Swiss Corporate Tax Reform
On 19/05/2019, under the pressure from the EU, Switzerland voted “yes” to the corporate tax reform that will abrogate preferential regime for multinationals while lowering the baseline corporate tax rates across cantons.
The main changes to the Swiss tax system to be introduced by the reform are as follows:
1. End of cantonal tax breaks:
Multinationals will no longer get breaks from cantons; all companies will be subject to the same rate. As of 1 January 2020, there will be no special regimes any more, which will remove Switzerland from the grey list of the EU.
At the same time Swiss cantons will cut the rates they levy on companies as part of the reform. They will have full ordinary tax rates of between 12% and 14% in general.
2. Patent box:
Profits from patents will get favorable tax treatment at a cantonal level subject to nexus approach; but that rate must be above 10%.
3. R&D deductions:
Cantons may give breaks to promote research and development activities; a deduction of no more than 1.5 times is permitted.
4. Higher tax on dividends:
Federal rate on dividends will be 70% and at a cantonal levels at least 50%.
5. Equalization:
Canton’s share of federal tax receipts to rise to 21.2% from 17.0%.
Thus, the current corporate tax reform aims to ensure the Swiss tax system is both internationally competitive and compliant with the OECD rules.
The original source of information: Swiss Federal Department of Finance
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