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  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 12/23/2013

Switzerland - Final report on Corporate Tax Reform III 

December 23: The Swiss Federal Council on 19 December 2013 released a final report on a plan known as “Corporate Tax Reform III.”

The corporate tax reform proposals are intended to maintain the competitiveness of the Swiss tax system, but also to address the increasing pressure from the European Union concerning the Swiss “privileged tax regime” for holding companies and other entities.

Proposed changes

In recent years, the Swiss “ring-fencing” regime—i.e., earnings based on activities outside Switzerland are taxed favorably compared to intra-state activities—has been subject to international pressure. In response, the Swiss federal government proposes to replace the holding, domiciliary, and mixed company regime in the next five to seven years and to enact a series of measures.


Among the proposals in the final report are measures that would:


  • Introduce new rules for mobile earnings—e.g., the concept of license boxes at the cantonal level and an interest-adjusted earnings tax that would limit interest deductions on higher-than-average equity
  • Reduce cantonal tax rates
  • Repeal certain tax burdens—such as repeal the stamp duty on equity interests

What’s next?

The Federal Council has directed the Swiss Federal Department of Finance to consult with the cantons and then to draft a proposal for consultation (scheduled for summer 2014).


Read a December 2013 blog item prepared by the KPMG member firm in Switzerland: How to retain Switzerland’s competitiveness


Read a December 2013 presentation(PDF 657KB) prepared by the KPMG member firm in Switzerland.




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