On 18 June 2021, the Swiss Parliament has resolved to abolish the 1% issuance stamp duty. The abolition may enter into force as early as of 1 January 2022 but will likely be subject to a referendum vote initiated by the Social Democratic Party (SP).
Switzerland levies a 1% issuance stamp duty on equity contributions. This includes capital contributions made by the shareholders to a Swiss company in exchange for shares or share premium. Even though there are numerous exemptions available, such as for qualified mergers, group restructurings, financial reorganizations, etc., this tax is considered a disadvantage for Switzerland as it impedes equity funding and places a financial burden on companies.
It was the Swiss Liberal Democratic Party (FDP), which initiated the abolishment of the issuance stamp duty on a political level in 2009 already. After several political delays (incl. the removal from the Corporate Tax Reform III bill), the Swiss Parliament now approved the bill to abolish the issuance stamp duty on 18 June 2021.
The legislative change could in principle enter into force on 1 January 2022. However, the Swiss Social Democratic Party (SP) has already initiated a referendum and is currently collecting the required 50’000 signatures. Provided the required signatures will be collected within 100 days, a popular vote on the decision of the Swiss Parliament will take place.
Outlook and comments
The abolishment of the 1% issuance stamp duty will likely be subject to a popular vote, which is not expected to take place until 2022. Thus, a further delay must be considered, and it remains to be seen whether the decision of the Swiss Parliament will be upheld in a popular vote.
From an economic point of view, the commercial benefits associated with the proposed abolishment are expected to outweigh the annual tax revenue loss of approx. CHF 250 million. By this measure, Switzerland can further strengthen its position as a highly attractive business location in the long term and can simultaneously abandon one essential disadvantage compared to other jurisdictions. Finally, the abolishment of the issuance stamp duty would also be a supportive measure to mitigate potential impacts on the Swiss tax landscape in light of the recent developments of the OECD/G20 BEPS 2.0 project and in particular with regard to Pillar 2 and the proposed global minimum taxation of large multinational enterprises.