Switzerland

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Aid to undertakings in the form of liquidity

• Deferral of social insurance contributions: Companies affected by the crisis are able to request to defer the payment of social insurance contributions temporarily. No late interest was then levied on instalment payments until 20 September 2020. An adjustment of the usual amount of advance payments made under these insurances in the event of a significant drop in the wage bill could be requested. Moreover, no payment reminders were sent until June 2020. These measures also apply to self-employed persons whose turnover has dropped. Moreover, employers may temporarily use their accumulated employer contribution reserves to pay employer contributions to occupational pension funds.

Extension of short-time working and simplification of procedures

• The instrument of reduced working hours (short-time working) makes it possible to compensate for a temporary drop in activity and to preserve jobs. Today's exceptional economic situation is also hitting hard at people who work for a limited period of time or on a temporary basis, at people in a position similar to that of an employer and at people who are doing an apprenticeship. For this reason, the entitlement to compensation for reduced working hours is extended, and is easier to apply for it.
• Short-time working may now also be granted to employees with a limited period of employment and to persons in the service of a temporary work organization.
• The loss of work is counted for persons who are in an apprenticeship.
• Short-time work may be granted to persons who occupy a position comparable to that of an employer. This includes, for example, partners in a limited liability company (e.g. GmbH) who work for remuneration in the company. Persons who work in the company of their spouse or registered partner can also benefit from short-time working and claim a lump-sum compensation of CHF 3,320 for a full-time position.
• The waiting period (waiting period) for entitlement to short-time working, which had already been shortened, is abolished. This means that the employer does not have to assume any loss of work.
• Employees will no longer have to compensate overtime before they can benefit from short-time working.

Compensation for loss of earnings for self-employed persons

• Self-employed persons who suffer a loss of earnings due to government measures to combat the coronavirus are compensated if they are not already receiving compensation or insurance benefits. Compensation is provided in the following cases:
  • closure of schools;
  • quarantine ordered by a doctor;
  • closure of an independently managed school open to the public.
• The regulations also apply to independent artists who have suffered a loss of earnings because their engagement has been cancelled due to coronavirus control measures or because they have had to cancel an independently organized event.
• Compensation is paid on the basis of the earnings loss allowance scheme and is paid in the form of per diems. These correspond to 80% of the salary and are capped at CHF 196 per day. The number of daily allowances for self-employed persons who are in quarantine or who assume managerial duties is limited to 10 and 30 days respectively. Claims are examined and the benefit paid out by the Old Age and Survivors Insurance (AVS) compensation funds.

Earnings Loss Allowances for Employees

• Parents who have to interrupt their professional activity to take care of their children are entitled to compensation. The same applies in the case of interruption of work due to a quarantine ordered by a doctor. As for self-employed persons, compensation are paid on the basis of the system of loss of earnings allowances (loss of earnings allowances for service and maternity) and paid in the form of daily allowances. These correspond to 80% of salary and are capped at CHF 196 per day. The number of daily allowances is limited to 10 for persons in quarantine.

Additional measures relating to the Labor Act

• Hospitals and clinics, in particular, are/were under great strain in the current situation. It is/was impossible for them to employ their staff in compliance with all legal provisions given their extraordinary workload and limited staff numbers. They are allowed the greatest possible flexibility in terms of working hours and rest periods. The priority remains, however, to ensure sufficient protection for medical and nursing staff, care assistants and all other persons involved, who contribute with their valuable commitment to the management of this exceptional situation.

Aid to undertakings in the form of liquidity

• Affected by company closures and falling demand, many companies have less and less cash to cover their running costs, despite compensation for reduced working hours. A package of additional measures has therefore been adopted to prevent otherwise solvent companies from finding themselves in difficulty.
• Immediate assistance in the form of specific transitional credits: the Confederation has set up a guarantee program with a volume approx. CHF 60 billion to ensure that affected SMEs (sole proprietorships, partnerships and legal entities) obtain transitional bank credits. This program is based on the existing structures of the guarantee organizations. Therefore, requests for such credits could have been made by the Swiss bank where the requestor has its bank account between 26 March and 31 July 2020. The credits have a term of 5 – 7 years. The aim is that the companies with less than CHF 500 million turnover in 2019 concerned are able to access credits of up to 10% of their turnover or up to CHF 20 million quickly and simply. Amounts up to CHF 0.5 million are paid out immediately by the banks. These credits are issued interest-free, but are subject to an annual amendment based on the market developments and are fully covered by the federal guarantee. For amounts exceeding this ceiling, the guarantee is reduced to 85%, which is therefore subject to a brief review by the banks. An interest of 0.5% is charged on those credits. Amounts up to CHF 0.5 million should cover the needs of more than 90% of the companies affected by the consequences of the coronavirus epidemic.
• There are restrictions for companies that obtain a COVID-19 credit. This is because the sole purpose of the COVID-19 (bridging) loan is to cover running costs. Excluded are, among other things, the payment of dividends, the repayment of capital contributions, refinance shareholder loans, advance COVID-19 funds to foreign affiliates or new investments in fixed assets that are not replacement investments. Once a company has recovered and wants to finance growth plans or distribute capital again, it can repay the guaranteed COVID-19 loan and finance itself through profits, "normal" bank loans or the capital market. Therefore from the time a COVID-19 loan is granted, no more dividends may be paid out until the loan has been fully repaid.

Culture: CHF 280 million released for immediate assistance and cancellation compensation.

• The Federal Council wants to prevent lasting damage to Switzerland's cultural landscape and to maintain the country's cultural diversity. Immediate aid and compensation should help to alleviate the economic consequences of the ban on events for the cultural world (performing arts, design, film, visual arts, literature, music and museums). An initial tranche of CHF 280 million is made available for two months. During these two months, the Confederation will discuss developments with the cantons and cultural organisations. The following measures are planned:
  • Firstly, the Confederation provides financial means to provide immediate assistance to cultural enterprises and artists: non-profit cultural enterprises (e.g. foundations) facing liquidity problems are able to obtain interest-free repayable loans. Artists, for their part, may apply for non-repayable emergency aid for their immediate vital needs, provided that these are not covered by the new allowances paid on the basis of the allowance for loss of earnings scheme. The cantons (in the case of cultural enterprises) and the association Suisseculture Sociale (in the case of artists) are responsible for implementing this measure.
  • Secondly, cultural enterprises and artists may claim compensation from the cantons for financial loss caused in particular by the cancellation or postponement of events or the closure of establishments. This compensation covers a maximum of 80% of the damage; the Confederation pays half of the compensation granted by the cantons.
  • Thirdly, amateur music and theatre companies may be financially supported in covering the costs of cancelling or postponing events.

Tourism and regional policy

• Emergency measures have already been implemented as early as February 2020 under the tourism promotion instruments. These were mainly information and advisory activities as well as measures to overcome liquidity shortages. The Confederation is strengthening its support by waiving the repayment of the outstanding balance of the additional loan granted to the Swiss Hotel Credit Corporation (SCH), which expired at the end of 2019. The SCH thus has an additional CHF 5.5 million at its disposal for loans to retroactively finance the investments of the accommodation facilities, which the latter have financed through their cash flow over the past two years.
• Within the framework of regional policy, federal loans for projects (60% of which are in the tourism sector) currently amount to around CHF 530 million. By law, the management of these loans is delegated to the cantons. In order to make more liquidity available to borrowers, the Confederation allows the cantons greater flexibility in managing the possibilities of deferring payments. This should help the ropeway sector in particular in the short term, where repayments often fall due after the winter season.

Duty relief

• Switzerland suspends import duties on certain medical goods from 10 April to 9 October 2020
• The concerned commodity codes are the following: 2847.0000 3808.9480 3926.2010 3926.2090 3926.9000 4015.1100 4015.1900 4015.9000 4818.5000 4818.9000 6113.0000 6114.2000 6114.3000 6114.9010 6114.9090 6116.1000 6210.1000 6210.2000 6210.3010 6210.3090 6210.4000 6210.5010 6210.5090 6211.3200 6211.3300 6211.3910 6211.3990 6211.4210 6211.4290 6211.4300 6211.4910 6211.4920 6211.4990 6216.0010 6216.0090 6307.9099 6505.0010 6505.0080 6505.0090 9004.9000 9020.0000

Payment facilities

• Possibility, under certain conditions, to defer the payment of the Customs debt and other taxes collected by the Swiss Customs authorities.
• Swiss government announced additional assistance for companies on 20 March 2020. Businesses should have the possibility to extend payment periods for VAT, customs duties, special excise taxes and incentive taxes, without having to pay interest on arrears. For this reason, the interest rate will be reduced to 0.0 percent in the period from 21 March 2020 to 31 December 2020. No interest on arrears will be charged during this period.

• 11/05/2020 The obligation to put in place a protection plan that meets the requirements contained in the model protection plan The following are authorised from 11 May 2020: (i) classroom courses in compulsory schools (primary and secondary I levels) (ii) classroom courses for groups of up to 5 persons (including the teacher) in upper secondary schools, tertiary schools and other educational institutions (driving school, language courses). Non-contact amateur sport activities practised individually or in groups of not more than five persons (including the coach, trainer or supervisor); including the use of facilities and establishments necessary for this purpose, provided that protection plans exist and are respected, Training of competitive athletes who are members of a national framework / national sports federation or who train individually, in a group of up to five people (including the coach, trainer or supervisor) or in a fixed group (elite athletes); protection plans exist and are respected;Training, with physical contact, of members of teams belonging to a league whose competitions are mainly professional (elite athletes); they must comply with strict hygiene rules set out in a protection plan. Family reunification should be allowed again in Switzerland for Swiss and EU citizens. On the other hand, border controls will still take place.
• The measures have been further released in a staggered approach. See link on next slide regarding allowed / prohibited activities.
• In October 2020 the measures have been tightened again (e.g. obligation of waring masks in publicly accessible rooms, in some cantons bars have been closed or restaurants need to close by 10pm).

• Recovery plan : Swiss Relance
• Budget : undefined
• Announcement : September 2nd 2020
• Main orientations : undefined

Economy

•  A specific Swiss recovery plan has not been announced. During the corona crisis, several measures were implemented to mitigate the economic impact of the spread of the coronavirus. Since the lockdown, a development to significant normalization of the economy is visible. Nevertheless, for some economic sectors the recovery is challenging. Thus, the Swiss government will decide on individual cases about further support – in particular in light with the recent tightening of the measures.

Key Measures

• Depends on individual cases

Sectors/Industries/Areas affected

• unclear

Economy

• A specific Swiss recovery plan has not been announced. During the corona crisis, several measures were implemented to mitigate the economic impact of the spread of the coronavirus. Since the lockdown, a development to significant normalization of the economy is visible. Nevertheless, for some economic sectors the recovery is challenging. Thus, the Swiss government will decide on individual cases about further support.

Key Measures

• Depends on individual cases

Sectors/Industries/Areas affected

• unclear

Payment of invoices by the Confederation

• The Federal Finance Administration has instructed the administrative units to check and settle creditors' invoices as quickly as possible, without waiting for payment deadlines to expire, in order to increase the liquidity of the Confederation's suppliers.

CHF 100 million for sports organizations

• Due to the cancellation of amateur or professional sports competitions and championships, the survival of sports clubs and associations as well as organizers of sporting events is at stake. In order to prevent the structures of the Swiss sports world from being undermined, the Federal Council is making the following financial assistance available:
  • CHF 50 million in repayable loans to enable organizations that are active in a Swiss league and focus primarily on professional sport or that organize professional sports competitions to overcome liquidity shortages;
  • CHF 50 million in subsidies for voluntary organizations promoting mainly grassroots sport that are threatened in their existence.
• This support is linked to the obligation for leagues and federations to take measures to ensure their liquidity levels in the event of a crisis. This obligation is enshrined in the performance agreement that the Confederation concludes annually with Swiss Olympic.
• In addition, this ordinance, which is valid for a maximum of six months, allows for the flexible handling of interruptions to training and further training within the framework of the Youth & Sport and Adult Sport programs. These provisions also apply to the training courses provided by the Swiss Federal Institute of Sport in Magglingen.

Legal measure regarding entities over-indebted

• Since 20 April 2020, the board of directors or the auditors can waive notification of the court in the event of justified concerns of over-indebtedness, provided the company was not already over-indebted on 31 December 2019 and there is a prospect that the over-indebtedness can be remedied by 31 December 2020. In addition, relief has been provided in the context of the probate proceedings and a special deferral has been created for SMEs that have got into financial difficulties as a result of the COVID 19 crisis. Such a COVID-19 deferral is 3 months and can be extended to 6 months by the probate court.

Measures to ease the lockdown

• 11/05/2020 The obligation to put in place a protection plan that meets the requirements contained in the model protection plan The following are authorised from 11 May 2020: (i) classroom courses in compulsory schools (primary and secondary I levels) (ii) classroom courses for groups of up to 5 persons (including the teacher) in upper secondary schools, tertiary schools and other educational institutions (driving school, language courses). Non-contact amateur sport activities practised individually or in groups of not more than five persons (including the coach, trainer or supervisor); including the use of facilities and establishments necessary for this purpose, provided that protection plans exist and are respected, Training of competitive athletes who are members of a national framework / national sports federation or who train individually, in a group of up to five people (including the coach, trainer or supervisor) or in a fixed group (elite athletes); protection plans exist and are respected;Training, with physical contact, of members of teams belonging to a league whose competitions are mainly professional (elite athletes); they must comply with strict hygiene rules set out in a protection plan. Family reunification should be allowed again in Switzerland for Swiss and EU citizens. On the other hand, border controls will still take place.

Main sources of information

• COVID-19 landing page of KPMG Switzerland
• Switzerland: Tax measures in response to coronavirus (COVID-19)
• The Federal Council of Switzerland
• Guidance on transitional credits

Tax: Olivier Eichenberger – oeichenberger@kpmg.com
Restructuring: Peter Dauwalder – pdauwalder@kpmg.com
Legal: Joerg Kilchmann – jkilchmann@kpmg.com