Federal Tax Authorities published circular No 37A

On 4 May 2018, the federal tax authorities have published a new circular regarding the tax treatment of participation instruments for employers (circular No 37A). The circular enters into force with immediate effect.

What is it about?

Whereas the circular No 37 mainly provides guidance on the definition and individual income tax treatment of participation instruments in national and international cases, the new circular No 37A focuses on the corporate tax impact for employers resulting from participation instruments, i.e. tax deductibility of corresponding expense.

Learn more about the circular No 37A

What does this mean for employers?

The cost in connection with employee participation programs are generally tax deductible for corporate tax purposes as long as this is adequately reflected in the books. The new circular provides various examples in this respect. However, the devil lies in the detail.

We recommend you to assess the potential impact of the new guidance on your plans and processes to avoid / mitigate any tax exposure. If you have any questions regarding the circular contact Remo Schmid.

Published by

Remo Schmid

Remo Schmid

Birchstrasse 160
Postfach, 8050 Zürich
+41 58 792 46 08

Remo is a partner in the People & Organisation team Switzerland, PwC, Zurich, leading the People and Organisation Consulting Practice in Zurich, which includes the pension and reward team.

Remo has more than 18 years of experience in advising clients in reward matters. From 2009 – 2011 he was developing the reward practice in Geneva and from 2015-2017 he was leading the reward practice for PwC in Germany. He is furthermore co-author of the annual PwC publications “executive compensation and corporate governance in Switzerland and Germany” and is publishing on a regular basis.