The federal has given order to the financial department, to prepare and present the cornerstones of a new tax submission 2017 (SV 17). If this tax reform can be implemented early enough is questionable.
Status companies – no immediate changes
At first glance there are no changes caused by the rejection of CTR III for these company types. They still profit from a lower taxation compared to the other capital corporations. But in the long run substantial changes are to be expected which will raise the necessity of tax consulting concerning this issue.
Blacklist of the EU
Switzerland has promised to the EU/OECD to abolish these special company taxation schemes until 2019. At present the EU is working on clarifications concerning special taxation schemes and based upon this wants to establish a blacklist of countries and tax systems which are not compliant with the OECD/BEPS regulations. The possibility cannot be ruled out that Switzerland could land on such list.
Possible measures of other countries
If Switzerland is mentioned on this blacklist the following specific actions or sanctions of other countries are conceivable:
- Termination of double tax treaties
- Levying of source taxes for Swiss companies receiving earnings from the respective country
- Refusal of deduction of expenses towards Swiss status companies
The last one being most probable as it is already known practice with some countries (e.g. Italy).
Voluntary waiver of the special tax status
Due to the actions taken by other countries it could make sense for international companies to waive their special tax status voluntarily. Associated with such change of tax status it has to be checked, how this change can be done with regard to existing hidden reserves.
Risk assessment necessary
Most cantons allow – based on the know practice – a tax neutral disclosure of hidden reserves that have been generated due to the privileged status in a so called tax balance sheet. The company then would have the possibility to write down these hidden reserves over a period of five to ten years, which – in many cases – strongly reduces the taxable results and the running tax burden for this period. Following a respective risk assessment such proactive voluntary waiver could be an alternative worth considering.
Targeted analysis of developments
Companies profiting from a special tax status should follow the developments in countries relevant for them closely and in a timely manner. Depending on the observations and the analytical results a proactive voluntary waiver as shown above could make sense. At the same time, it has to be analysed how such change in status can be done in a tax optimised way.
Passive waiting is no solution. Make you assessments and analyse the possible tax impact early and choose your way of dealing with the issue. Christian Lingg, our experienced tax expert looks forward to supporting you.