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Switzerland: New 2020 tax law, canton of Ticino

Switzerland: New 2020 tax law, canton of Ticino

The deadline for the referendum against the new Ticino tax law expired on 7 January 2020; thus, the corporate tax law adjustments are effective retroactively to 1 January 2020.

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The canton of Ticino implemented the Federal Act on Tax and AVS Financing (TRAF) in its tax legislation. Together with the adjustments required by TRAF, the first step of the new cantonal law includes a reduction of the corporate income tax rate from 9% to 8% and a reduction of the cantonal tax base from 100% to 97%, dropping the average effective tax rate for corporate taxpayers from 19.81% to 18.47%.

The main element of the tax reform is the repeal of tax privileges (for holding, mixed, and principal companies). The transitional measures are expected to provide certain relief for those companies benefiting from the privileged taxation regime up to 2025.

  • In addition, the patent box regime provides for a reduced taxation of profits from patents and comparable rights, with a reduction of 90% of the tax base.
  • The increased research and development (R&D) expenses of 50% for the calculation of the taxable profit is also part of the new tax package.

The tax reform will reach its full potential in 2025, with a further reduction of the effective corporate income tax rate to 15.4% and the introduction of differentiated communal tax multipliers for corporate and individual taxpayers.

Read a January 2020 report prepared by the KPMG member firm in Switzerland

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