Tax flash: votes regarding lump sum taxation and inheritance tax

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  • Federal vote regarding lump-sum taxation: The Federal referendum on the initiative to abolish lump-sum taxation everywhere in Switzerland is expected to already take place before the end of 2014. If the new law is accepted, the state will be required to issue implementation regulations within a period of three years. Until such implementation regulations are enacted, lump-sum taxation under the old law will be maintained.
  • Federal vote regarding 20% Federal inheritance and gift tax: It is difficult at the current time to predict when the referendum on the initiative to introduce a 20% Federal inheritance and gift tax will take place, but this is unlikely to happen before 2015. If the new law is accepted, it will enter into force on 1 January of the second year after acceptance. However, the Federal Council will have to issue implementation regulations and no details are known in this regard yet. If the law is enacted, it will have retroactive effect for gifts from 1 January 2012. 

Reclaim of Swiss withholding tax for individuals: a clarification

With Circular No. 40 of 11 March 2014, the Federal Tax Administration summarised and clarified the court decisions of the past few years regarding the right to reclaim Swiss withholding tax. The rule is that taxpayers may only reclaim withholding tax if they properly declared the relevant income to the competent tax office. As the time, type and manner of declaration require interpretation, the new Circular describes the requirements to be met by a proper declaration.

A proper declaration is deemed to have been made if:

  • the taxpayer ordinarily declared the relevant income to the competent tax office (as well as the assets from which this income derived) in the first tax return that was due after the date on which the taxable payment was received or
  • the taxpayer did not declare the income and assets in the corresponding tax return but followed up this omission with a spontaneous subsequent declaration before the ordinary tax assessment entered into legal force (voluntary declaration).

The withholding tax is not repaid if:

  • the taxpayer deliberately or with the intention to evade tax did not declare parts of his/her income or assets and this fact was discovered by the tax office, or if the tax office started an enquiry, issued an order or otherwise intervened before the taxpayer could make a subsequent declaration (voluntary declaration) or
  • the subsequent declaration refers to tax years for which the ordinary tax assessment has already been finalised.

Costs for training and further education

The Swiss federal law on the taxation of work-related costs for training and further education will enter into force on 1 January 2016. This new law will allow taxpayers to deduct all their work-related costs for training and further education. For federal tax, the maximum deduction is CHF 12,000 per tax period. For cantonal tax, the cantons can determine their own upper limits. The new deduction does not apply only to further education costs as before, but for all work-related training, further education and retraining costs. Costs borne by the employer are not added to the employee’s salary. As before, the costs for initial education cannot be deducted. The cantons have to amend their cantonal legislation by the time the new federal legislation enters into force to ensure that the new federal and cantonal legislation take effect on the same date.

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