Tax proposal and AHV financing (TRAF)

The Swiss electorate accepted the tax reform and AHV financing in the May 2019 votes. The new, approved provisions came into force on 1 January 2020. The aim of the reform is to promote Switzerland as a business location and to secure it for the future. The revision also promotes the international acceptance of the Swiss tax system for companies by strengthening international conformity and competitiveness. The new bill on the AHV also helps to ensure that the AHV receives immediately needed additional income so that pensions can be secured in the future.

The tax reform can be explained in three sections. Firstly, a patent box and a special deduction for research and development (R & D) costs have been introduced. This gives tax advantages to income from intangible assets, which should increase innovation and R & D in Switzerland. The Patent Box and the detailed calculation mechanisms are clearly explained in the regulation and are in line with OECD standards. The implementation takes place at the cantonal level. Secondly, a deduction for self-financing was introduced in the canton of Zurich. This regulation only applies to the Canton of Zurich, as only the latter fulfills the requirement set by the parliament. This instrument is intended to prevent excessive indebtedness of companies.

In the latter sub-area, a number of other tax policy measures are mixed up. These include a 70% increase in the taxation of dividends at the federal level and at least 50% at the cantonal or communal level, a relief limit of 70% on all new measures at the cantonal level and the introduction of a proportionality rule for capital contributions. However, this rule only affects companies listed on the Swiss stock exchange. 

The new AHV bill should ensure that an additional CHF 2 billion will already be paid to the AHV this year. The additional income will be borne in varying proportions by the federal government, companies and the insured. There has also been a 0.3% increase in AHV contributions, which will be borne equally by employees and employers.