Overview of the most important developments regarding Tax Proposal 17
The reform of the present corporate taxation system is an important issue and is aimed at securing the fiscal attractiveness of Switzerland in the long term, while guaranteeing international acceptance as well as sufficient tax revenues. After 66.4% of Swiss voters accepted the tax package in May 2019, it came into force on 1 January 2020. Most cantons have already included the requirements from the Tax Harmonisation Act in their cantonal tax laws. The remaining cantons are planning to do so during 2020, effective from 1 January 2020.
We’ll be happy to give you details about the latest status and show you how your company can benefit from the changes that have come into force.
Research and development activities and their value creation in these areas are promoted with tax advantages for income from intellectual property rights. The text of the law provides for a precise definition of which patents or comparable rights qualify for box taxation. In addition, the ordinance contains detailed provisions on the calculation mechanism and documentation requirements. In accordance with the international OECD standard, the Nexus approach can be applied by patent, product or product family. The implementation of the patent box is mandatory at cantonal level.
The introduction of a special deduction for research and development expenses is optional for the cantons. This deduction may not exceed 50% of the relevant R&D expenditure in Switzerland.
EN: Further information: www.patent-box.org
The introduction of a notional interest deduction on so called security capital intends to prevent excessive indebtedness by companies. Parliament has decided that this measure may only be implemented by cantons with a statutory cantonal and communal tax rate of at least 13.5% at the cantonal capital.
Only the canton of Zurich meets this requirement and has introduced the deduction for equity-financing. This instrument isn’t available at Swiss Federal level.
Other changes introduced on 1 January 2020:
The abolition of cantonal tax status and principal taxation as well as the tax rules for Swiss finance entities and the introduction of the reform measures mentioned above can trigger a profound change in the tax burden of a company in Switzerland. There are winners and losers. The aim of the impact analysis is to show how the reform will have a concrete impact on the tax burden of your Swiss company/ies. We also show you how a company can best position itself in the new statutory tax environment and make best use of the new tax measures by making changes to its existing structures and business models.
PwC has developed analysis tools to simulate the effects of the following elements of the reform in advance. Of course, a combined analysis of various measures is also possible.
The OECD's new rules on international transparency are designed to ensure taxation at the place where profits are actually generated. This leads to additional compliance tasks and higher demands on your company's tax risk management. Our specialists will be happy to assist you.
Together with you, we develop a transfer pricing model that takes into account the needs of your company in the light of the new OECD regulations.
We also define transfer pricing strategies that are in line with the principle of arm's length pricing. In addition, we support you in making your pricing model more sustainable and protecting it better.