Swiss Tax Newsletter
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Tax deduction of business expenses: Towards a long-awaited simplification
As part of the consultation process on 8 December 2023, the Federal Council revised the guidelines for the project to simplify the deduction of business expenses for persons in dependent employment. On this basis, it intends to draw up a dispatch by the end of 2024. The project is broadly approved in principle, but there is as yet no consensus on how it should be implemented.
A single lump sum for business expenses, with the exception of travel and accommodation expenses
The aim of the consultation draft was to simplify the deduction of business expenses for people in dependent employment and to treat different forms of work on an equal footing. To this end, it provided for all taxpayers to be able to deduct all their business expenses using a single lump sum, irrespective of their place of work. The deduction of actual business expenses was also proposed as an alternative solution, provided that these could be justified.
The message must take account of the following new guidelines:
- Travel expenses and accommodation costs relating to a stay away from home during the week should continue to be deducted separately and not included in the single lump sum. This is to take account of cantonal and regional differences in transport infrastructure (which vary the length of the journey between home and work) and the different cantonal regulations. Maintaining these deductions is also intended to prevent many taxpayers from opting to justify actual expenses because of high travel or accommodation costs, and to prevent the intended simplification from being jeopardised by the non-application of the lump-sum system.
- In order to simplify the system, proof of actual expenses is to be excluded for deductible expenses included in the flat-rate deduction, i.e. expenses relating to meals taken away from home and other professional expenses (e.g. use of a private work room, professional books or clothing). The equal treatment of different forms of work will thus be guaranteed as regards the elements included in the lump-sum deduction.
Conclusion
The Federal Council hopes that implementation of the project will have as little impact as possible on direct federal tax revenues, and will set the amount of the flat-rate deduction at a later date. The project's impact on cantonal finances will depend on the level of the lump-sum deductions, which the cantons will set autonomously.
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