Swiss corporate tax reform will provide significant changes to the Swiss corporate tax system. With the effective date of 1 January 2020 rapidly approaching, companies may not have much time to react.
The Swiss corporate tax reform includes the repeal of tax regimes that are no longer internationally acceptable by introducing transitional measures as well as replacement measures. The main components are:
The tax reform will effectively be implemented through changes in the cantonal tax laws. This applies in particular to the cantonal tax rate reductions, which are also part of the reform strategy but not formally part of the federal bill. A number of cantons have already decided on (or at least announced) details of their implementation measures. There are significant differences among the cantons (e.g. specific modalities of transitional rules, tax exemption rate of the patent box, and applicability and extent of the R&D super-deduction).
Effective date, 1 January 2020
The reform is scheduled to be effective at the federal level on 1 January 2020, and the cantons have been asked to implement their reforms by this date, too. Therefore, the effective date of the upcoming changes is fast approaching, leaving little time for cantons and companies to act or react as necessary.
Companies with a closing date before the end of the calendar year generally have even less time to react to the tax reform measures. These companies, especially if they are currently benefiting under a privileged tax regime, need to explore whether it is feasible to extend their financial year to the end of December, or whether the canton is willing to grant the privileged taxation in the business year 2020 on a pro-rata basis until the end of December 2019.
Companies need to consider company-specific effects that tax reform could have and determine if there are any planning opportunities. They also need to keep compliance in mind by considering filing requirements in connection with the transitional measures together with the tax return 2019.
Read an August 2019 report prepared by the KPMG member firm in Switzerland
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