On May 19, 2019, Swiss voters affirmed the Federal Act on Tax Reform and AHV Financing (TRAF), including the Tax Harmonization Act, requiring an effective date of January 1, 2020. TRAF requires the abolishment of current favorable cantonal tax regimes (holding, mixed, and domicile company). In connection with TRAF legislation, certain Swiss federal practice-based regimes, specifically the federal principal company and finance branch regimes, are abolished effective January 1, 2020.
The TRAF legislation provides for broad changes to taxation in Switzerland. Companies will need to assess the financial reporting implications of the various provisions, including abolishment of the Swiss principal company and Swiss finance branch regimes, as well as cantonal replacement measures and transitional provisions. Companies should monitor cantonal enactment to ensure that the related impacts are accounted for in the appropriate period. Companies also should consider whether updates are required to processes and controls, and whether disclosure in the financial statements is appropriate.
US Tax Accounting Market Leader, PwC US