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Tax aspects of the revision of the stock corporation law in Switzerland

by Cédric-Olivier Jenoure & Sascha Wohlgemuth

In Switzerland on 01 January 2023 the new stock corporation law came into force.

One change is that stock corporations and limited liability companies may express their nominal capital not only in Swiss francs (CHF), but also in EUR, USD, GBP, or JPY if this is their functional currency. However, it is mandatory that at the time of incorporation the equivalent value is at least CHF 100,000 for stock corporations, and CHF 20,000 for limited liability companies.

This introduction also has tax implications. For example, taxes are still to be paid in CHF, therefore taxable profit and taxable equity must be converted into CHF. The nominal capital’s currency may be changed, prospectively or retrospectively, as of the beginning of the company’s financial year.

It is important to know that if the nominal capital is denominated in a foreign currency, the capital contribution reserves will also be determined in the same currency. According to initial information from the Swiss Federal Tax Administration, existing capital contribution reserves (which can be repaid tax-free) will be converted at the same FX rate used for the conversion of the nominal capital, which should be beneficial for most companies.

Also new is the creation of a legal basis for the distribution of interim dividends, which is now possible on the basis of the interim financial statements. The interim dividend is then deducted from equity as a negative item in the annual financial statements. For the taxable profit, the annual profit is relevant, but the taxable capital is reduced due to the interim dividend. If the interim dividend is higher than the actual annual profit, there is no repayment obligation, but it must be recognised for tax purposes. Interim dividends are distributions of current profits and not substance dividends, which reduces acquisition costs. The distribution of interim dividends can be used for tax optimisation to take advantage of deductions for tax purposes.

Another change with tax implications is the capital band, which makes capital increases and capital reductions more flexible. At the annual general meeting, shareholders can thus authorise the board of directors to increase or reduce the nominal capital within a period of five years. In principle, the capital band has the same direct tax consequences as “normal” capital increases and decreases. However, if shares are repurchased, e.g. via the stock exchange, the income tax consequences of a possible direct, partial liquidation can be avoided.

In the case of capital increases, the premiums paid in by the shareholders are generally considered as capital contributions. With regard to the capital contribution reserves, a net consideration applies regarding direct taxes and withholding taxes. In addition, the capital band has the benefit that the one percent Swiss stamp tax payable on capital contributions is only due on the net increased amount at the expiry of the capital band.

Photo: dudlajzov -

21 August 2023

Cédric-Olivier Jenoure

Bratschi AG, Partner

Sascha Patrick Wohlgemuth-Weber

Bratschi AG, Partner

Bratschi AG