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Switzerland: Changes concerning treatment of principal companies, finance branches

Switzerland: Treatment of principal companies

The Swiss federal tax administration announced that it will no longer apply federal practices concerning principal companies and Swiss finance branches to new companies from 2019.


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This announcement represents a step towards implementation of the tax reform anticipated to be effective beginning on 2020 when these federal practices would also be abolished for existing principal companies and Swiss finance branches.

Status of tax reform

The law package was finally approved by Parliament on 28 September 2018. Signatures are being collected for a referendum vote on the latest tax reform initiative. Currently, the referendum period is running, and citizens may call a public vote on the new law by filing a minimum of 50,000 signatures by 17 January 2019. If requested, the public vote would be held on 19 May 2019. According to the Federal Council, the reform would be effective 1 January 2020. 

The Federal Act on Tax Reform and AHV Financing (TRAF) introduces legislative measures to bring the Swiss corporate tax law in line with international standards. Thereby, cantonal tax status companies (e.g., holding companies or mixed companies) would be abolished, and new measures would be introduced. In this context, the federal practices on tax allocation for principal companies and Swiss finance branches would be abolished (no formal change of the tax law is required in this regard). 


Read a November 2018 report prepared by the KPMG member firm in Switzerland

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