In their final vote on 28 September 2018, the National Council and Council of States passed the Federal Law on Tax Reform and OASI Financing (STAF; formerly Tax Bill 17, SV17). In the process, amendments were made to the bill right up to the last minute.
In the final vote, the final legislative text was amended to include a further exception for companies listed on a Swiss stock exchange with regard to the new, stricter regulation on the capital contribution principle, in accordance with a proposal of the editorial commission of 27 September 2018. The National Council and the Council of States approved this addition by a majority in the final vote.
As a result, the STAF contains the following cornerstones (supplemented list based on the SDA media release of 12 September 2018 and our contribution of 22 September 2018):
- AHV: The AHV receives an additional CHF 2 billion per year.
- Federal tax: The cantons' share of direct federal tax will be increased from 17% to 21.2% in order to give the cantons greater leeway to reduce profit tax rates.
- Municipalities clause: The municipalities must be compensated for the effects of the corporate tax reform.
- Dividends: Dividends on participations of at least 10% are taxed at a rate of at least 70% by the Confederation and at least 50% by the cantons.
- R&D expenses: 150% of the expenses for research and development in Germany are tax deductible.
- Patent box: Income from patents and similar rights is recorded. The discharge may not exceed 90%.
- Hidden reserves: Companies that relocate their registered office to Switzerland can amortise disclosed hidden reserves over a period of 10 years. Hidden reserves of companies that lose their cantonal tax privileges as a result of the SV17 are taxed separately.
- Notional Interest Deduction (NID): High-tax cantons (in particular the canton of Zurich) may allow the deduction of a notional interest on excess equity capital and thus reduce profit tax.
- Relief limitation: The total relief through interest deduction, patent box, research deductions and write-offs of hidden reserves including self-created added value, which were disclosed at the end of the taxation period under Article 28(2-4) previous law (Art. 78g(3) nStHG), is limited to 70%. In our understanding, however, this does not include the special taxation of hidden reserves in accordance with the transitional provision of Article 78g (1) nStHG.
- Capital contribution principle: Listed companies may only pay out capital contribution reserves tax-free if they distribute taxable dividends in the same amount. The following exceptions are provided for:
- capital contribution reserves which have been created in merger-like mergers by the contribution of participation and membership rights in a foreign corporation or cooperative or by a cross-border transfer to a domestic subsidiary after 24 February 2008;
- capital contribution reserves which have been created at the time of a cross-border merger or restructuring or the transfer of the registered office or effective management after 24 February 2008; - capital contribution reserves which have been created at the time of a cross-border merger or restructuring or the transfer of the registered office or effective management after 24 February 2008. capital investment reserves that are repaid to domestic and foreign legal entities that hold at least 10% of the share capital or nominal capital of the company providing the service (new according to the proposal of the editorial commission of 27 September 2018).
- Capital reserves in the event of liquidation or the transfer abroad of the registered office or effective management of a capital company or cooperative.
- Financial equalisation: The financial equalisation between the cantons should be adjusted.
- Capital tax: The cantons may provide for capital tax relief.
- Transposition: Anyone who sells holdings to a company in which he himself owns at least 50% should always have to pay tax on the profit. Under current law, the sale of investments below 5% is tax-free.
- Tax credit (motion pelli): Under certain circumstances, Swiss permanent establishments of foreign companies should be able to claim withholding taxes on income from third countries with a lump-sum tax credit.
The FDK also unanimously supports the new law and stresses the urgency of the reform (cf. the FDK's media release of 28 September 2018). In particular, it emphasises the importance of internationally accepted corporate taxes for Switzerland as a business location and the medium and long-term benefits for social security, which experience has shown to bring about corporate tax reforms. It is therefore essential that all forces interested in the common good of Switzerland support the proposal and show a willingness to compromise.
If the referendum is held, the date of a possible referendum is set for 19 May 2019. Although the Federal Council had intensively examined the possibility of bringing the voting date forward to 10 February 2019, the applicable legal provisions do not permit such an advance. If no referendum is held or if the people and cantons approve the bill, the tax reform is scheduled to come into force on 1 January 2020 (cf. the Federal Council's press release of 28 September 2018).
The entire Parliamentary Business (18,031), the amendment of the Editorial Committee, as well as the final vote text are available here.
