On March 25, the Federal Council adopted an emergency ordinance on granting of credits with joint and several federal guarantees. Bridging credit facilities representing a maximum of 10% of their annual turnover and no more than CHF 20 million. Credits of up to CHF 500,000 will be fully secured by the Confederation, and will be paid out quickly and with the minimum of bureaucracy. Zero interest will be charged.
Credit application form: covid19.easygov.swiss

Bridging credits that exceed CHF 500,000 will be secured by the Confederation to 85% of their value; the lending bank will secure the remaining 15%. Each company can obtain a credit of this type for up to CHF 20 million, which means a more rigorous bank review will be required. The interest rate on these credits is currently 0.5% on the loan secured by the Confederation. Companies with a turnover of more than CHF 500 million are not covered by this programme.

Dear Members of LCTA,

we would like to inform you that in March/April we received several emails and phone calls from LCTA members complaining that the measures implemented by the Swiss Confederation discriminate against trading companies. On the one side, discrimination on the access criteria; on the other side, discrimination on the criteria to establish the amount to be assigned.

Access Criterion

In fact, the “emergency ordinance on granting credits with joint and several federal guarantees” adopted by the Federal Council is discriminating against small trading companies that are not big enough to face the crisis alone and that unfortunately are not small enough to be supported by Confederation. Matter-of-factly, companies with a turnover <500 M CHF has no right to be supported by Confederations for these specific credits/guarantees; as you know, we are talking about companies with big turnovers (>500 M CHF), very small margins and not more than 20-30 employees.

Loan Amount Criterion

Also criteria to establish the amount to be assigned to companies (Covid19 credit and Covid19 plus credit) have arisen some doubts regarding the treatment of trading companies. According to the Federal Ordinance (25.03.2020), in the case of trading companies the benchmark for granting a Covid19-loan is turnover, while according to the Swiss Banking Association point 22 of the “SBA Q&A” (as of 02.04.2020) the benchmark is gross margin*. Obviously, for a loan to a company with CHF 30 million in turnover, there is a big difference between 10% of turnover (or CHF 3 million) and the gross margin* (in optimistic cases around 2%, or CHF 0.6 million). In addition, there are general indications or obligations (“it is appropriate or mandatory”?).

It is also a question of consistency: if for trading companies the gross margin criterion is used instead of turnover, then the access criterion must also be based on the gross margin criterion and not on the turnover criterion. This is a double standard case.

Our association (STSA, LCTA and ZCA) wrote a letter to federal authorities as well as to the Swiss banking association in order do have an official reply. This is an important occasion to remember that not all trading companies are giants and that there is a relevant number of the operators that was and is still negatively affected by this Covid-crisis without having the same rights of other similar companies.

*For the “Commodity Trade Finance” sector, which turnover parameters should be taken into account? (New question published on March 31, 2020): Traders in principle have high turnover figures. The use of annual turnover as a benchmark could therefore result in disproportionate amounts of credit being granted. In order to comply with the actual purpose of the transitional credit programme, the gross margin / gross trade margin should therefore be used. The gross trade margin is also used to cover salary costs and fixed and variable expenses.

Fabio Regazzi, Member of the National Council, is working to find a solution for companies as regards the annual radio-television fee. He submitted in 2019 the parliamentary initiative “Excluding SMEs from the media fee”. The initiative has been deposited at the National Council on 19 September 2019, then has been approved by the TTC (Transport and Telecommunications Committee) and now it is at the Council of States.

In summary, Fabio Regazzi requested to amend the law on radio and television so that only companies with 250 or more (full-time) workers are subject to the radio and television fee. Companies with less than 250 employees should be exempted. Apprentices are not counted as employees.

If the initiative will be approved by the Council of States, the amendment to the law would only have to be approved by parliament.

LCTA is supporting and pushing for this solution.

More information on the initiative: here

Contribution by EY.

Spreading contagion – coronavirus effects on the working world

The rapidly evolving threat around the COVID-19 virus has raised concerns among the business and investor community across the world. The global and interconnected nature of today’s business environment poses serious risk of disruption of global supply chains that can result in significant loss of revenue and adversely impact global economies.

Enterprise response

As the uncertainty around the evolving event persists, we are starting to see companies take measured approaches to safeguard employees and mitigate financial and operational exposure. Companies and governments around the world continue to closely monitor the situation.

While cyber risk is a relatively recent consideration in resilience planning, companies have long maintained various resilience plans for business continuity, disaster recovery, and crisis management. These plans, while effective for a range of business disruptions, may fall short during a global crisis such as coronavirus or other pandemic events. Moreover, companies typically have less incentive to invest in distinct pandemic management capabilities since pandemics are lower-probability events (the last major pandemic, H1N1 influenza or swine flu, occurred in 2009). And while firms likely refreshed resilience plans in response to the H1N1 pandemic, it is important to consider differences in today’s environment. Companies must think through the implications to their businesses and develop specific crisis management annexures around pandemic threats.

Importance of pandemic planning – why traditional resilience plans are not sufficient to address pandemic-related disruptions

The differences between business disruptions that are caused by natural, human-made, technology or operational failures and those caused by pandemic events persist due to the potential increased scale, severity and duration of pandemic events, necessitating the need for organizations to expand beyond traditional resilience planning strategies. Companies must incorporate pandemic planning considerations into existing resilience management activities to provide a comprehensive response and to provide continuity for their most critical products and services. Additionally, companies should consider establishing pandemic-specific policies and procedures, capabilities for employee communications, telecommuting and personal/family leave to minimize disruptions.

Key takeaways – how to plan and respond differently to pandemics versus traditional resilience planning

Apply a people-first mindset: The very first priority of an organization during a pandemic should be the safety and well-being of its workforce. Employees are unable to focus on work responsibilities when their well-being and that of their family are in peril. It is important for companies to be able to monitor the situation, provide a safe workplace and offer their employees the support that they need. Examples of employee support may include providing access to internal and external resources (e.g., World Health Organization, International SOS, Centers for Disease Control and Prevention), services (e.g., extended child/elder care, transport for late hours) and recognition for employees who take on work for other areas, communicating timely updates to raise awareness and establishing employee standard of care services where possible to provide support to sick personnel or those that are caring for sick household members. To enable timely two-way communication and employee tracking and to disseminate critical information, companies must validate that emergency notification systems are in place and tested on a routine basis. In addition, companies should deliver pandemic-related training to enhance employee preparedness and alleviate any concerns.

Plan for geographical segmentation of functions and activities: A pandemic can have severe consequences in impacted areas and geographies, making them inaccessible for an extended period of time. As a component of a business impact analysis, companies identify the chain of activities and functions, along with interdependencies (e.g., people, process, technology, data, facilities, third parties) and related impacts, to inform potential mitigation strategies. From a pandemic planning perspective, companies should pay closer attention to the geographical concentration of these critical activities and functions, and how to segment them for work transfer to alternate locations and sites. As prudent risk management and to the extent possible, companies should look to diversify supplier base, customers and third-party service providers across geographies to avoid single points of failure.

Invest in technology and infrastructure to support remote work and virtual collaboration capabilities: A pandemic requires employees to stay home to limit exposure and to prevent or slow down the spread of the disease, requiring the activation of remote working capabilities. A pandemic may lead to a complete shutdown of the entire facility in an area, forcing a high number of employees to work remotely for an extended duration. This may in turn result in heavier-than-normal traffic on remote connectivity networks, causing capacity and load access issues. Companies should invest in tools to enable personnel to work remotely and collaborate virtually, perform periodic network stress testing and identify workarounds for critical tasks that are not executable from home. It is worth noting that remote working is a not viable option for manufacturing, thus resulting in critical impacts on product supply chains.

Consider the systemic nature of pandemics when designing response strategies: Companies must challenge and stretch the boundaries for traditional resilience plans to address pandemic events and carefully design distinct strategies; for instance, inter-affiliate contracts to subcontract work to or alternate supply chain vendors to overcome these barriers. Companies should validate that contracts between country-to-country affiliates are in place to reduce uncertainty of terms, rates, payments and regulatory requirements; data-sharing agreements are addressed within the contracts (e.g., General Data Protection Regulation requirements); and, as required in regulated industries, appropriate licenses are in place to conduct the additional work. Further, downstream dependencies should be considered. For example, if contractor onboarding is concentrated in the impacted region, capabilities in other locations that could be quickly mobilized should be entertained.

Assess reliance on third parties: Companies today have increased interconnectedness with third parties, which are also vulnerable to pandemic events. Companies must develop a thorough understanding of their critical third, fourth and fifth parties, and their resilience programs, and develop alternate plans, for instance insource strategies or substitutability, if the critical third party’s ability to perform services is impaired. Companies should also validate alignment between their alternate plans and those of their third parties. However, companies must recognize that their peers and competitors may look to the same third parties for assistance during a market contagion, leading to concentration risk. Where possible, companies must explore opportunities to embed contractual clauses that allow them to be prioritized for products and services in relation to their competitors.

Engage with customers: Customers are generally more empathetic to degradation or discontinuation of certain products and services during disruptions that are beyond a company’s control and involve life safety concerns than they are toward those that are perceived to be preventable (e.g., system glitches). However, they expect transparency and timely updates. Customers may have specific questions around a company’s supply chain, especially if resources are located in impacted areas, and also may have questions around how those resources may pose any potential risks to them for future use of the company’s products and services. A clearly drafted frequently-asked-questions document published and disseminated through multiple channels, including the company’s website and social media, can prove to be a useful tool to proactively address customer concerns.

Develop a robust communication strategy (including social media): Effective communications during any crisis are crucial to maintaining customer trust, restoring employee morale and confidence, and retaining market stability. For companies that have both retail and corporate customers, consistent messaging is key. All channels must reconcile (e.g., social media, customer call centers, public relations releases). Additionally, events like a pandemic can add another layer of complexity due to circulation of false news and narratives on social media. Companies must establish a robust communications strategy that clearly lays out process and protocols to engage with a wide set of stakeholders inclusive of any legal and jurisdictional considerations. For highly regulated industries such as financial services, health care, and power and utilities, companies should determine and comply with applicable federal, state and local reporting requirements (e.g., disclosure of material risks and impacts), and have a process in place to notify and engage with regulators proactively across various jurisdictions.

Team with public sector; national, state and local agencies; and health officials: Pandemics are a public issue first and a business issue second. Hence, it is important for the public and private sector to come together to provide an adequate and comprehensive response to a pandemic event. Companies must leverage advisories, resources and health safety measures prescribed by international, national and local agencies and health officials, and refrain from distributing conflicting materials as this can lead to confusion and fear among employees. Companies may set up matching-grant and other financial assistance programs to help employees and communities in financial distress during this time.

Increase rigor and complexity of testing: Companies must elevate the complexity of existing scenarios used for testing and simulations to assess preparedness for pandemic events. In addition, companies must rehearse crisis management governance and response, including C-suite executives and delegations of authority at least two levels down from primary decision-makers, so that delegates are well prepared to execute timely decisions in the event primary decision-makers are not available. Companies should also include critical third parties in select tabletop simulations to gain a better understanding of interdependencies and points of coordination, and to assess effectiveness of their resilience plans.

Leverage pandemic command center to prioritize and govern effectively: As time goes by, a widespread pandemic event will assert more pressure on existing resources, infrastructure and technology. As resources become constrained, firms must constantly re-prioritize delivery of products and services that are absolutely critical to meet customer needs and provide market stability. Equally important is a thorough understanding of activities that must be de-prioritized to allow effective repositioning of available resources. Companies must have a clearly documented prioritization framework, inclusive of associated risk tolerances, supported by a robust governance process to make risk acceptance decisions (e.g., discontinuation of certain services) during an event.

Establish crisis management exception approval process: In the event of a crisis, there are instances when companies need to deviate from standard policies and procedures to best meet the needs of their customers and employees. For instance, a company may not support or have stringent policies with regard to overtime or remote work, corporate card usage and so on during the normal course of the business; however, these policy exceptions may be necessary and permissible during an actual crisis. All potential changes to existing policies should be carefully reviewed by risk management, compliance and legal prior to being finalized and should take into account what risks are appropriate to accept.

What should companies do now?

  1. Communicate with employees to raise awareness, enforce policies (e.g., travel restrictions) and familiarize them with available tools and resources
  2. If pandemic planning considerations have not been incorporated into existing business continuity and disaster recovery strategies or updated, begin rapid planning or refresh of pandemic strategies and actions
  3. Perform an immediate assessment of processes and functions with high manual intervention and critical third-party dependencies, especially in high-vulnerability and impact locations, to understand key risks, including any single points of failure
  4. Review crisis communication plan and designate single points of contact to facilitate seamless engagement with local, national and global authorities, and other key internal and external stakeholders
  5. Identify potential policy exceptions and institute a crisis management exception approval process to manage such exceptions on an accelerated basis in each jurisdiction
  6. Confirm employees have the requisite capabilities, including access to requisite share drives, documents and other critical tools, to perform critical tasks remotely
  7. Review relevant standard operating procedures and manuals and update them, as necessary
  8. Monitor the situation and provide regular briefings to leaders on any emerging threats and issues
  9. Ask employees to confirm and update contact information (primary and secondary) in company records, as necessary
  10. Conduct brief pandemic training with employees to enhance employee and organizational preparedness to respond effectively


Alessandro Cataldo, Ernst & Young Ltd, Lugano
Partner, Transaction Advisory Services


Fabio Nani, Ernst & Young Ltd, Lugano
Executive Director, Transaction Advisory Services


Contribution by

Paolo Lezzi
CEO and Founder, InTheCyber Group

Over the last few years, there has been a significant increase in the level of connectivity that was hard to be expected.

Adopting IOT devices has become pervasive in the world of commodity trading. These detectors can be found almost everywhere in the chain of the commodity trading process, on ship containers, in the agriculture field in order to monitor land and production, in the oil field and inside mines. These technologies allow to monitor and predict anything that could slow down production and supplies.

Real-time trading. The central role of Internet of Things

The relation between Supply and Demand is the key of commodity trading. All goods must reach the right location at the right time. The Internet of Things allows to collect all real-time information which are needed to ensure that the whole process will not suffer of any kind of impediment. Do not forget all the online trading platforms where transactions take place at incredible rates.

What type of risks do these new technologies involve?

The described process has a very high level of technology, and it is sufficient to compromise a part of it in order to cause alterations on the market. Think about what impact a cyber-attack could have on the devices that provide all the information needed to manage Supply and Demand.

Why do IoT devices often have a low level of security?

One of the first issues is the use of default credentials in IOT devices, for example, the Mirai botnet took advantage of that to infect all the cameras. There are also market needs that encourage the lack of security in IoT devices. The high Demand forces manufacturers to produce new models, without paying the right attention to security issues and ignoring the current updates on older models, which have been replaced on the market by newer ones. Other than IoT devices, it is necessary to manage the whole communication system, which involves many actors in the commodity trading process, including producers, wholesalers, governments, regulatory agencies etc.

What repercussions could there be in the event of a cyber attack?

Definitely, one of them is the damage that could be caused by an actor who is able to alter the veracity of the information that is exchanged in the commodity trading process between the players mentioned before. In addition, there is the risk due to all those cyber-attacks that can reduce the availability of a player’s products by blocking its systems or damaging them, or even attacks that affect trading platforms. Think about the repercussions if a main supplier, such as an oil producer for example, were forced to stop the production due to a ransomware attack.

What is the correct approach that must be taken while facing this transformation? 

The pervasive digitalization has brought many advantages, such as the introduction of the block chain technology which allows to not modify Bill of Lading and so on, or the ability to access real time data which used to seem impossible. As always, great possibilities also bring high risks, and that is why even the commodity trading world must approach cybersecurity systemically, considering every single element of the process connected to the Net and therefore, as a potential weak point. It is also necessary to work on security improvement in order to cope with the constant evolution of the cyber threat, protecting processes, technologies and especially training on this threats all people involved.

Contribution by Euler Hermes.

The hit to China’s GDP y/y growth caused by 2019-nCoV (Coronavirus) could amount to c. 1pp, mostly over Q1 2020. A recovery should thereafter be possible, based on pent-up production and policy support.

A protracted pause in Chinese activity could be disruptive for certain supply chains such as chemicals, transport equipment, textile and electronics.

If we look into the impact on the rest of the world: manufacturing and trade recessions are likely to continue, with a trade shock of USD26bn per week from the lockdowns in China and global growth barely staying afloat at +2% in Q1 2020.

First, the coronavirus outbreak is likely to keep the manufacturing sector in recession in H1 2020. Electronics and computers are most at risk. With the business interruption in China caused by the coronavirus epidemic, — which has put several sectors at risk of supply chain disruption and lower global demand — above long-term average stocks could increase further in sectors such as textiles, machinery and transport equipment and commodities. Meanwhile, goods’ shortages are a risk in sectors with below long-term average stocks (electronics, computers). In 2019, companies’ unusually high levels of stocks pushed manufacturing production into recession, notably in the advanced economies.  With the stock absorption over the past few months being only partial, the lower global demand and the higher uncertainty are likely to push inventories up in the coming months. Hence, we expect the global manufacturing sector to remain in (shallow) recession in H1 2020.

Second, potential losses of exports of goods and services to China could amount to USD26bn per week as production and trade are paused. We have revised down our global trade growth forecast for 2020 by -0.5pp to +1.3%. Hong Kong, the U.S., Japan, South Korea and Germany are most exposed. This weekly loss is more than the effect of the U.S.-China trade feud in 2019 (0.7pp). In terms of goods, the most exposed countries are Hong Kong, South Korea, Japan, Germany and the U.S. The cost could be USD18bn weekly.

Last, the macroeconomic impact should remain contained (-0.3pp on global GDP growth in Q1 2020 to +2%), if the business interruption in China doesn’t last for more than one month and business activity returns to normal after three months. While we think that the negative spillovers from the coronavirus epidemic will not last for more than three months, we doubt the global economy is strong enough to catch up entirely after the loss, given that the growth acceleration in H2 will be capped by U.S.-driven uncertainty. Overall, we think the recession in the manufacturing sector and global trade in goods will be prolonged into H1. Hence, we have revised our 2020 global GDP growth forecast by -0.1pp to +2.3%, based on a revised forecast for China (+5.6%, i.e. -0.3pp), the Eurozone (+0.9%, i.e. -0.1pp) and several other economies. We expect monetary policies to remain very active, with the ECB and the Fed even more likely to implement another rate cut in H1 2020, given that the “isolation” of China amid the coronavirus outbreak is likely to have strong negative impacts on both trade in goods and services.

Marco Arrighini 
Senior Sales Manager

Euler Hermes Switzerland | Via A. Adamini 10A | CH-6900 Lugano | Switzerland

t +41 91 922 73 64
m +41 79 501 43 44

Contribution by KPMG.

On 25 June 2018, the EU Directive 2018/822 (DAC6), which introduced mandatory disclosure rules, entered into force. These rules target all kinds of cross-border arrangements that fall under a hallmark of the Directive, irrespective of whether an advisor or intermediary is involved or not.

When will the rules enter into force?

EU Member States have until 31 December 2019 to implement the new rules, which will be applicable from 1 July 2020. As of 1 July 2020, qualifying intermediaries (or, in certain cases, the respective taxpayer) will be required to disclose information on reportable cross-border tax arrangements to their authorities within 30 days of the earlier of when the arrangement is made available for implementation, ready for implementation or actually implemented.

However, intermediaries and respective taxpayers will also be required to disclose information retroactively by 31 August 2020 on reportable cross-border arrangements that have been implemented since 25 June 2018.

Which transactions will be affected by DAC6?

In order for a transaction to be reportable under DAC6, it is required that:

  • the arrangement has a cross-border dimension, i.e. it involves participants residing either in more than one EU member state or in a member state and a third country;
  • the arrangement falls under a hallmark; and
  • in the case of certain hallmarks, that the main benefit test is satisfied.

Who is required to report?

Under DAC6, the primary reporting obligation lies with the intermediary involved in the transaction.

In the following cases, however, the reporting obligation shifts to the taxpayer (individual or company):

  • The intermediary is exempt by virtue of legal professional privilege; or
  • there is no EU intermediary (in particular in the case of “in-house arrangements”).

Why DAC6 even affects ‘ordinary’ corporate groups?

As mentioned above, if a transaction falls under a hallmark, but there is no EU intermediary involved, the reporting obligations fall to the taxpayer residing in the EU, i.e., for example, to the EU subsidiary of a Swiss company.

The hallmarks that trigger a reporting obligation are drafted very broadly. They even catch standard transactions such as the following examples:

Example A: transferring functions to another country

  • A German group entity forming part of a Swiss based company transfers certain sales functions to its subsidiary in Poland, where taxes are lower. The additional income realized by the Polish company will be distributed to the German parent company, which leads to an overall lower tax burden.
  • This transaction may fall under hallmark B.2 of the Directive: An arrangement that has the effect of converting income into capital, gifts or other categories of revenue, which are taxed at a lower level or exempt from tax.
  • The main benefit test is satisfied if one of the main benefits of the transaction is a tax advantage, which is likely this case.
  • Therefore, this transaction must in principle be reported by the German subsidiary.

Example B: granting a loan to an Italian subsidiary

  • In December 2018, a Swiss holding company granted a loan to its Italian subsidiary. Whilst the interest is deductible in Italy, it is not taxable at cantonal and communal level in Switzerland (status of holding company). Even though the holding status will be abolished as of 1 January 2020, such transactions are caught by DAC6 because of its retroactive effect dating back to 25 June 2018.
  • This transaction may fall under hallmark C.1(d) of the Directive: An arrangement that involves deductible cross-border payments (…) where (…) the payment benefits from a preferential tax regime in the jurisdiction where the recipient is resident for tax purposes.
  • As one of the main benefits of this transaction is a tax advantage, the main benefit test is satisfied, too.
  • Therefore, this transaction must in principle be reported by the Spanish subsidiary.


Based on the above comments, DAC6 affects many Swiss companies with EU group entities. Non-compliance with these new rules is not an option, as some countries provide for penalties of up to several hundred thousand euros. Therefore, all Swiss companies with EU group entities should start analyzing their cross-border transactions now, so that they are in a position to comply with the reporting obligations as from July 2020.

Please find here the factsheet for additional examples.

Not sure if any transaction within your group might be caught by DAC6? Our specialist are available for a call or a meeting to explain you the potential impact of the Directive:

Gernot Zitter, Partner Tax & Legal, +41 58 249 67 30, gzitter@kpmg.com

Simone Leonardi, Manager Tax & Legal, +41 58 249 32 49, sleonardi@kpmg.com

The Lugano Commodity Trading Association (LCTA) is pleased to offer a scholarship opportunity for the next CAS Commodity Professional (start: May 7, 2020).


Due to the COVID-19 emergency, the CAS Commodity Professional for the year 2020 has been cancelled.               

Study content

Commodity trading and related services have grown significant in the Swiss economy, and they are expanding even further. These companies are in search of talents.

In cooperation with the Lucerne University of Applied Sciences and Arts, the Lugano Commodity Trading Association (LCTA) and the Zug Commodity Association (ZCA) offer a certificate of advanced studies CAS for commodity professionals. The certificate programme will provide attendants with a thorough understanding of the commodity industry and its characteristics. The course work will provide students from the commodity sector with detailed skills, students from commodity service providers the ability to better understand their clients, and give all graduates tools to enhance their careers. The CAS Commodity Professional combines theoretical know-how with hands-on learning experience provided by accomplished guest speakers. This programme prepares the participants to take on management or specialist functions within the commodity industry.

  • Basics of Commodity & Geopolitical Dynamics
  • Commodities within the value chain
  • Shipping and Transport
  • Trade Finance
  • Basics of Risk Management
  • Legal Aspects and Compliance

Scholarship amount: CHF 7,900 (CAS tuition fee)

Application requirements:

To apply to the LCTA scholarship, applicants must fulfil the following criteria:

  1. Employee of a company, which is member of the LCTA
  2. Tertiary education (as minimum level)
  3. Good marks in the previous educations
  4. Multi language. In particular, good knowledge of the English language (fully taught in English)
  5. International skills
  6. Letter of reference from the employer or from a key-person in the commodity trading sector

The scholarship is granted if the following conditions are fulfilled:

  • The student is required to have an 80% attendance at the lessons
  • The student has to pass all the exams
  • The student has to carry out a research on a topic related to the Lugano commodity trading hub (defined by the board of the LCTA)


Due to the COVID-19 emergency, the CAS Commodity Professional for the year 2020 has been cancelled.               

The Global Commodities Conference, organised by Lugano Commodity Trading Association (LCTA), was successfully held in LAC Lugano on November 13 – 14, 2019. More than 300 people attended the two-day conference that brought together numerous experts and important players in the commodity trading and international trading sectors.

The annual international conference on commodities and commodity trading, organised by Lugano Commodity Trading Association (LCTA), was held in Lugano on November 13–14, 2019 at LAC Lugano Arte e Cultura. With a new format, the Global Commodities Conference has established itself as the pre-eminent gathering of world-renowned special guests, international trade experts, commodity traders, banking institutions and service providers.

Read here the full Event Review and Conference Pictures

On November 16 2019 at the Palazzo dei Congressi in Lugano was held the diplomas ceremony of the fifth edition of the CAS Commodity Professional, a training organized by the Lugano Commodity Trading Association (LCTA), in collaboration with the Zug Commodity Association (ZCA) and the Hochschule of Lucerne. The lessons were held alternately in Lugano and Zug and were able to provide the students with a global vision of the commodity trading and the tools needed to work in this sector. The president of LCTA, Thomas Patrick, the president of ZCA, Martin Fasser, LCTA Secretary General Marco Passalia and ZCA Secretary Martin Spillmann attended the ceremony. Congratulations to the students! Next course will start on May 2020.

Contribution by Ernst & Young.

Following the adoption of the Federal Act on Tax Reform and AHV (Old-Age and Survivors Insurance) Financing (TRAF) by popular vote in May 2019, all Swiss cantons are required to align their cantonal tax laws and ensure conformity with TRAF-regulations. Since the new measures are not all mandatory, the cantons have some discretion when adopting the new regulations, depending on the cantonal requirements and interest.

The Ticino Cantonal Government presented its proposal on how to implement TRAF in Ticino in a press conference on 10 July 2019. The new rules will enter into force as of January 2020, so planning for the change, based on the details that are published, is finally possible.

Mandatory Measures

Abolishment of preferential tax regimes

Like all other cantons, Ticino must abolish tax privileges for holding companies, domicile companies and mixed companies. In 2016, only 3.7% of all taxpayers were taxed according to a preferential tax regime. However, these companies contributed over 20% of the annual tax revenue generated by legal entities (CHF 144 Mio.) and are important for Ticino. Therefore, the Ticino Government is proposing a set of internationally accepted measures to replace certain tax regimes and to maintain the attractiveness of the Canton from a tax perspective.

Disclosure of hidden reserves

The abolishment of preferential tax regimes would result in the ordinary taxation of hidden reserves that were generated during the time that the privileged taxation applied. To mitigate this effect, cantons are required to introduce transitional rules. For that purpose, the so-called “two-rate system” will be introduced. Hidden reserves, including any self-created goodwill, at the date of transition from privileged to ordinary taxation, can be confirmed by the tax authorities upon request. Profits relating to the realization of hidden reserves that were generated under a privileged tax regime are subject to a separate tax rate over a period of 5 years. Ticino plans to apply a competitive tax rate of 1% to these profits. At the same time, the current step-up practice, set out in circular letter 29/2017, will be abolished from 2020. This means that the two-rate system will also be applied to companies that disclosed hidden reserves under the circular in the past.

Since trading companies often benefitted from a special tax regime, this measure is essential for them. It is important to start analyzing the opportunities presented by the transitional rules by evaluating the various scenarios. The different options for application of the transitional rules may present different benefit outcomes for a company. Amongst others, aspects to be considered include timing, valuation method, and the application of other available measures. EY has developed a comprehensive tool to simulate potential outcomes based on a variety of different scenarios and parameters. Using this tool, we are able to assist in identifying the most beneficial option.

In the case of a migration to Switzerland, the so-called step-up system is applied. Hidden reserves, confirmed by the tax authorities, can be tax effectively depreciated. According to the Ticino Cantonal Government proposal, the tax-free disclosed hidden reserves can be depreciated annually over a period of 10 years.

Patent box

According to federal legislation, all cantons must introduce a so-called “patent box”. This measure provides tax relief of a maximum of 90% of the income derived from patents and similar rights at cantonal and communal level. Ticino plans to make full use of this measure by introducing the maximum relief of 90%. However, as trading companies are typically not patent owners, this measure is unlikely to be too relevant for trading companies.

Overall tax relief

The Canton of Ticino intends to introduce a maximum tax relief of 70%. This is a very positive development, as a lower relief limitation was previously planned. With the 70% limit, the Canton of Ticino reaches the maximum possible tax relief in order to maintain the attractiveness compared to other Swiss cantons.

Optional measures

Capital tax relief

Companies with a preferential tax regime usually benefit from a reduced capital tax rate, which is often the case for trading companies. To mitigate the increase from the reduced capital tax rate when moving to ordinary taxation, the cantons can introduce a capital tax relief on patents and similar rights, qualifying participations, and intra-group loans.

Since 2018, a capital tax relief on qualifying participations has been available in Ticino. In addition, the Government has proposed to introduce capital tax relief on qualifying patents and similar rights. Regarding intra-group loans, the Government has decided (at this stage) not to implement a specific deduction. However, such a measure may still be introduced in a second step should this be necessary.

The change from privileged to ordinary taxation generally results in a significant increase of a trading company’s capital tax burden. Such increase might be mitigated in case a company can apply for additional tax relief that will be introduced for capital tax purposes.

R&D super deduction

The reform allows for the introduction of a super deduction on domestic R&D costs at the cantonal level. This measure aims at promoting R&D activities. Cantons may allow the deduction of up to 50% of qualifying R&D costs from the taxable income. In order to promote and develop R&D activities in its territory, the Ticino Cantonal Government has decided to propose the maximum deduction rate of 50%. This measure should have little impact for trading companies as they are typically not carrying out R&D activities in Switzerland.

Notional interest deduction (NID) on surplus equity

The notional interest deduction (NID) is basically granted on equity which, in the long-term, exceeds the average equity required for business operations. It is a measure only intended for application in “high-tax” cantons so will not be implemented in Ticino as Ticino does not fall under the definition of a high-tax canton.

Additional measures 

In addition to the mandatory and optional measures outlined above, the canton of Ticino has decided to implement further corporate tax measures.

Reduction of cantonal tax rate and cantonal multiplier

In order to maintain the tax attractiveness of Ticino, the corporate tax rate will be gradually decreased from 9% today to 8% in future for the period 2020 to 2024. From 2025 onwards, the rate will be further reduced to 5.5%. The cantonal multiplier will be reduced from 100% today to 98% for the period 2020 to 2024. From 2025 onwards, it will be further reduced to 96%.

These measures should lead to a future envisaged ETR of approx. 13.7% in the most attractive communes, which should allow the current tax privileged companies to almost maintain their current taxation level.

Differentiated communal multiplier

Today the canton Ticino applies one multiplier for both individuals and legal entities. From 2025 onwards, communes will be entitled to introduce different communal multipliers. The different multipliers are subject to the following conditions: (i) the communal multiplier must not be below 40% for both individuals and legal entities, and (ii) the spread between the communal multiplier for individuals and legal entities must not exceed 20%.

Increased creditability of corporate income tax against capital tax

The creditability of corporate income tax towards capital tax will be increased from 10% to 16% (as from 2025).


Trading companies, currently benefitting from a privileged tax regime such as the mixed company regime, should carefully consider the potential risks and opportunities arising from the upcoming tax reform. In particular, the fact that the tax regimes will be abolished requires them to properly analyze the different options available under the transitional rules and other new measures to be implemented. Any review should include the quantification of the financial implications, taking into account a number of parameters including, but not limited to, financial forecasts, hidden reserves, and goodwill, together with the application of the various measures and relief limitations. To be effective, planning and implementation should be completed before the end of 2019. Therefore, we recommend you take action now.

Cover Image © Fabio Marchese – Unsplash