TRAF: Tax reform will impact corporate taxation

The "Tax Reform and AHV Financing" package is now reality

The "Tax Reform and AHV Financing" (TRAF) package entered into force on January 1, 2020, and entails a fundamental restructuring of corporate taxation. For Swiss SMEs, this reform offers the opportunity to rethink and optimize their own corporate structure to take advantage of these new possibilities. 

Has your company taken the necessary steps?

The complexity and the short deadline for the implementation of the Tax Reform and AHV Financing (TRAF) package are major challenges for most companies. If potential is not tapped into soon enough, this could lead to competitive disadvantages. 

Relevant fields of action for companies as a result of TRAF

Source: Credit Suisse

What are the TRAF milestones in the 2020 financial year?

When filing their 2019 tax return (to be submitted in 2020), companies that previously held special status (holding and domiciliary companies as well as mixed companies) can either to apply the existing step-up or allow the cantonal tax office to bindingly determine their previously privileged hidden reserves as part of a "special tax rate solution." The more beneficial option must be analyzed on a case-by-case basis.

You should also currently be considering other important points, such as a change in corporate structure (holding vs. parent company structure), the use of a patent box, R&D deductions (segment accounting), and the development of an optimal withdrawal strategy for entrepreneurs (salary/dividends/BVG).

TRAF milestones for companies in 2020

Source: Credit Suisse

What's our approach?

We recommend conducting a TRAF checkup at once, in order to identify possible opportunities and fields of action. This is important, as not every corporate structure is able to take advantage of these new opportunities to the same extent.

In this way, your company can benefit from an ideal realignment, tailored to the new tax regulations. At the same time, you can optimize your overall financial situation as an entrepreneur. 

Do you have any questions about the "Tax Reform and AHV Financing" (TRAF) package?

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