From Switzerland: Vaud Confirms Massively Lower Corporate Tax Rates

Roberto Cavadini or Paolo Mondia - Andersen in Lugano, a member firm of Andersen Global

On November 1, 2017, regardless of the Federal Tax Proposal 17 that is in progress, the Vaud Council of State legislative roadmap confirms a significant reduction in the corporate tax rate to 13.79% to come into effect as of January 1, 2019.

The executives of the Canton of Vaud give a strong message to its taxpayers and companies contemplating to relocate in the French part of Switzerland. Furthermore, it gives visibility and certainty to companies domiciled there. Even though other cantons are waiting for the outcome of the corporate tax reform at the federal level, the intention to substantially reduce the corporate tax rate by the Vaud Council of State has been confirmed.

A cantonal package, which includes the reduced corporate income tax rate, will be put into place within the coming months. The income tax rate that will be lowered from approx. 22% to 13.79% from January 1, 2019 is a remarkable drop for all companies, SMEs and others, which do not currently benefit from a privileged tax regime in canton Vaud.

Companies in Vaud, which have until now experienced a privileged status, will also be subject to the new ordinary tax rate in the future. However, they will still benefit from their favorable tax status until the new federal tax reform will be implemented, probably in 2020.

Given this announcement, it is recommended that all companies thoroughly assess the impact the new tax rate will have and identify possible opportunities concerning investments, disposals as well as accounting and reporting.