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.

Manage VAT risk and gain valuable business insight with VATwatch

What’s the problem?

Being in control of your VAT data is becoming more crucial than ever. This stems from the fact that the tax authorities could have more information about your company’s VAT operations than you do. How is this possible?

It’s down to the growing complexity of the indirect tax compliance and control framework and the emergence of new reporting requirements globally. In response to these developments, tax authorities are no longer conducting sample checks, since they can use instant access to a company’s ‘raw’ accounting data and scan them to assess its VAT liability.

If you don’t have proactive control processes to review your transactional data and take action before this information is transmitted to the tax authorities, the consequences can be severe: more VAT audits, and increasingly complex questions from the authorities.

How can VATwatch help?

PwC’s VATwatch solution gives you a global overview of your flows, and helps you detect potential discrepancies and mismatches within your data before they’re identified by the tax authorities.

How can VATwatch help you manage VAT risk and gain valuable business insight?

Read more about VATwatch here to find out more about the benefits of our solution.

Do not hesitate to contact us to further discuss your situation.

Patricia More, TLS VAT Partner, PwC Geneva
+41 58 792 95 07 / patricia.more@ch.pwc.com

Antoine Wüthrich, Risk Assurance Partner, PwC Geneva
+41 58 792 82 27 / antoine.wuthrich@ch.pwc.com