{"id":3522,"date":"2019-04-05T08:53:29","date_gmt":"2019-04-05T06:53:29","guid":{"rendered":"https:\/\/www.lcta.ch\/?post_type=portfolio&#038;p=3522"},"modified":"2019-04-05T08:55:50","modified_gmt":"2019-04-05T06:55:50","slug":"swiss-tax-reform_kpmg","status":"publish","type":"portfolio","link":"https:\/\/www.lcta.ch\/en\/portfolio-articoli\/swiss-tax-reform_kpmg\/","title":{"rendered":"SWISS TAX REFORM \u2013 THE PUBLIC VOTE IS APPROACHING"},"content":{"rendered":"<div id='full_slider_1'  class='avia-fullwidth-slider main_color avia-shadow   avia-builder-el-0  el_before_av_section  avia-builder-el-first   container_wrap fullsize'  ><div  class='avia-slideshow av-1nayjuw-790c2ecdef200df18f9d443aefc93b29 avia-slideshow-featured av_slideshow_full avia-slide-slider av-slideshow-ui av-control-default av-slideshow-manual av-loop-once av-loop-manual-endless av-default-height-applied   avia-slideshow-1' data-slideshow-options=\"{&quot;animation&quot;:&quot;slide&quot;,&quot;autoplay&quot;:false,&quot;loop_autoplay&quot;:&quot;once&quot;,&quot;interval&quot;:5,&quot;loop_manual&quot;:&quot;manual-endless&quot;,&quot;autoplay_stopper&quot;:false,&quot;noNavigation&quot;:false,&quot;bg_slider&quot;:false,&quot;keep_padding&quot;:false,&quot;hoverpause&quot;:false,&quot;show_slide_delay&quot;:0}\"  itemprop=\"image\" itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/ImageObject\" ><ul class='avia-slideshow-inner ' style='padding-bottom: 28.666666666667%;'><li  class='avia-slideshow-slide av-1nayjuw-790c2ecdef200df18f9d443aefc93b29__0  av-single-slide slide-1 slide-odd'><div data-rel='slideshow-1' class='avia-slide-wrap '   ><div class='av-slideshow-caption av-1nayjuw-790c2ecdef200df18f9d443aefc93b29__0 caption_fullwidth caption_left'><div class=\"container caption_container\"><div class=\"slideshow_caption\"><div class=\"slideshow_inner_caption\"><div class=\"slideshow_align_caption\"><h2 class='avia-caption-title '  itemprop=\"name\" >NEWS<\/h2><\/div><\/div><\/div><\/div><\/div><img decoding=\"async\" fetchpriority=\"high\" class=\"wp-image-4089 avia-img-lazy-loading-not-4089\"  src=\"https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school.jpg\" width=\"1500\" height=\"430\" title='sld-dinner-american-school' alt=''  itemprop=\"thumbnailUrl\" srcset=\"https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school.jpg 1500w, https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school-300x86.jpg 300w, https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school-768x220.jpg 768w, https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school-1030x295.jpg 1030w, https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school-705x202.jpg 705w, https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2017\/06\/sld-dinner-american-school-450x129.jpg 450w\" sizes=\"(max-width: 1500px) 100vw, 1500px\" \/><\/div><\/li><\/ul><\/div><\/div>\n<div id='av_section_1'  class='avia-section av-1jcygd4-5dd3a3b533cd3aff9fd843c251f727e0 main_color avia-section-small avia-no-shadow  avia-builder-el-1  el_after_av_slideshow_full  el_before_av_two_third  avia-bg-style-scroll container_wrap fullsize'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-3522'><div class='entry-content-wrapper clearfix'><\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='after_section_1'  class='main_color av_default_container_wrap container_wrap fullsize'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-full alpha units'><div class='post-entry post-entry-type-page post-entry-3522'><div class='entry-content-wrapper clearfix'>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-1ie1lg8-c9a357716eed360fb21359d9dde6225e\">\n#top .flex_column.av-1ie1lg8-c9a357716eed360fb21359d9dde6225e{\nmargin-top:0px;\nmargin-bottom:0px;\n}\n.flex_column.av-1ie1lg8-c9a357716eed360fb21359d9dde6225e{\nborder-radius:0px 0px 0px 0px;\npadding:30 px 30 px 30 px 30 px;\n}\n.responsive #top #wrap_all .flex_column.av-1ie1lg8-c9a357716eed360fb21359d9dde6225e{\nmargin-top:0px;\nmargin-bottom:0px;\n}\n<\/style>\n<div  class='flex_column av-1ie1lg8-c9a357716eed360fb21359d9dde6225e av_two_third  avia-builder-el-2  el_after_av_section  avia-builder-el-no-sibling  first flex_column_div  '     ><style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-1fqdvoo-54cd302cf31fbd384609541e98bd16bf\">\n#top .av_textblock_section.av-1fqdvoo-54cd302cf31fbd384609541e98bd16bf .avia_textblock{\ncolor:#477067;\n}\n<\/style>\n<section  class='av_textblock_section av-1fqdvoo-54cd302cf31fbd384609541e98bd16bf '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock av_inherit_color'  itemprop=\"text\" ><h1><strong>SWISS TAX REFORM <\/strong><strong>\u2013<\/strong><strong> THE PUBLIC VOTE IS APPROACHING <\/strong><\/h1>\n<\/div><\/section><br \/>\n<div  class='avia-logo-element-container av-1axsj4o-ec68728dffcf1f410df5cbc899b499be av-border-deactivate avia-logo-grid avia-content-slider avia-smallarrow-slider avia-content-grid-active noHover avia-content-slider-even  avia-builder-el-4  el_after_av_textblock  el_before_av_hr  avia-content-slider1' ><div class='avia-smallarrow-slider-heading '><div class='new-special-heading'><h3 class='av-logo-special-heading-text '>Contribution by<\/h3><\/div><\/div><div class=\"avia-content-slider-inner\"><div class=\"slide-entry-wrap\"><div  class='slide-entry av-2rd3v0-a1fb2246ebd9cc26cd50e0391aac9c91 flex_column no_margin av_one_fourth real-thumbnail post-entry slide-entry-overview slide-loop-1 slide-parity-odd post-entry-last first'><a href=\"https:\/\/home.kpmg\/ch\/en\/home.html\" data-rel='slide-1' class='slide-image' title=''  target=\"_blank\"  rel=\"noopener noreferrer\"><span class='av-partner-fake-img' style='padding-bottom:61.919504643963%; background-image:url(https:\/\/www.lcta.ch\/site\/wp-content\/uploads\/2019\/04\/LG-kmpg.png);'><\/span><\/a><\/div><\/div><\/div><\/div><br \/>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-177b508-d86d061fcd963fb7e58b15f7a1031438\">\n#top .hr.hr-invisible.av-177b508-d86d061fcd963fb7e58b15f7a1031438{\nheight:30px;\n}\n<\/style>\n<div  class='hr av-177b508-d86d061fcd963fb7e58b15f7a1031438 hr-invisible  avia-builder-el-5  el_after_av_partner  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div><br \/>\n<section  class='av_textblock_section av-141audk-51c67f99a748c4b96d9ca33a328f7537 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock'  itemprop=\"text\" ><p><strong>Federal vote <\/strong><br \/>\nOn 19 May 2019, the Swiss public will vote on the Federal Act on Tax Reform and AVS Financing (TRAF). The tax reform, which Parliament has linked to a social compensation measure concerning AVS financing (Old Age and Survivor\u2019s Insurance), provides in particular for the abolition of internationally no longer accepted tax regimes and for the introduction of transitional and replacement measures. However, these measures have met with rejection in certain political camps. In addition, the combination with additional AVS financing has mobilized further opponents.<\/p>\n<p><strong>Background <\/strong><br \/>\nLike its predecessor \u2013 the Corporate Tax Reform III (CTR III), rejected by public vote on 12 February 2017 \u2013 TRAF pursues the same three main objectives: to maintain the attractiveness of Switzerland as a business and tax location, to promote international acceptance of the Swiss corporate tax legislation and to ensure sufficient tax revenues to finance public activities. Therefore, some elements of the CTR III are still included in the new proposal. Other elements have been added subsequently in order to create a balanced reform that \u2013 hopefully \u2013 meet with acceptance.<\/p>\n<p><strong>The potential impact to commodity traders <\/strong><br \/>\nThe main measures that could have a relevant impact to the Commodity Traders is the abolition of status companies at Cantonal level (Mixed Company status). It is well established that Cantons usually granted the Mixed Company status to the Commodity traders (Art. 93 of the Ticino Tax Act, \u201csociet\u00e0 ausiliaria\u201d), excluding part of the income generated abroad from Corporate Income Tax and allowing a lower taxation on equity.<\/p>\n<p>The abolishment of cantonal tax statuses will lead to an increase of the applicable tax rate for companies that previously enjoyed privileged tax status. To prevent the shock, TRAF include a transitional measure and allow a smoother transition from the privileged to the ordinary taxation.<\/p>\n<p><strong>Disclosure of hidden reserves (step-up)<\/strong><br \/>\nFor companies changing status, transitional measures provide for two possibilities to prevent over-taxation of hidden reserves. The first, in accordance with current practice in most cantons, it to disclose tax-neutrally and subsequently depreciate existing hidden reserves when the status is abandoned (current law step-up; disclosure solution). The second is application of a special tax rate (special tax rate solution).<\/p>\n<p><strong>Current law step-up (disclosure solution)<\/strong><br \/>\nThe current law step-up allows companies to effectively disclose hidden reserves formed, or self-generated value created (goodwill), under a privileged tax regime in the tax balance sheet immediately before the privileged status is abandoned. For this purpose, a taxed hidden reserve is disclosed in the tax balance sheet without the need to make a corresponding entry under commercial law. In the following tax periods, the taxed hidden reserve can be depreciated tax-effectively, taking into account the overall limitation of measures. (The depreciation period is defined according to cantonal regulations or depreciation rates published by the Swiss Federal Tax Administration, respectively).<\/p>\n<p><strong>Special tax rate solution<\/strong><br \/>\nThe special tax rate solution provides for separate taxation over five years of the portion of the profit based on the realization of hidden reserves and goodwill, which were previously not taxed under the old regime. The maximum amount is limited to such hidden reserves available at the time of the status change. The amount must be recorded in a decree. In contrast to the practice under the current law step-up, the special tax rate solution does not result in the disclosure of hidden reserves in the tax balance sheet. This eliminates the issue of recognizing deferred tax assets.<\/p>\n<p><strong>Outlook<\/strong><br \/>\nIn case of a Public\u2019s \u201cYes\u201d on 19 May 2019, it is planned that the reform will come into force on 1 January 2020. The regulation concerning a temporary special tax rate solution is to come into force immediately after the referendum vote. The cantons will thus be able to make use of this measure early in order to mitigate the <em>de facto<\/em> tax increase for those companies that plan to waive their cantonal tax status earlier in time.<\/p>\n<p>In the event of rejection, the Federal Council would have to act quickly and ensure that the tax regimes criticized by the OECD and the EU are abolished \u2013 potentially together with increasing the cantonal share of federal tax revenue and adjusting the fiscal equalization system. Otherwise, it would hardly be possible to prevent Switzerland from being blacklisted by the EU.<\/p>\n<p><strong>Next steps<\/strong><\/p>\n<p>The local tax experts of KPMG would be glad to discuss the impact of TRAF and the potential relief of the transitional measures. Please contact KPMG Lugano to schedule a meeting with us.<\/p>\n<\/div><\/section><br \/>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-12zayjs-6dda0f93ee079f55e01017312ce0743a\">\n#top .hr.hr-invisible.av-12zayjs-6dda0f93ee079f55e01017312ce0743a{\nheight:30px;\n}\n<\/style>\n<div  class='hr av-12zayjs-6dda0f93ee079f55e01017312ce0743a hr-invisible  avia-builder-el-7  el_after_av_textblock  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div><br \/>\n<section  class='av_textblock_section av-qsnf6g-9cd9a723cc50d04a451a1c7e4b717b34 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock'  itemprop=\"text\" ><p><strong>Your contacts<\/strong><\/p>\n<p>Stefan Kuhn <em><br \/>\nPartner, Head of Corporate and M&amp;A Tax, Region Zurich and Ticino, <a href=\"mailto:stefankuhn@kpmg.com\">stefankuhn@kpmg.com<\/a>; +41 58 249 54 14<\/em><\/p>\n<p>Simone Leonardi <em><br \/>\nManager, International Corporate Tax, Zurich and Lugano, <a href=\"mailto:sleonardi@kpmg.com\">sleonardi@kpmg.com<\/a>, +41 58 249 32 49<\/em><\/p>\n<h2><\/h2>\n<\/div><\/section><br \/>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-2mawi0-63cf488238a8a25e0bca2631818abcd0\">\n#top .hr.hr-invisible.av-2mawi0-63cf488238a8a25e0bca2631818abcd0{\nheight:30px;\n}\n<\/style>\n<div  class='hr av-2mawi0-63cf488238a8a25e0bca2631818abcd0 hr-invisible  avia-builder-el-9  el_after_av_textblock  el_before_av_textblock '><span class='hr-inner '><span class=\"hr-inner-style\"><\/span><\/span><\/div><br \/>\n<section  class='av_textblock_section av-jddako-5b1229c1de49140091219890661fe2a5 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/CreativeWork\" ><div class='avia_textblock'  itemprop=\"text\" ><p><em>April 4, 2019<\/em><\/p>\n<\/div><\/section><\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>SWISS TAX REFORM, April 4th, 2019<\/p>\n","protected":false},"author":1,"featured_media":1828,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"tags":[],"portfolio_entries":[21],"class_list":["post-3522","portfolio","type-portfolio","status-publish","has-post-thumbnail","hentry","portfolio_entries-review-en"],"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/portfolio\/3522","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/portfolio"}],"about":[{"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/types\/portfolio"}],"author":[{"embeddable":true,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/comments?post=3522"}],"version-history":[{"count":0,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/portfolio\/3522\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/media\/1828"}],"wp:attachment":[{"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/media?parent=3522"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/tags?post=3522"},{"taxonomy":"portfolio_entries","embeddable":true,"href":"https:\/\/www.lcta.ch\/en\/wp-json\/wp\/v2\/portfolio_entries?post=3522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}