Comparison of Tax Proposal 17 measures between Federal Council dispatch and Council of States

Armin Marti Partner and Leader Tax Policy 08 Jun 2018

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On 7 June 2018, the Council of States discussed details about the Tax Proposal 17 measures, confirming the proposed changes of the WAK-S. Recently, the WAK-S had unanimously agreed on an overall concept which differs in several points from the dispatch on the draft law bill published by the Federal Council on 21 March 2018. 

In Detail

The following overview shows the difference between the reform measures, which the Federal Council proposed, and the version as amended by the State council Commission and as approved by the full State Council:

TP17 Measures Dispatch on draft law bill by Federal Council Amended draft by State Council (07 June 2018)
Date of communication 21.03.2018 16.05.2018 and 25.05.2018
Patent box (cantonal level, mandatory) ✓ (cantonal level, mandatory)

R&D incentive (super-deduction)

(cantonal level, optional) ✓ (cantonal level, optional)
Taxation of hidden reserves (two rate approach) (two rate approach)
Maximum relief for all measures 70% 70%
NID x ✓ NEW: optional on cantonal level for cantons with high tax rates (currently, only the Canton of Zurich would fulfill the criteria to introduce this measure)
Capital tax ✓ (possibility to reduce the capital tax base with equity related to investments and patents) ✓ NEW: in addition to investments and patents, possibility to reduce the capital tax base with equity related to loans to group companies
Partial taxation of private dividend income 70% ✓ NEW: 70% on federal, min. 50% on cantonal level
Increase of child allowances (by CHF 30) x
Increase of social security contributions x ✓ NEW: increase of social security contributions by 0.3% (split equally between employer and employee)
Increase of cantonal share in direct federal tax revenues ✓ (from 17% to 21.2%) (from 17% to 21.2%)
Amendment regarding capital contribution reserves x ✓ NEW: 50% proportionality rule for WHT-exempt repayment of capital contribution reserves for quoted companies with exemptions for relocations and distributions within multinational groups (to safeguard attractiveness of Switzerland for foreign investments)

The amendments approved by the State Council are driven be the clear and strong desire of all parties, from right to left, to make the reform a success, to reduce the risk of referendum and to proceed with implementation as quickly as possible. 

What's next

In a next step, the debate on the reform will continue in the National Council Commission towards the end of June and in August. Thereafter full parliamentary debate in the National Council is planned during the autumn session (from 1 to 29 September 2018). In parallel different cantons have started the political soundings of their implementation plan of the new federal harmonisation law provisions into their cantonal tax laws with the objective to put the reform into effect by 1 January 2020, if ever possible.

PwC actively contributes to the debate and follows these developments very closely.Companies are best advised to actively look into the impacts the revised reform measures will have.Please contact your usual PwC contact for any questions or a member of the PwC Tax Proposal 17 core team listed below. 

 

Contact Us

Dieter Wirth

Partner and Leader Tax & Legal Services, Zurich

+41 58 792 44 88

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Armin Marti

Partner and Leader Tax Policy, Zurich

+41 58 792 43 43

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Benjamin Koch

Partner and Leader Transfer Pricing & Value Chain Transformation, Zurich

+41 58 792 43 34

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Daniel Gremaud

Partner Tax & Legal Services, Lausanne

+41 58 792 81 23

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Remo Küttel

Partner Tax & Legal Services, Zug, PwC Switzerland

+41 58 792 68 69

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Claude-Alain Barke

Partner Tax & Legal Services, Lausanne, PwC Switzerland

+41 58 792 83 17

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