Tax assessment of startups

In its session of December 8, 2017, the Federal Council took note of a report from the working group "Start-ups". The working group particularly recommends an adjustment in the asset valuation of non-listed companies.

Working group "Start-ups"

‍The working group "Start-ups" consists of representatives from the Federal Tax Administration and representatives from various cantons. Specifically, representatives from the cantons of Basel Stadt, St. Gallen, Vaud, and Zurich are involved. Their mission is to present suggestions for improvements in the taxation of startups. The federalist discretion of the cantons should be particularly taken into account here.

‍The Proposals

‍In their report, the working group "Start-ups" addresses the demand from politics and the economy that the asset valuation of start-ups can lead to hardship cases. Generally, the value of a non-listed company corresponds to that which is paid out in a financing round for the shares. This can lead to situations where young entrepreneurs who hold shares of the company are barely or not at all able to pay their wealth tax. An adjustment of the circular issued by the Swiss Tax Conference on the asset valuation of non-listed companies should now make it possible to deviate from this principle in justified individual cases.

From politics and the economy, an adjustment was also demanded at the temporal limitation of loss carryforwards. Currently, losses can be transferred to the next tax period for seven years. Some startups, due to the temporal limitation, can no longer deduct their losses from their initial phase. The working group "Start-ups" recommends that if a deviation from the seven-year loss offset period is to be made, it should only be possible for startups. Furthermore, a minimum taxation should be provided, and a temporal limitation should continue to be implemented. Where the working group "Start-ups" saw no need for action, however, is in the income taxation of employee shares at startups. These can, for the same reasons as with the wealth tax, put those affected in financial difficulties.

It will be interesting to see how the Federal Council reacts to this report. Findea helps you keep your taxes simple and hassle-free.