Switzerland Becomes One of the Most Attractive Jurisdiction for Corporate Tax in Europe

Significant decrease in corporate tax from 24.2% to 13.99% in Geneva, Switzerland.

On 19 May 2019 Swiss voters have accepted the Federal Act on Tax Reform and AHV Financing (social charges) (“FAAF”). At the same time, the canton of Geneva has amended its companies taxation act to implement the FAAF.

The purpose of the FAAF is to establish a system of corporate taxation that is in line with international requirements while maintaining Switzerland’s competitiveness.

The main consequences of the FAAF are the following for Geneva:

1. Significant decrease in corporate tax from 24.2% to 13.99% in Geneva, Switzerland.
2. Abolishment of cantonal regimes of tax privileges applicable to companies whose main activities are carried out abroad (“Special Tax Status”).
3. Slight increase of the federal dividends tax.
4. Reduction of the taxation applicable to patent profits with a maximum discount of 90% (patent box). The canton of Geneva will apply a maximum discount of 10%.
5. Possibility for the cantons to implement up to 50% tax exemption on the research and development expenses.

Entry into force: 1st January 2020