Switzerland’s Tax Proposal 17 framework set by Federal Council

By Davide Anghileri, University of Lausanne

Switzerland’s Federal Council, during its 31 January meeting, set out the parameters for the reform of Switzerland’s international tax system, stressing the need to respond to the significantly changed international environment.

In particular, the Federal Council decided that the Swiss reform proposal, known as Tax Proposal 17, should provide for an increase the cantons’ share of direct federal tax to 21.2 percent, as suggested by the cantons and communes during the consultation procedure on the reform.

The Federal Council confirmed that Switzerland’s tax reform proposal will include the introduction of a patent box that would be mandatory for all cantons and an additional deduction for research and development that would be optional.

Moreover, under the tax reform, 70 percent of dividend income from qualified participations would be taxed at the federal level and at least 70 percent of this income would be taxed at the cantonal level.

In addition, the Confederation’s minimum guidelines for family allowances should be increased by CHF 30 per child, the Federal Council concluded.

The Federal Council mandated that the Federal Department of Finance should prepare a dispatch by the end of March together with an estimation of the dynamic financial implications of Tax Proposal 17 for the Confederation and the cantons.

The timing of the Federal Council’s action makes it possible for the Parliament to conclude its work as early as the 2018 autumn session.

Hence, if a referendum is not called, some Tax Proposal 17 measures would come into force as early as the beginning of 2019, and most proposals would come into force from 2020.

Davide Anghileri

Davide Anghileri is a PhD candidate at the University of Lausanne, where he is writing his thesis on the attribution of profits to PEs. He researches transfer pricing issues and lectures for the Master of Advanced Studies in International Taxation and Executive Program on Transfer Pricing.

Anghileri, a Contributing Editor at MNE Tax, previously worked as a policy advisor to the Swiss government on BEPS issues. He can be reached at danghileri@yahoo.it.

Davide Anghileri


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