TRAF - Transitional Measures

The tax reform will come into force on 1 January 2020. After New Year's Eve 2019/2020, cantonal tax privileges for holding, domicile and mixed companies will be abolished. In order to mitigate the additional tax burden, companies that benefitted from privileged tax treatment until the end of 2019 will have the option of disclosing their hidden reserves in a tax-neutral manner (socalled "old step-up") and depreciating them over a period of 5-10 years. Alternatively, the affected companies can apply for an order by the competent tax administration in order to determine the amount of hidden reserves. These hidden reserves can then be taxed at a special tax rate over a period of 5 years in case of their realisation (so-called "special rate solution"). The treatment of hidden reserves is clearly regulated. Other questions remain unanswered: In particular, the handling of value recoveries on depreciated participations after the change of status.