On 15 January 2020, the Swiss Tax Conference (SSK) published Circular Letter 34 on the "Intercantonal tax separation of companies claiming the deductions provided for in the STAF" for the additional deductions newly introduced for state and municipal taxes - but not for direct federal taxes - following the entry into force (1 January 2020) of the Federal Law on Tax Reform and OASI Financing (STAF) of 28 September 2018.
Due to the discretionary powers which the StHG leaves to the cantons, there may be considerable differences in the calculation of taxable net income and consequently double taxation or non-taxation. The aim of this circular is to ensure compliance with the Federal Court's case law on intercantonal tax differentiation for STAF deductions, using nine different calculation examples.
The calculations are exemplary and in no way represent a recommendation of SSK. Circular 34 is limited to dealing with possible intercantonal problems in connection with STAF reductions.
The circular deals only with STAF deductions from legal entities and deliberately refrains from dealing with the intercantonal exclusion of natural persons with self-employment.
Most examples are shown by the additional deduction for R&D expenditure. In addition to the elimination of profits, the elimination of capital is also discussed.
As before, intercantonal tax differentiation must be carried out from the perspective of the canton assessing the tax. On the one hand, the circular emphasises the increasing importance of this principle and, on the other, that the sum of the distributed profits must not exceed the total profit (unconstitutional intercantonal double taxation).
The general principles for intercantonal tax differentiation are in principle also applicable to STAF reductions. For the STAF reductions, the elimination shall be carried out in three stages (specific principles)
- First of all, a segregation is made before applying the STAF reductions.
- In the second stage, the STAF reductions are calculated and allocated.
- In the third stage, the relief limit is determined and divided.
Each stage consists of several steps. The canton in which the company is domiciled basically determines the value of the disclosed hidden reserves (subject to the provisions of the NSD), which are distributed among the cantons using the method applied.
The provisions on the assessment procedure and the notification procedure between the cantons are also applicable to STAF reductions. The "Leader Canton" plays a key role in this process. It sends a proposal for withdrawal together with additional (minimum) information to the other cantons for checking and, if necessary, correction with a counter-proposal.
The circular letter 34 is available here
