In a referendum held on 12 February 2017, Swiss voters rejected the Corporate Tax Reform III (CTR III). The CTR III was supposed to introduce major changes in the Swiss tax system by abolishing certain current preferential tax statuses and replacing them with new measures.

Background and Content of the CTR III-Bill

The CTR III was initiated due to the continuous criticism and pressure coming from various international bodies (in particular the European Union) concerning numerous preferential tax statuses and practices currently applied in Switzerland (for example, the mixed company regime at cantonal level as well as the Swiss finance branch and principal company regime at Federal level). The CTR III was supposed to lead to the abolishment of those rules and to the introduction of new measures that are in line with international standards (namely a patent box, a R&D super-deduction, and a notional interest deduction).

What’s Next?

The current preferential tax statuses remain in place for the time being. However, there is a political consensus that a new corporate tax reform is crucial in order to maintain and even enhance the attractiveness of Switzerland as a business location. Therefore, it is expected that a new reform of the Swiss corporate tax system will be initiated as soon as possible. Such new reform will likely include some of the measures that were already included in the CTR III-bill.

How can we help?

We will closely monitor the developments concerning the potential proposal of a new corporate tax reform and keep you updated accordingly. For the purpose of providing a first analysis of the current situation and the potential developments in Swiss tax policy to come, our Zurich office held a Breakfast Briefing on 8 March 2017 including Fabian Baumer, Vice Director and Head of Tax Policy of the Swiss Federal Tax Administration. Furthermore, we will organize roundtables in April 2017, where participants will have the opportunity to discuss such developments also from a technical perspective with experts from the tax administration. We would be pleased to welcome you at one of our events.