Swiss voters reject Corporate Tax Reform III in popular referendum
Article 2 minute read

Swiss voters reject Corporate Tax Reform III in popular referendum

14 February 2017

On 12 February 2017 a majority 59.1% of Swiss voters rejected Corporate Tax Reform III (CTR III), which will lead to a redrafting of the original proposal.


The draft Corporate Tax Reform proposal was published by the Federal Council on 5 June 2015. Following discussion, Federal Parliament approved the bill for CTR III on 17 June 2016, and it was subject to a popular referendum on Sunday 12 February 2017.


The 59.1% rejection of CTR III by Swiss voters will result in a delayed implementation, as the proposal must now be redrafted. It’s possible the delay will have a knock-on effect with the European Union, OECD and maybe even a number of bilateral relationships, as Switzerland was expected to abolish its preferential tax regimes by 31 December 2018.

Theoretically, it may still be possible to meet this date, but the consensus appears to be that  the CTR III project will now be delayed by two to three years.

Reason(s) for rejection

It would seem that the introduction of the notional interest deduction and partial taxation of dividend income for individuals were the main drivers for the rejection of CTR III by Swiss voters. This, combined with the Swiss tax payer having to pay the shortfall in tax revenue, according to CTR III’s opponents, seems to have dealt a decisive final blow.

Whatever the reasons for the rejection, all do seem to agree that reform of the Swiss tax system is required; particularly with regard to the difference in taxation between foreign and Swiss companies, and the reduction of effective corporate income tax rates.

What happens now?

The Federal Council will need to start working on a revised proposal for CTR III, taking into account the discussions leading up to last Sunday’s referendum. It is expected that some of the hotly-disputed items will be taken out. The sooner more clarity can be obtained on about what is ‘in’ and what is ‘out,’ the better. The concerns about potential counter measures from the European Union are there.

The rejection of CTR III means the current tax rules stay in place, including the preferential tax regimes. Regardless of CTR III, some Swiss cantons may decide to decrease their corporate income tax rates; this may help companies to deal with the prolonged uncertainty on their tax status.

Companies that are under pressure internationally in relation to the use of a preferential tax regime in Switzerland may wish to make use of the tax-free ‘step-up practice’.

Talk to us

This setback in corporate tax reform does not detract from Switzerland’s attractiveness as a jurisdiction in which to do business, and TMF Switzerland’s experts can assist companies with a review of their current set-up, and make referrals to local tax counsel where required.

Need more information? Get in touch with our team.

Find out more about our services in Switzerland.

Written by

Jurgen Borgt

Director, Client Services

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