SME and entrepreneurs: All the latest news in a nutshell

The repurchase of the 3rd pillar A: a project reduced to nothing?

In a previous edition of our newsletter, we had the opportunity to address this new tax optimisation tool, which was due to be introduced at the beginning of 2023. In addition to the delay in its implementation, the current parliamentary version has (unfortunately) been significantly reduced, mainly on the following two points:

• The maximum possible repurchase would now be limited to the small deduction for 3rd pillar A, i.e. CHF 7,056 instead of the large deduction in the previous version of the draft law (CHF 35,280).
• The repurchase capacity will only be calculated once the new legislation comes into force, i.e. from 1 January 2025, the date on which this new provision is due to come into force. This means that contributions not made before this date will not be considered as being included in the repurchase capacity that can be bought back. What's more, in all cases the relevant pension gap will only be calculated over the 10 years preceding the repurchase.

As a result, this tool, while promising, has been greatly reduced in scope and interest. In future, therefore, you should not rely solely on it to significantly optimise your tax situation. 2^nd pillar repurchases will therefore remain one of the few tax optimisation tools available to individual taxpayers.

Tax-deductible interests on loans to shareholders or close relatives: sharp rise in interest rates

We already had the opportunity on several occasions to discuss the tax issues relating to the granting of a loan by a company to its shareholder or close relative, as regards the loan itself: 

With the rise in money market rates, the interest rates considered as tax-deductible have followed a similar curve:

So, while interest rates have been stable for many years, it is important to keep a close eye on changes in interest rates, which will certainly continue to be subject to the changes of the markets in the coming months. Interest rates are published annually by the Federal Government, usually at the beginning of the year, and are valid for the whole year. 

What's more, this increase in tax-deductible interest rates is accompanied by an increase in the potential tax consequences of non-compliance. Great care must therefore be taken when preparing company accounts to ensure compliance with these standards.

Abolition of rental value: a project that drags on and does not have unanimous support

Much has been written about this recurring issue over the years. There have been several unsuccessful attempts to abolish rental values in the past.

We already had the opportunity to assess blithe scope of this draft law, which once again aims to abolish the rental value.

Just over two years later, where do we stand with this project?

Everywhere and nowhere at the same time. The Council of States and the National Council are still at loggerheads on certain specific points of the project, as the summary table below shows:

Source : AFC (admin.ch)

The only thing that is almost certain is that, whatever the final content of the final project, the Swiss population will be asked to vote on the issue in one of the forthcoming referenda, as the impact of this possible reform will be significant but very different depending on the situation of the population of property owners in Switzerland. Those with low expenses and/or little debt will certainly welcome the abolition of this rental value, while those who benefit from the deductibility of maintenance or financing costs will be disadvantaged by this reform. To be continued...