest deduction. At least, the cantons shall be free to introduce such a scheme.

Despite all these possible changes and uncertainties, one thing is already clear: Switzerland will remain an attractive location for doing international business. But things must change to remain the same.

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