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Switzerland: Tax relief proposal, employee participation in start-ups, family businesses

Switzerland: Employee participation in start-ups

A proposal to reduce the tax burden on employee participation in start-ups and family businesses has advanced following approval by committees of the Council of States (“WAK Ständerat”) and the National Council (“WAK Nationalrat”).

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Under the current tax framework and practice of the cantonal tax authorities, the valuation of employee stocks for tax purpose is often an issue for unlisted companies—in general, start-ups and family businesses. This makes employee stocks of unlisted companies unattractive from a tax perspective compared to employee stocks of listed companies.

The initiative would provide tax benefits in terms of: (1) the tax valuation of employee stocks for wealth tax purposes; (2) capital gains treatment on the sale of employee stocks; and (3) taxation of employee stock options. Under the proposal:

  • The sale of employee stocks in an unlisted company would result in a tax-free capital gain after a holding period of five years.
  • The tax value of employee stocks in an unlisted company would be considered to be based on the equity of the company (at least the share capital) for seven years on the one-time application of the company.
  • The taxable income on employee stock options of unlisted companies would be calculated as under current rules but reduced by 50%.


Read a May 2019 report prepared by the KPMG member firm in Switzerland

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