Corporate Tax in Tax and Legal blog
Switzerland published draft law to extent tax loss period
The Federal Council (“Bundesrat”) published its draft law and the accompanying dispatch on the extension of the tax loss carry-forward period from seven to ten years (media release: German/French), but at the same time recommended that the proposal be rejected. What are the chances of this proposal being adopted by the Swiss Parliament?
Securities Transfer Duty Relief for Group Companies Acting as Intermediaries
The Swiss Federal Tax Administration (“SFTA”) issued a practice note (German/French) clarifying the topic of group holding or management companies acting as intermediaries mainly in an M&A transaction in view of the securities transfer duty. The new practice applies with immediate effect to all pending cases and will lead to a relaxation in this controversial topic.
Switzerland to introduce IIR in 2025, but not UTPR
The Federal Council decided on 4 September 2024 that Switzerland will introduce the Income Inclusion Rule ("IIR") on 1 January 2025. The introduction of the Undertaxed Profit Rule ("UTPR") has been postponed until further notice.
Federal Supreme Court Denies Tax Deductibility of Provisions for Unused Holidays
In a recent court decision (9C_192/2024, in French), the Federal Supreme Court dealt with the question of the tax deductibility of provisions for unused holidays. It remains to be seen whether this rather short and controversial decision will lead to a change in the practice of certain cantons.
Basel Plans to Strengthen its Attractiveness as a Life Sciences Business Location
After the cantons of Grisons and Zug (see recent blog), the canton of Basel-City has now also presented its plans to strengthen its economic attractiveness. The package includes measures in the areas of innovation, society, and the environment as well as tax compensation measures. The focus is clearly on promoting the key life sciences industry. The trend in all cantons so far is towards location promotion outside the tax system and it is unclear whether the Qualified Refundable Tax Credits (“QRTC”) instrument will become established in Switzerland.
Federal Supreme Court ruled on Income Tax Treatment of Treasury Shares
In a long-awaited landmark decision, the Federal Supreme Court (“Bundesgericht”) has ruled on the question of whether the reissue of treasury shares by a company is subject to corporate income tax. The court concluded that no taxable capital gains arise from the reissue of treasury shares since there is no legal basis in the tax law to deviate from the treatment in the financial statements (9C_135/2023, in German). Despite this important decision, however, the Federal Supreme Court has not yet clarified all aspects.
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Court Rejects Zurich Practice to Levy Real Estate Capital Gain Tax on Shareholders in Germany
In a recent court case (GR.2023.22, in German) the Zurich Tax Appeals Court ("Steuerrekursgericht Zürich") confirmed that the sale of the majority of shares in a Swiss real estate company by a German domiciled individual constitutes a sale of financial assets, even though the sale qualifies as an indirect sale of real estate (change of economic ownership) under Zurich tax law. In view of the double taxation treaty between Switzerland and Germany and according to the prevailing academic consensus, the right to tax the capital gain was granted to Germany. As a result, the relevant city in the canton of Zurich does not have the right to levy the real estate capital gain tax on the indirectly sold property. The court decision is not yet legally binding.
Canton of Zug Plans to Strengthen its Attractiveness in a Post-Pillar II World
The canton of Zug aims to strengthen the attractiveness of Switzerland, and in particular the canton itself, as a business location in a post-Pillar II world using a bundle of instruments with a focus on subsidies related to sustainability and innovation (media release in German). No Qualified Refundable Tax Credits (“QRTC”) are planned at this stage. The consultation draft of the "Location Development Act" is subject to a popular vote in 2025 and would come into force on January 1, 2026.