Taxation

Automatic exchange of information

In July 2014, the Council of the Organisation for Economic Co-operation and Development (OECD) adopted the global standard for the automatic exchange of information on financial accounts (AEOI). This enables greater tax transparency and prevents cross-border tax evasion. To date, more than 100 countries, including all major financial centres, have decided to adopt this standard, with Switzerland joining them in 2017. At the end of 2023, 50 countries, including Switzerland, also committed to the extended AEOI. This extension concerns crypto assets (Crypto-Asset Reporting Framework, CARF) and is due to come into force on 1 January 2026.

The US still does not adhere to the OECD standards. It applies a unilateral US regulation that applies to all countries worldwide, the Foreign Account Tax Compliance Act (FATCA). For foreign financial institutions, the implementation of FATCA involves considerable administrative and financial effort. This burden is reduced for Swiss financial institutions by the 2014 FATCA agreement between Switzerland and the US. In June 2024, Switzerland and the US signed a new FATCA agreement that provides for the automatic exchange of information (the so-called switch to ‘Model 1’). The implementation of this agreement requires an amendment to national law.

As part of the public consultation process, the VAV submitted a statement in which it expressed its fundamental support for the model change, but called for the complete removal of the proposed penalty provision for negligence in the implementation of FATCA. The Swiss Parliament will decide on this matter. According to current plans, the change to the new system in Switzerland should come into force on 1 January 2027.

OECD minimum tax

With the Base Erosion and Profit Shifting (BEPS) project, the OECD and G20 initiated a fundamental reorganisation of international corporate tax law in 2015. This is divided into two pillars: While Pillar 1 represents a connecting rule for profit taxation at the place of consumption, Pillar 2 provides for a global minimum tax rate of 15 per cent for international corporations with a turnover of more than EUR 750 million. While the implementation of Pillar 1 is still up in the air, partly due to the reluctance of the US, the introduction of Pillar 2 is well advanced. However, large countries such as the US, China and India have not yet committed to implementation. The global survival of this system is therefore uncertain.

Nevertheless, minimum taxation was quickly implemented in Switzerland by means of an ordinance. The people and the cantons approved the necessary constitutional amendment in June 2023, enabling Switzerland to implement the OECD minimum tax on 1 January 2024 with the introduction of a domestic supplementary tax. The Federal Council decided in September 2024 to introduce the international supplementary tax (Income Inclusion Rule, IIR), which will come into force on 1 January 2025. Within six years, the Federal Council must also submit a federal law to parliament to replace the ordinance.

The VAV welcomes the fact that 75% of the revenue from the supplementary tax will go to the cantons so that it can be used to relieve the burden on the affected companies in the respective cantons. Ultimately, the aim is to ensure that Switzerland remains as attractive as possible as a business location and that measures are taken to compensate for the loss of the low tax advantage.

Pension provision and fiscal policy

Like many other countries, Switzerland is faced with the challenge of ensuring a balanced national budget, particularly in view of significant demographic changes.

One example of this is the 13th AHV pension, which was decided in spring 2024 and will further exacerbate the financial imbalance of the AHV. The financing of the associated additional expenditure is still open and controversial. While the Federal Council proposed an increase in VAT to finance the additional expenditure, the councils are wavering between a temporary increase in VAT (National Council) and an increase in VAT together with an increase in wage contributions (Council of States). A moderate increase in VAT has the advantage that the additional expenditure is borne by the entire population, thus better preserving intergenerational fairness. An increase in wage contributions, which would have to be borne solely by the working population, is likely to lead to an increase in labour costs and thus impair the competitiveness of Switzerland as a business location.

In order to avoid deficits, comply with the debt brake and keep the federal budget in balance in the medium term, the Federal Council has also drawn up a relief package (Entlastungspaket 27) with selected measures and sent it out for consultation on 29 January 2025. As part of this relief package, the Federal Council proposed, among other things, an increase in taxation on capital withdrawals from the second and third pillars.

While the VAV generally welcomes measures to curb the growth of government spending and ensure a balanced budget, it considers the increase in taxation on capital withdrawals from the second and third pillars to be a measure that would reduce the attractiveness of occupational pension provision. The proposed measures in the area of occupational pension provision would weaken citizens' trust in institutions and reduce incentives for private pension provision, particularly at a time when this should be encouraged. Accordingly, the VAV has spoken out clearly against this measure in the consultation process on this draft.