Background

Switzerland levies several stamp taxes on federal level, including a 1% stamp tax on equity contributions (Emissionsabgabe) and a securities transfer stamp tax (Umsatzabgabe) of up to 0.3% on the transfer of certain securities such as shares and bonds. In the past years, the Swiss parliament discussed several proposals to abolish these stamp taxes fully or partially. In order to smoothen the process, the abolishing has been split over several separate bills.

Current status of bills to abolish stamp taxes

The abolishing of stamp taxes was split into two pending measures: first the abolishing of the issuance stamp tax and second the further abolishing of the other remaining stamp taxes.

With the focus on abolishing the equity stamp tax, the parliament has now decided not to further pursue the abolishing of other stamp taxes, notably the securities transfer stamp tax on domestic issued bonds and the stamp tax on certain insurance premiums.

In June 2021, the Swiss parliament passed the bill to abolish the issuance stamp tax on equity contributions in order to no longer penalize recapitalization measures by shareholder contributions to equity or debt-equity-swaps (read here our prior update). Although the bill successfully passed the parliamentary procedure and could enter into force on 1 January 2022, it is expected that a public referendum vote will be launched. The deadline for filing the required request is 7 October 2021. Due to the potential delay, the Swiss government expects the bill to enter into force in May 2022.

The second bill intended to abolish the securities transfer stamp tax on domestic securities and the stamp tax on life insurance premiums. The bill was however partially linked with the long-standing work on the abolishing of the interest withholding tax on domestic bonds and debentures in order to strengthen the Swiss capital market. The withholding tax changes would finally introduce the possibility to issue corporate bonds on the Swiss market without attracting a 35% interest withholding tax. Additionally, the withholding tax reform would also entail the abolishing of the securities transfer stamp tax on domestic and certain foreign bonds (read here our prior update).

Therefore, abolishing the securities transfer stamp tax on domestic securities altogether appeared to be excessive in the view of the Swiss parliament and the respective proposal has thus been retracted on 30 September 2021. This also in view of supporting the main focus on ending the equity stamp tax.

By way of background, stamp taxes only amount to 2.6% of total government revenue with the securities transfer stamp tax currently making up 60% of this revenue stream. The equity stamp tax will merely affect approx. 11% of the stamp tax revenue in total, i.e., less than CHF 250 million on average in the past seven years.

The next steps

The latest developments mean that the focus will now shift to the referendum vote on the abolishing of the 1% equity stamp tax and to the finalization of the bill on abolishing the interest withholding tax on Swiss bonds. Assuming that a referendum vote will not be successful, recapitalization measures may no longer face a roadblock as of 2022.