On 28 September 2018, the Swiss parliament adopted the bill for the Swiss corporate tax reform package, the Tax Proposal 17 (TP 17; Steuervorlage 17, project fiscal 17).
The reform package will strengthen Switzerland’s position as an attractive international business location and is expected to enter into force on 1 January 2020. Aside from favourable step-up mechanisms, TP 17 will introduce a notional interest deduction on equity financing for companies in the canton of Zurich. Any company which currently benefits from a preferential tax status such as the holding company, mixed company or finance branch status is now required to swiftly analyse its transition into the new tax system.
TP 17 – the bill as it stands.
TP 17 replaces current tax regimes such as holding, principal, mixed company and finance branch regimes with new tax measures in line with international standards.
As Switzerland is not tied back by the principles of the European Union, it provides more flexibility for R&D related activities, for instance by allowing outsourcing to related parties and third parties.
Separately, many cantons announced significant tax rate reductions resulting in effective corporate tax rates in Switzerland of 12 to 14% in most cantons, thus effectively spearheading Europe as a business location.
The final bill essentially mirrors prior drafts and does not contain any significant surprises.
We recommend clients to consider all elements of TP 17 and start the implementation process by focusing on the above topics for their Swiss operations.
LBA Global Partners provide tailor-made multi-jurisdictional solutions to clients in order to ensure a smooth and efficient transition from the current Swiss tax environment to a post-BEPS world, both in Switzerland and the European market.
The new tax world appears to be a complex matter – we believe everything can be solved with dedication, the right attention to detail and drive for efficiency.
Please contact us for more details and planning on the most appropriate STEP UP options for your business or for your clients.