At its meeting on December 8, 2017, the Federal Council took note of the report "Valuation of start-ups" by the Start-ups Working Group. In order to improve the attractiveness of Switzerland as a location for start-ups, the working group recommends amending the circular of the Swiss Tax Conference on the valuation of assets of unlisted companies.
The report "Valuation of start-ups" of 22 June 2017 was prepared by the Start-ups Working Group, which was made up of representatives of the Federal Tax Administration and the cantons BS, SG, VD and ZH. The Federal Council had commissioned the FDF to work with the cantons to look for tax optimisation possibilities in order to improve the attractiveness of Switzerland as a location for start-ups. In doing so, the federal leeway of the cantons should be respected accordingly.
The working group has dealt in particular with the following tax aspects:
- Company valuation: On the one hand, political and economic players criticise the current legal situation for the fact that the asset value of unlisted companies basically corresponds to the value paid for the shares in a financing round. This can result in high property taxes for founders and holders of employee shareholdings. In its report, the working group therefore recommends that the current legal situation may be deviated from in justified individual cases. This should be explicitly stated in the circular letter of the Swiss Tax Conference.
- Valuation of employee shareholdings: The working group sees no need for action with regard to the collection of income tax on the allocation and sale of employee stock options.
- loss carryforward period: The current seven-year loss carry-forward period may mean that start-ups cannot fully deduct their initial losses. However, the working group does not recommend any change in the current legal situation in this respect. In particular, it is critical of the introduction of an unlimited loss offset for all companies in conjunction with minimum taxation. However, if a consultation draft is prepared, it will request that the extension of the loss carryforward period with minimum taxation be examined only for start-ups.
The relevant press release is available here.
