Swiss voters reject Corporate Tax Reform III in its proposed form - Tax Blog

Ctriii result

In a referendum held on 12 February 2017, the Swiss electorate voted to reject the Corporate Tax Reform III (CTR III), which had been approved by the parliament. The main objectives of this comprehensive corporate tax reform, which was scheduled to become effective on 1 January 2019, were to align domestic tax law with international standards and enhance Switzerland’s attractiveness as a location for multinational companies. Read more and listen to our webcast held on Monday 13 February.

The reform would have phased out all special corporate tax regimes, such as the mixed, domiciliary, holding and principal company regimes, as well as the finance branch regime. Federal and cantonal tax holidays would not have been affected by the reform and would have continued to be granted.

The CTR III contained a number of measures to compensate for the elimination of the beneficial tax regimes, such as the following:

  • A reduction of the general cantonal/communal tax rates at the discretion of the individual cantons;
  • The introduction of a mandatory cantonal-level patent box regime applicable to all patented intellectual property (IP) for which the research and development (R&D) spend occurred in Switzerland, based on the OECD modified nexus approach;
  • The introduction of cantonal R&D incentives in the form of deductions of up to 150% of qualifying R&D expenditure at the discretion of the individual cantons;
  • A step-up of asset basis (including for self-created goodwill) for direct federal and cantonal/communal tax purposes upon the migration of a company or additional activities and functions into Switzerland;
  • The tax-privileged release of “hidden reserves” for cantonal/communal tax purposes for companies transitioning out of tax-privileged cantonal tax regimes (such as mixed or holding companies) into ordinary taxation;
  • The introduction of a notional interest deduction (NID) regime at the federal level and at the discretion of the individual cantons (however, a canton would have been required to introduce a revenue-raising measure to partially compensate for introducing an NID); and
  • A reduction of the cantonal/communal annual net wealth tax in relation to the holding of participations and of patented IP, at the discretion of the individual cantons.


Opponents of CTR III, who launched a successful referendum, disagreed with certain aspects of the proposed reform, in particular, the introduction of an NID. In addition, opponents demanded that the partial taxation by cantons of dividends received by individuals from qualified participations be mandatorily increased to 70% as a revenue-raising measure (cantons currently tax 50% or less of such dividends). However, the tax reform as such and the other measures basically were not disputed by opponents of the reform.

Since only a few aspects of CTR III were disputed and as pressure from the EU for abolishing the tax-privileged regimes continues, the Federal Counsel is expected to quickly reintroduce the legislation, which likely would include the elements of the previous measures but without the controversial items, most notably the NID. In addition, as a revenue-raising measure, the revised version of the legislation is expected to include a provision that dividend income received by individuals from qualifying participations of at least 10%, under the partial taxation regime for dividends may be mandatorily increased to 70% at both a cantonal and a federal level.

Although it still may be possible for revised legislation to meet the original 1 January 2019 introduction timetable at the federal level (assuming that a referendum on the legislation would not be initiated), since the cantons need adequate time to introduce the law into cantonal legislation, the introduction of the law may be postponed by one year to 1 January 2020.

Webcast recording available

On Monday, 13 February, we hosted a webcast to discuss the outcome of the vote - the recording is now available. Please request your access here



Jackie Hess - Managing Partner, Tax & Legal

Jackie is the Managing Partner for Tax & Legal and a member of the Swiss Executive team. She has more than 20 years of experience serving some of Deloitte’s largest multinational clients. Her areas of focus include business model optimization in the BEPS era, Swiss ruling and tax holiday negotiations, tax controversy, and audit defense. In addition, she has extensive experience in cross-border tax planning including substance reviews, IP structuring, and finance planning. Jackie’s industry focus is life sciences where she advises predominately US-listed companies in the biotech and medtech space that have their European headquarters in Switzerland.



Reto Savoia - Deputy CEO and Managing Partner, Clients & Markets

Reto is the Deputy CEO for Deloitte in Switzerland and the Managing Partner for Clients & Markets. Reto is a Swiss international corporate tax specialist with more than 15 years of experience in the area of cross-border structuring, M&A and business reorganisations. Reto is also a member of the board of Deloitte UK.

Jacques Kistler

Jacques Kistler - Partner, International Tax

Jacques is the Lead Partner of our Corporate Tax service line in the French Speaking part of Switzerland, covering international tax and M&A. He has been a full time International Corporate Tax specialist for over 23 years.


Raoul Stocker_BLOG

Raoul Stocker - Partner, Business Tax Leader Zurich

Raoul Stocker is a tax partner with more than 15 years’ experience specifically in international tax litigation such as mutual agreement procedures and advanced pricing agreements. His focus lies on corporate tax planning, cross-border structuring of corporate transactions and businesses, transfer pricing as well as taxation of financial institutions. Raoul is also a lecturer of transfer pricing and tax law at the University of St. Gallen.



Peter Brülisauer - Partner, International Tax

Peter is a tax partner with extensive experience in advising multinational companies on tax matters. This includes corporate restructuring, acquisition, finance restructuring, IP- and R&D-planning, cross-border tax planning, tax effective supply chain management as well as function and risk allocation within multinational groups. He also specialises in permanent establishment (PE) planning as well as profit attribution between PEs. Peter is lecturer in national and international taxation at the University of St. Gallen and a frequent speaker at tax conferences. He has a PhD in Law, University of St. Gallen and is Swiss Certified Tax Expert.


Rene Zulauf

René Zulauf - Partner, International Tax

René has more than 15 years of experience in the field of international tax structuring, financial services tax and Mergers & Acquisitions. He specializes in cross-border tax planning and has assisted numerous multinationals in particular in the establishment of Swiss finance and IP structures, as well as in the structuring of Swiss trading and principal/headquarter operations.



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