Corporate Tax, Switzerland, Walder Wyss updates

Tax treatment of debt waivers and other debt-to-equity swaps
Walder Wyss
  • Switzerland
  • 29 May 2020

In economic life, debt waivers involving associated companies take on central significance in the context of a restructuring. It can be assumed that restructuring will greatly increase in the near future due to the financial difficulties of many companies resulting from the current COVID-19 crisis. Although the tax treatment of a debt waiver granted by an independent third party is essentially well defined (ie, it is recognised in income), many questions will arise if debt is waived by a related party – namely, a shareholder.

COVID-19 and corporate tax considerations
Walder Wyss
  • Switzerland
  • 08 May 2020

Due to the COVID-19 pandemic, a number of tax return deadlines have been extended for legal entities; however, numerous questions concerning corporate tax requirements for the 2019 and 2020 fiscal years and contentious legal proceedings in tax matters remain. This article examines some of the most salient questions in this regard.

New step-up on migration instrument introduced
Walder Wyss
  • Switzerland
  • 01 May 2020

Foreign companies can now take advantage of a tax-neutral step-up of built-in gains (including self-created goodwill) to fair market value for Swiss direct tax purposes when relocating their legal seat, effective place of management or assets, business units and functions to Switzerland from overseas. The disclosed built-in gains may be depreciated tax-effectively over a specified time period, allowing the Swiss company or branch to reduce its tax burden significantly during the respective timeframe.

Taxation of digital economy: Swiss response to recent OECD statement
Walder Wyss
  • Switzerland
  • 28 February 2020

The Organisation for Economic Cooperation and Development recently released a statement update on a new international framework to allocate part of the profits of multinational enterprises with a substantial digital business footprint in countries in which they have a large user base, but no physical presence. Switzerland has stated that it will maintain its support for the development of a multilateral solution for taxing the digital economy to avoid unilateral actions that jeopardise growth and innovation.

Fundamental changes to Swiss withholding tax on interest payments
Walder Wyss
  • Switzerland
  • 09 August 2019

The Federal Council recently announced its intentions to resume the temporarily suspended Swiss withholding tax reform and set out the general framework to introduce a paying agent tax system with regard to interest payments. However, as the Federal Council's communication did not contain any details, it remains to be seen how the reform will be set out in the draft bill expected in Autumn 2019 and how it will affect paying agents and investors.

Switzerland adopts new corporate tax reform
Walder Wyss
  • Switzerland
  • 24 May 2019

Swiss voters recently approved a new corporate tax reform, which will set the basis for new rules on Swiss corporate taxation and secure and enhance Switzerland's overall attractiveness as a business location. The reform includes a patent box, an R&D super deduction and a notional interest deduction for high-tax cantons. There are also substantial non-tax (revenue-raising) measures and new provisions on social security contributions.

Welcome relaxation of Swiss withholding tax rules on foreign bonds guaranteed by Swiss parent company
Walder Wyss
  • Switzerland
  • 22 February 2019

The Swiss Federal Tax Administration recently relaxed its practice under which bonds that are issued by foreign resident issuers, but guaranteed by their Swiss resident parent company, are requalified as domestic issuances which trigger Swiss withholding tax on interest payments. The revised rules significantly increase the permissible use of proceeds in Switzerland.

Intra-group debt financing: updated safe haven rates and thin capitalisation rules
Walder Wyss
  • Switzerland
  • 15 February 2019

The Swiss Federal Tax Administration recently published the 2019 safe haven interest rates to be used on intra-group loans. Against this backdrop, this article provides an overview of the relevant Swiss tax rules associated with determining whether intra-group financing constitutes equity or debt for tax purposes and the consequences of each characterisation.

End to rulings on Swiss principal companies and finance branches
Walder Wyss
  • Switzerland
  • 30 November 2018

In the context of the bill on the Federal Act on Tax Reform and AHV Financing, the Swiss Federal Tax Administration recently announced that, as of 1 January 2019, it will abstain from granting rulings which safeguard the tax privileges of new principal companies and finance branches. Existing rulings for these regimes will no longer be valid after 1 January 2020 as part of the overall Swiss tax reform.

Swiss Parliament approves corporate tax reform
Walder Wyss
  • Switzerland
  • 28 September 2018

The Swiss Parliament has approved the revised version of Tax Proposal 17, a proposal for corporate tax reform. The new proposal aims to set the basis for new rules on Swiss corporate tax (the last proposal having been rejected in a nationwide referendum) and secure and enhance Switzerland's overall attractiveness as a business location.

Swiss Upper House issues revised Tax Proposal 17
Walder Wyss
  • Switzerland
  • 22 June 2018

The Council of States recently issued a revised version of Tax Proposal 17, a proposal for corporate tax reform. The new proposal is based on the government's March 2017 proposal and aims to set the basis for new rules on Swiss corporate tax (the last proposal having been rejected in a nationwide referendum in February 2017) and secure and enhance Switzerland's overall attractiveness as a business location. Under the proposal, Switzerland will repeal the existing special corporate tax regimes.

Switzerland and Brazil sign double taxation agreement
Walder Wyss
  • Switzerland
  • 18 May 2018

Switzerland and Brazil recently signed a double taxation agreement, which is a major achievement for both countries and has been a long-standing demand of the private sector. The new agreement will significantly increase Switzerland's attractiveness for Latin American investments and provide investors with legal certainty in tax matters.

Government adopts Tax Proposal 17 and submits dispatch to Parliament
Walder Wyss
  • Switzerland
  • 13 April 2018

The government has adopted Tax Proposal 17, a new proposal for corporate tax reform. The purpose of this new proposal is to set the basis for new rules on Swiss corporate taxation and to secure and enhance Switzerland's overall attractiveness as a business location. Under Tax Proposal 17, Switzerland will repeal the existing special corporate tax regimes. As opposed to the proposal that was rejected in February 2017, the current proposal appears to have attracted wider political support.

Initial coin offerings – more clarity on tax implications
Walder Wyss
  • Switzerland
  • 02 February 2018

Switzerland has become a major hub for initial coin offerings (ICOs). Yet to date, there has been little clarity about the resulting tax implications. Recent discussions and tax ruling negotiations with representatives of several tax authorities in Switzerland have provided more clarity on the tax implications of ICOs, at least regarding tokens issued by Swiss companies raising funds under the promise of a participation in future revenues.

Government publishes detailed draft for corporate tax reform
Walder Wyss
  • Switzerland
  • 22 September 2017

The government recently published a new detailed draft for a corporate tax reform. The purpose of this new draft is to set the basis for new rules on corporate tax (the last proposal having been rejected in a nationwide referendum) and to secure Switzerland's overall attractiveness as a business location. The draft includes several measures that have been discussed in the past, but it also addresses the criticism that contributed to the rejection in the February referendum.

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