EU Direct Tax Group

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Finland – CJEU judgment on the compatibility of the Finnish legislation implementing Article 10(2) of the Merger Directive with EU law
  • Germany – CJEU judgment in Deister Holding and Juhler Holding
  • Germany – CJEU referral of German dividend withholding tax regime in the case of a Canadian pension fund
  • Germany – AG Opinion on the compatibility of German at arm’s length legislation with EU law

National Developments

  • Cyprus – Public consultation on the EU’s Anti-Tax Avoidance Directives (ATAD1 & ATAD2)
  • Finland – Central Tax Board advance ruling on taxation of income from Luxembourg SICAV (UCITS)
  • Finland – Central Tax Board advance ruling on tax treatment of Finnish source real estate income
  • Italy – Final approval of the 2018 Finance Bill
  • Lithuania – Increased investment tax relief measures
  • Spain – Appeal before the Spanish Supreme Court on the rules to eliminate international double taxation

EU Developments

  • EU – ECOFIN Council publishes EU list of third country non-cooperative jurisdictions in tax matters
  • EU – ECOFIN Council Report to the European Council on tax issues
  • EU – European Parliament Recommendation to the Council and the Commission following the inquiry into money laundering, tax avoidance and tax evasion (PANA)

Fiscal State aid

  • Italy – Italian Supreme Court decision on recovery of illegal State aid granted to multi-utilities owned by municipalities
  • Netherlands – European Commission opens formal investigation into the Netherlands’ tax treatment of Inter IKEA
  • United Kingdom – European Commission publishes detailed opening decision regarding its State aid investigation into the financing income exemption within the UK’s CFC regime

Read the full newsletter

This bi-monthly newsletter is prepared by members of PwC’s pan-European EU Direct Tax Group (EUDTG) network.

To receive this newsletter and our newsalerts automatically and free of charge, please send an e-mail to: eudtg@nl.pwc.com with “subscription EU Tax News”. For previous editions of PwC’s EU Tax News see: www.pwc.com/eudtg

Contact Us

Armin Marti
Partner Tax & Legal Services, Leader Tax Policy
+41 58 792 43 43
armin.marti@ch.pwc.com

What will the Tax Proposal 17 add?

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The demands on Switzerland

Conformity with the OECD and EU standards. That means inter alia equal treatment of domestic and foreign income and therefore abolition of five special forms of corporate taxation (“tax regimes”), which are subject to international criticism:

  • Holding company,
  • domicile company,
  • and mixed company at cantonal level,
  • principal taxation,
  • and regime for Swiss Finance Branches at federal level.

The timeframe

On 14 October 2014, Switzerland assured the EU that it would abolish tax regimes considered by the EU to be harmful. In turn, the EU undertook to abolish in parallel existing measures of individual EU states against Switzerland. On 12 February 2017 Corporate Tax Reform III (CTR III) was presented to the sovereign and rejected with a resounding “No”.

Given the existing international pressure, the Federal Council had to act quickly and therefore launched the draft of a new tax proposal (known as Tax Proposal 17; TP 17). The consultation process on the Federal Council’s revised proposal was concluded on 6 December 2017.

The objectives of TP 17 are the same as for CTR III

The following target triangle is to be achieved in the best possible way:

  • Restore international acceptance of the Swiss tax system,
  • maintain its attractiveness as a business location and
  • secure appropriate tax revenues for confederation, cantons and communities.

The new corporate tax system should strengthen Switzerland as a competitive tax location and reliable value-adding partner for domestic and foreign groups and for Swiss SMEs. Attractive jobs should be created and retained and social prosperity consolidated. In addition, international conformity is strived for and a balanced corporate tax substrate ensured. It is the intention that TP 17 is more balanced, more comprehensible and politically more widely accepted, as the call for an acceptable solution and a suitable balance is becoming louder.

For those involved in the political process it is now a question of giving up their extreme positions and to come together to reach an agreement.

The basic concept

In order, to achieve the above-mentioned target triangle in the best possible way, the cantons must be permitted a high degree of flexibility in structuring their regimes. Rigid regulation with enforced conformity regardless of the cantonal characteristics would inhibit successful realisation and contradict Switzerland’s federalist concept. The reform package is therefore still based on modules and allows the cantons certain range of options in the realisation. The Helvetic success model, which in the last 30 years has brought Switzerland numerous corporate relocations and prosperity, should be retained this way.

During the CTR III referendum campaign it was frequently unclear, to what extent one would gain effective advantages and suffer disadvantages. The fact is: In the past, the Confederation has benefited from the regime companies to a much greater extent than the cantons. The substrate for these taxation forms represents about half of the corporate income tax revenues from Direct Federal Tax and, together with the cantonal corporate income taxes, amounts annually to about five billion Swiss francs. An exodus of the regime companies, which up to now have enjoyed privileged cantonal taxation, would therefore seriously damage not only the cantons, but also the Confederation. The measures foreseen by the Federal Council are intended to avoid this as far as possible and to ensure, that Switzerland will remain fiscally attractive for the location of companies in the future.

The prospective tax charge for those companies, which up to now have been taxed under the rules of the regimes being abolished, depends on how much the canton, in which they carry on their activities, will reduce the standard corporate income tax rate and whether they carry on research and development in Switzerland. In any event, previous regime companies will, after the reform becomes effective, at first pay the same or somewhat higher taxes and, after the expiry of a transitional period, depending on the canton pay a little or substantially higher taxes.

The proposed relief measures and cantonal reduction of the ordinary corporate income tax rates will benefit in particular Swiss SMEs. The increased partial taxation of dividend income at owner level will compensate this benefit to some extent. The total effect depends on the characteristics of a SME, and where in Switzerland the company and its owners carry on their activities or have their residence. In cantons, which reduce the corporate income tax rates significantly, SMEs will in spite of higher partial taxation overall be the winners. This in contrast to cantons, which cannot, or only marginally, reduce the corporate income tax rate.

The measures

Overview of the most important reform measures and their effects on the corporate location Switzerland:

  • Introduction of internationally accepted reliefs for all Swiss companies with research and development activities in Switzerland (including those that have previously not benefited from a tax regime);
  • Increase of financial contribution from the Confederation to the cantons, to finance the cantonal different potential for reduction of the corporate income tax rates for all companies;
  • Alleviation of the increase in the cantonal corporate income tax charge for international corporate activities, which previously benefited from a tax regime now being abolished, for a transitional period of five years;
  • Retention of taxation independently of the legal form by means of a moderate counter-correction in the partial taxation of private dividend income;
  • In comparison with CTR III reduced losses of tax revenues, with the aim of nevertheless keeping the business and tax location Switzerland internationally attractive and reliable.

Missing is:

  • the introduction of an incentive to create more equity by a deduction for secure financing (formerly interest adjusted corporate income tax) at least optionally for the cantons for the purpose of motivating greater self-financing and reducing the present tax motivation of higher debt. This would contribute to the stability of Swiss companies and job security, even in times of crisis.

Selected measures in detail:

  • Patent box profits, more precisely from patents and comparable rights are beneficially treated for tax purposes. They are intended to promote research and development activities and their value creation in groups and SMEs. At cantonal level – as previously proposed in CTR III – a patent box meeting the OECD requirements is foreseen as compulsory. It is, however, more narrowly defined in TP 17. For example, income from Copyrighted Software shall be excluded from the tax benefit.
  • Increased deductions for R&D expenditure: because the nexus approach reduces the effect of the patent box, optionally the cantons may supplement the patent box with an input oriented special deduction in the additional amount of at most 50 % of own research and development costs and of 40% of R&D costs purchased in Switzerland.
  • Deduction for secure financing: the so-called interest adjusted corporate income tax, also known as Notional Interest Deduction (NID) on excess equity has been struck out of TP 17 by the Federal Council. Interestingly, in the meantime the EU has published a proposed guideline for measurement common corporate tax base in the EU. Included in this proposal is also a so-called deduction for growth and investment, which is very similar to the Notional Interest Deduction. The aims of this rule were twofold: firstly, one wanted to give companies a fiscal incentive to create higher equity financing and, associated with this, greater resistance to a crisis. On the other hand, one wanted to retain highly mobile financing activities existing in Switzerland. Presumably this objective was not recognised by wide circles during the CTR III referendum campaign, not least because of the badly chosen expression “interest adjusted corporate income tax”. Being a sensible measure, it should nonetheless be permitted optionally at least at cantonal level under the positive labelling, “Deduction for secure financing“.
  • Step-up of hidden reserves: 18 of 26 cantons already permit under current law the change from a privileged tax status to ordinary taxation through the tax-free step-up of the hidden reserves that arose under the special regime. With the transitional rule under TP 17 the increase, mentioned at the beginning in the tax charge on the abolition of the current tax status, is to be cushioned for the first five years after enactment of TP 17. The cantons may tax the hidden reserves, hitherto tax free, at a special (low) rate to be fixed by the canton.
  • Reduction of the ordinary cantonal corporate tax rate for all companies: in order to avoid a fiscal shock after expiry of the transitional rules on the taxation of hidden reserves, the cantons want to reduce their cantonal corporate income tax rates as far as possible. Depending on the cantonal tax level, this reduction, which would be effective for all companies operating profitably, would be in the range between negligible and a substantial number of percentage points. This measure is not formally part of TP 17. Each canton must have such a measure approved in the normal cantonal legislative manner.
  • Revision of the capital tax: for companies under a tax regime, today the capital tax is applied more favourably than for companies without special tax treatment. Therefore, the cantons should be able to reduce the cantonal capital tax, to the extent the taxable capital is attributable to patents and participations. Here, too, consonant with the introduction of a deduction for secure financing optional for the cantons, the capital tax relief is also to be permitted, to the extent the equity is attributable to group loans.
  • The partial taxation of dividend income for income tax purposes of private investment holders was adopted in 2008 together with CTR II. This income is to be taxed at 70% in future. Compared with today this is higher. In various cantons this increase will be compensated respectively over-compensated, by the expected reduction of ordinary corporate income tax rates, which in future will apply to distributed profits. However, depending on the constellation, the situation is not consistent and can result in a higher charge for private company owners. Therefore, in order to avoid false incentives and distortions, it would be preferable, if the cantons could set the partial taxation percentage autonomously.
  • The overall limitation of reliefs was reduced from 80% to 70%. The cantonal minimum charge to income tax will be at least 30% (CTR III: 20%) of profits in the future. This limit is effective in those cases, in which the measures being newly introduced would provide greater relief.
  • The minimum children’s and education allowances shall be increased by CHF 30, following the example of Canton Vaud. As a reminder: children’s allowances are funded by the companies dependent on the number of jobs. This element is irrelevant and has nothing to do with corporate taxation. It should therefore be struck from the bill.

Based on the consultation replies received, the Federal Council will draw up the final bill and forward it to Parliament for discussion in spring 2018. If the reform proposal can be dealt with in Parliament expeditiously and without referendum, it is anticipated that the package can become effective on 1 January 2020.

Companies are well advised to prepare in good time for the changing conditions and to draw up alternative actions with a scenario planning. In a first step, they should review the overall tax effects. These include possible benefits from the Step-up practice, benefits from relief measures, such as the research and development deduction or the patent box and effects on the valuation of deferred taxes in the group financial accounts. And of course, it is worthwhile comparing their different possibilities in the various cantons.

Your contact partners

Dieter Wirth
Tel. +41 58 792 44 88
E-Mail: dieter.wirth@ch.pwc.com

Armin Marti
Tel. +41 58 792 43 43
E-Mail: armin.marti@ch.pwc.com

Benjamin Koch
Tel: +41 58 792 43 34
E-Mail: benjamin.koch@ch.pwc.com

Daniel Gremaud
Tel: +41 58 792 81 23
E-Mail: daniel.gremaud@ch.pwc.com

Remo Küttel
Tel: +41 58 792 68 69
E-Mail: remo.kuettel@ch.pwc.com

Claude-Alain Barke
Tel: +41 58 792 83 17
E-Mail: claude-alain.barke@ch.pwc.com

Laurenz Schneider
Tel: +41 58 792 59 38
E-Mail: laurenz.schneider@ch.pwc.com

Information on Tax Proposal 17

The most up-to-date information on and changes to the Tax Proposal 17 can be found at any time online.

EU-black listed jurisdictions: what you need to know in a nutshell

On 5 December 2017, the ECOFIN Council published the conclusions on the EU common list of (third country) non-cooperative jurisdictions in tax matters, also referred to as the EU ‘blacklist’. In this blacklist 17 jurisdictions are included. For the blacklisted jurisdictions the Council proposes EU Member States to adopt certain non-tax and tax defensive measures. Among the proposed tax measures would be e.g. increased audits, disallowance of deductibility of costs, withholding tax measures, application of CFC rules, reversal of the burden of proof, limitation of participation exemptions and switch-over clauses among others.

Switzerland and Liechtenstein appear on a “grey list”

In addition to the black list there is a “grey” list where Switzerland and Liechtenstein are included. The grey list inclusion means, that such jurisdictions still have certain harmful tax regimes (e.g. Swiss cantonal tax regimes). However, these jurisdictions have been determined as cooperative and committed to amend or cancel such regimes.

Swiss Tax Proposal 17

From a timing perspective, the Council Conclusions mention, that these jurisdictions “are committed to amend or abolish the identified regimes by 2018”. In context of the Tax Proposal 17, the existing cantonal tax privileges for holding, domiciliary and mixed companies will be abolished, but realistically only the legislative process at federal level can be completed during 2018 (but this we consider to be the relevant step). The finalisation of the legislative process at cantonal level will take more time and go well into 2019.

In our view and since the EU acknowledges Switzerland’s efforts to abolish the mentioned regimes we do not expect that the EU Council will include Switzerland into the black list, after an updated dialogue and assuming due progress regarding the Tax Proposal 17 is made during 2018.

Please also refer to the PwC EUDTG newsletter in this respect which you can read here.

For more insights and to understand the implications for your organisation, please contact Armin Marti.

EU Direct Tax Group

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Austria – CJEU’s first judgment as court of arbitration in a double tax treaty dispute
  • Belgium – CJEU judgment on compatibility of interest payment deduction rules with Parent-Subsidiary Directive: Argenta Spaarbank
  • Germany – CJEU referral on compatibility of German limitation of deductibility of special expenses for non-residents with the freedom of establishment: Montag
  • Germany – CJEU judgment on compatibility of German deduction of special expenses with the freedom of movement for workers: Bechtel
  • Netherlands – AG Opinion on compatibility of Dutch fiscal unity regime with fundamental freedoms, and the Dutch Government’s emergency response measures
  • Sweden – CJEU referral regarding final losses in indirectly held subsidiaries
  • Sweden – CJEU referral regarding final foreign losses
  • United Kingdom – CJEU judgment on taxation of transactions for the raising of capital : Air Berlin Plc
  • United Kingdom – CJEU judgment on the application of UK capital gains tax on a deemed disposal of all of the assets of a trust: Trustees of the P Panayi Accumulation & Maintenance Settlements
  • United Kingdom – CJEU judgment on the UK tax treatment of foreign income dividends : Trustees of the BT Pension Scheme

National Developments

  • Norway – EFTA Court advisory opinion opens door to cross-border group contributions with tax effect
  • Norway – Amendment to the group contribution rules
  • Sweden – Dividend tax rule deemed incompatible with EU law
  • United Kingdom – Court of Appeal in Routier v HMRC regarding the UK definition of ‘charity’ and its compatibility with the free movement of capital

EU Developments

  • EU – European Commission issues Communication on the taxation of the digital economy
  • EU – Directive on Tax Dispute Resolution Mechanisms formally adopted
  • EU – European Council President Tusk’s new EU reform plans
  • EU – Tallinn European Council Conclusions of 19 October 2017
  • EU – European Commission adopts Work Programme for 2018

Fiscal State aid

  • EU – European Commission takes next steps against Ireland and Luxembourg in Apple and Amazon State aid cases
  • Netherlands – Court of Appeal refers preliminary questions on possible State aid to the CJEU
  • Spain – Supreme Court resolution about Spanish tax on immovable property
  • United Kingdom – European Commission opens formal State aid investigation into financing income exemption within the UK’s CFC regime

Read the full newsletter

This bi-monthly newsletter is prepared by members of PwC’s pan-European EU Direct Tax Group (EUDTG) network.

To receive this newsletter and our newsalerts automatically and free of charge, please send an e-mail to: eudtg@nl.pwc.com with “subscription EU Tax News”. For previous editions of PwC’s EU Tax News see: www.pwc.com/eudtg

Contact Us

Armin Marti
Partner Tax & Legal Services, Leader Corporate Tax Services
+41 58 792 43 43
armin.marti@ch.pwc.com

Swiss Tax Proposal 17 – Launch of the PwC Step-up-Calculator

Switzerland is currently preparing the so-called Tax Proposal 17 (TP 17). As a consequence, the existing cantonal tax privileges for holding, domiciliary and mixed companies will be abolished, most likely as per 1 January 2020. In order to smoothen the transition for these so-called status companies, the reform foresees a separate taxation rate for existing hidden reserves. In addition, based on the current legislation, various cantons offer the possibility of a step-up of hidden reserves for tax purposes when giving up the privileged taxation status before the effective date of TP 17.

In order to provide affected companies a quick and easy estimation of the impact of these transitional rules, we have built the PwC Step-up Calculator. This web-based tool offers free estimations of the indicative fair market value of the company, its step-up potential and the magnitude of the potential tax benefit resulting from claiming the step-up potential with the tax authorities. The app also offers the possibility of ordering a paid data sanity check by PwC’s valuation experts. The deliverable will be in the form of a PwC document containing the validated high-level fair market value and the estimated step-up potential. This document may then be used as a basis for discussions with the tax authorities.

You can find the PwC Step-up-Calculator at the following link:

Here

Contact

If you have any questions or would like to have a personal discussion on the impact of Tax Proposal 17, please do not hesitate to contact

Armin Marti
Partner
Leader Corporate Tax Schweiz
Tel. +41 58 792 4343
E-Mail: armin.marti@ch.pwc.com

For questions relating to company valuations, please feel free to contact

Dr. Marc Schmidli
Partner
Leader Energy
Tel. +41 58 792 1564
E-Mail: marc.schmidli@ch.pwc.com

EUDTG Newsletter July – August 2017

EU direct tax law is a fast developing area. This presents taxpayers, in particular groups and multinational corporations that have an EU or European Economic Area (EEA) presence, with various challenges.

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Germany CJEU referral of domestic anti-treaty shopping rule as potential violation of the fundamental freedoms/ Parent-Subsidiary Directive

National Developments

  • Italy Tax Court of Appeal decision on EU law compatibility of withholding tax levied on dividends distributed to US pension fund
  • Netherlands Proposal Bill for new law on State aid recovery
  • United Kingdom Publication of EU Withdrawal Bill

EU Developments

  • EU Updated EU BEPS Roadmap for coordinated EU action under the Estonian EU Presidency
  • EU European Parliament adopts legislative resolution on public CBCR
  • EU European Parliament votes for EU Directive on double taxation dispute resolution mechanism in the European Union

Fiscal State aid

  • Cyprus Tax authorities issue interpretative circular for financing companies
  • EU European Commission finds Poland’s retail tax in breach of EU State aid rules
  • EU European Commission requires Belgium and France to abolish tax exemptions for ports

 

Read the full newsletter

 

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG).

Further information about our service offerings in EU taxes: www.pwc.com/eudtg


Contact

Armin Marti
Partner Tax & Legal Services, Leader Corporate Tax Services
+41 58 792 43 43
armin.marti@ch.pwc.com

Anna-Maria Widrig Giallouraki
Senior Tax Manager
+41 58 792 42 87
anna-maria.widrig.giallouraki@ch.pwc.com

Swiss Federal Council released Tax Proposal 17 for formal consultation

On 6 September the Federal Council initiated the consultation procedure with respect to the Tax Proposal 17 (formerly “Corporate tax reform III”; CTR III). The overall objectives of the reform remain unchanged, i.e. improve the attractiveness of Switzerland as a business location, maintain and create jobs and adjust the corporate tax law to the new international standards. In addition, in order to take into account learning points from the negative vote on CTR III in February 2017, the Tax Proposal 17 puts more emphasis on the financial impact of the tax reform on the Federal as well as on municipalities’ and cities’ budgets.

The consultation period will last until 6 December 2017. It is foreseen, that the draft bill will make its way back to the Federal Council, for further submission to the Parliament, in spring 2018. The earliest anticipated entry into force would be 2020.

Apart from the draft bill, the package also includes an ordinance on the reduced taxation of profits from patents and similar rights (clarification of the patent box). The different proposals are outlined in our current newsletter.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts named below.

Contacts

Dieter Wirth
Partner
Leader TLS Schweiz
Tel. +41 58 792 44 88
Send E-mail
Armin Marti
Partner
Leader CT Schweiz
Tel. +41 58 792 43 43
Send E-mail
Benjamin Koch
Partner
Leader TP and VCT
+41 58 792 43 34
Send E-mail
Daniel Gremaud
Partner
Tax & Legal
+41 58 792 81 23
Send E-mail
Claude-Alain Barke
Partner
Tax & Legal
+41 58 792 83 17
Send E-mail
Remo Küttel
Partner
Tax & Legal
+41 58 792 68 69
Send E-mail
Laurenz Schneider
Director
Tax & Legal
+41 58 792 59 38
Send E-mail

EUDTG Newsletter May – June 2017

EU direct tax law is a fast developing area. This presents taxpayers, in particular groups and multinational corporations that have an EU or European Economic Area (EEA) presence, with various challenges.

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • Belgium: CJEU judgment in X concerning the Belgian fairness tax
  • Belgium: CJEU judgment in Van der Weegen and Pot concerning the tax exemption applicable to income from savings deposits
  • France: CJEU judgment in AFEP concerning the French contribution tax
  • Luxembourg: CJEU judgment in Berlioz concerning exchange of information upon request

National Developments

  • Austria: Administrative High Court disallows import of foreign (final) losses despite transfer of place of management
  • Germany: Federal Fiscal Court refers §6a RETT Act to CJEU as potential State aid
  • Germany: Federal Fiscal Court denies deduction of final losses according to EU law
  • Italy: Amendments to the NID and Patent Box Regime: conversion into law with revisions
  • Poland: Ministry of Finance publishes warning on aggressive tax planning structures
  • Spain: Supreme Court issues preliminary ruling about tax on activities that affect the environment
  • Switzerland: Federal Council presents basic parameters of the renewed planned tax reform
  • United Kingdom: Upper Tribunal Tax and Chancery decision on the Coal Staff Superannuation Scheme Trustees

EU Developments

  • EU: ATAD II Directive formally adopted
  • EU: European Commission proposes mandatory disclosure rules for intermediaries
  • EU: ECOFIN Council of 23 May 2017: agreement on Double taxation dispute resolution mechanism in the EU
  • EU: ECOFIN Council of 16 June 2017: Main results
  • EU: European Parliament PANA Committee issues draft report and draft recommendations
  • EU: Public CBCR: European Parliament ECON and JURI Committees adopt joint report
  • Italy: EU Tax Commissioner Moscovici concludes that Italian flat tax for high net worth individuals does not appear to constitute harmful tax competition
  • Spain: European Commission starts infringement procedure on state liability for breach of EU law

Fiscal State aid

  • EU: European Commission and China start dialogue on State aid control
  • EU: European Commission adopts annual Competition Policy Report for 2016
  • Hungary: Advertisement Tax Act aligned to comply with EU State aid rules
  • Spain: CJEU judgment on tax exemptions for Catholic Church
  • United Kingdom: CJEU judgment on the Gibraltar Betting and Gaming Association

 

Read the full newsletter

 

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG).

Further information about our service offerings in EU taxes: www.pwc.com/eudtg


Contact

Armin Marti
Partner Tax & Legal Services, Leader Corporate Tax Services
+41 58 792 43 43
armin.marti@ch.pwc.com

Anna-Maria Widrig Giallouraki
Senior Tax Manager
+41 58 792 42 87
anna-maria.widrig.giallouraki@ch.pwc.com

Tax Package 17: Federal Council presents basic parameters of the planned reform

At its meeting on 9 June 2017 the Federal Council confirmed the basic parameters of the planned reform of Swiss corporate taxes, which the Steering Committee sent as a recommendation to the Federal Council and already introduced in a press release on 1 June 2017. The Tax Package 17 (SV 17) has three main objectives: first the aim is to secure Switzerland’s attractive status as a business location. In addition the reform intends, in view of the changed international environment, also to continue to preserve the acceptance of the Swiss tax system. Finally SV 17 is intended to secure sufficient tax revenues at all levels. These objectives are in principle identical with those of Corporate Tax Reform III (CTR III), which was rejected by the Swiss voters on 12 February 2017 with a share of the vote of almost 60%. SV 17 will therefore be more balanced. Compared with CTR III the special rules will be drawn up more restrictively and the interests of the cities and communes will carry more weight.

Continue to read in detail in our current newsletter.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts named below.

Contacts

Andreas Staubli
Partner
Leader TLS Schweiz
Tel. +41 58 792 44 72
Send E-mail
Armin Marti
Partner
Leader CT Schweiz
Tel. +41 58 792 43 43
Send E-mail
Benjamin Koch
Partner
Leader TP and VCT
+41 58 792 43 34
Send E-mail
Daniel Gremaud
Partner
Tax & Legal
+41 58 792 81 23
Send E-mail
Claude-Alain Barke
Partner
Tax & Legal
+41 58 792 83 17
Send E-mail
Remo Küttel
Partner
Tax & Legal
+41 58 792 68 69
Send E-mail
Laurenz Schneider
Director
Tax & Legal
+41 58 792 59 38
Send E-mail

OECD BEPS: Multilateral Instrument signed by Switzerland and 67 other countries

On 7 June 2017, officials from more than 70 countries participated in the signing of the multilateral instrument (“MLI”), which is a result of negotiations of more than 100 jurisdictions. The Organization for Economic Cooperation and Development (“OECD”) aims for a swift implementation of a series of tax treaty measures to update international tax rules and reduce the opportunity for tax avoidance. Impacts for Swiss companies are mainly expected in the field of dispute resolutions.

The MLI is one of the outcomes of the OECD/G20 Project to tackle Base Erosion and Profit Shifting (“BEPS”) and has the goal to enable countries to swiftly modify bilateral tax treaties (more than 3’000 worldwide) to include the measures developed in the course of the BEPS work. In this respect, an ad hoc group, consisting of 99 countries, four non-state jurisdictions and seven international or regional organizations participating as observers, developed the MLI. In their negotiations, the ad hoc group focused on the following BEPS measures and how the MLI would need to modify the provisions of bilateral or regional tax agreements. Aiming to swiftly implement those measures, some of which are minimum standards and others representing best practice recommendations only:

  • Hybrid mismatch arrangements in accordance with BEPS Action 2 (best practice recommendation);
  • Granting of treaty benefits in inappropriate circumstances under BEPS Action 6 (minimum standard);
  • Amendments to the definition of “permanent establishment” as recommended under BEPS Action 7 (best practice recommendation);
  • Facilitating of access to and resolution of mutual agreement procedures consistent with BEPS Action 14 (minimum standard).

Continue to read in detail in our current newsletter.

If you have questions, please contact your usual PwC contact person or one of PwC Switzerland´s experts named below.

Contacts

Andreas Staubli
Partner
Leader TLS Schweiz
Tel. +41 58 792 44 72
Send E-mail
Armin Marti
Partner
Leader CT Schweiz
Tel. +41 58 792 43 43
Send E-mail
Stefan Schmid
Partner
Tax & Legal
+41 58 792 44 82
Send E-mail
Fabio Dell’Anna
Partner
Tax & Legal
+41 58 792 97 17
Send E-mail
Claude-Alain Barke
Partner
Tax & Legal
+41 58 792 83 17
Send E-mail
Michael Ruckstuhl
Senior Manager
Tax & Legal
+41 58 792 14 94
Send E-mail