(June 7, 2015)

During its meeting of June 5, 2015, the Swiss Federal Council adopted the dispatch on the Corporate Tax Reform Act III. The dispatch includes both tax policy and fiscal policy measures. Herewith the third series of corporate tax reforms is ready for parliamentary deliberation.

The dispatch includes a.o. the following proposals:

The cantonal tax statuses for holding companies and management companies are to be abolished. In this respect a press release issued by the Swiss Federal Department of Finance (FDF) states that while these arrangements made a valuable contribution to the business location’s appeal in the past, they are no longer compatible with the international standards, which is proving to be a growing disadvantage for companies engaged in cross-border activities.

A patent box is to be introduced for cantonal taxes. This will make provision for preferential treatment for revenue from patents and similar rights associated with research and development in Switzerland. The cantons will additionally have the option of envisaging increased deductions for research and development expenditure. Moreover, they will be able to introduce targeted capital tax reductions. In contrast, the Federal Council will refrain from proposing the introduction of a tonnage tax, as this measure would not be compatible with the constitutional requirements.

Further tax measures are to be taken to strengthen the tax system. These include:

·        uniform rules for the disclosure of hidden reserves;

·        the abolition of the issue tax on equity capital.

An adjustment at the shareholder level is also included: dividends paid to shareholders are only to be taxable at 70% in order to take appropriate account of the burden of double taxation (= taxation of profits and of dividends). As is the case under currently applicable law, the prerequisite for this reduction is a stake of at least 10% in the company paying the dividends.

The Swiss FDF issued a press release with respect to the Swiss Federal Council adopting the dispatch on the Corporate Tax Reform Act III. Attached to this press release the following documents can be found:

·        Dispatch on the Corporate Tax Reform Act III

·        Federal act

·        Glossary

·        Questions and answers on the reform 

·        Regulatory impact assessment of the CTR III

·        Avis de droit du professeur Robert Danon sur la constitutionnalité des mesures fiscales proposées par la troisième réforme de l’imposition des entreprises (RIE III)

For further information click here to be forwarded to the press release as issued by the Swiss FDF in this respect. This press release is also available in the French, German or Italian language.

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