Yesterday’s referendum result confirmed a resounding ‘no’ vote, with around 60% of the Swiss population decisively standing against the Corporate Tax Reform III.
Citywire Switzerland has spoken to financial law firm Ochsner & Associés to hear its take on the knock-on effects of the result.
According to partner Alexandre de Boccard, the rejection paves the way for a more considered and appropriate proposal next time around.
‘I hope the next draft will be acceptable, but the one that has been voted on was obviously not the right one for Swiss citizens, given that 60% voted against it,’ he said.
For the time being, however, it’s business as usual with the current system still in place while authorities in Bern recover from the setback and brace for a potential international backlash.
This means those at the heart of the tax reform – international corporations – still enjoy the special privileges.
‘If we think of local corporations, the results should in my view not have a dramatic effect on a short term-basis, given that they currently live under the current taxation regime and that a new draft of Corporate Tax Reform III will be discussed in the following months.
‘The question is more for the multinationals and the other international or foreign entities, which have the choice of setting up in Germany, France, the UK, Switzerland and so on.’
In turn, de Boccard believes that these multinational groups will not be thinking of leaving the country just yet, given the outcome of the vote.
‘Of course, the uncertainty in the upcoming taxation regime is not a good thing for the market and in particular the decisionmakers. Hopefully, taking that into consideration, the new draft will be prepared and discussed promptly.’
In the meantime, the result of the vote should have no major effects for independent asset managers, de Boccard believes.
In his opinion, the primary concerns remain the implementation of the Automatic Exchange of Information, access to EU markets, upcoming regulations and potential market swings.
One source of concern for independent advisers could be that clients leave Switzerland with their multinational organisations.
This, however, will most likely not be a worry, de Boccard said, given the fact that a person leaving the country can maintain a contractual relationship with an asset manager based in Switzerland.
This is in line with the Automatic Exchange of Information, which should ease such cross-border relationships from a tax perspective on a mid and long-term time frame.
Thus, maintaining cross-border relationships with clients is possible, with reserve to any foreign regulation and requirements applicable.
Government officials now have two years to draft up the new proposals, buying a lot of businesses time.
‘The new draft has been postponed so it will be an opportunity to improve it and to have everybody in agreement with it.’