Immediate tax measures in connection with the novel coronavirus
Since 13 March 2020 the federal council has taken various measures aimed at slowing down the rapid spread of the coronavirus (Covid-19) including a partial lockdown. The summary below provides an overview of measures immediately available to Swiss taxpayers to reduce pressure related to tax and other public levies.
Filing obligations: deadline extensions
Deadlines for pending tax return filings can be extended. Although deadlines for income tax returns vary depending on the canton most cantons allow for extensions of the filing deadlines well into the second half of 2020. Many cantons have urged tax payers to use available online tools on the website of the cantonal tax administration to extend filing deadlines.
Several cantons have enacted automatic extensions for tax return filings, mainly with respect to individuals. Automatic extension notably apply in Aargau (31 May 2020), Basel-Stadt (31 May 2020), Solothurn (31 July 2020) and Zurich (31 May 2020). Taxpayers should also check availability to extend deadlines beyond that date. For corporations the filing deadlines for tax returns can also be extended (e.g., Zurich with a regular deadline of 30 September 2020 but extensions are possible).
Revised tax invoices, deferral and abatements of tax payments
To the extent that the taxpayers expect lower income or profits for the 2020 tax period, revised tax invoices can be requested. However, 2019 taxes may partially already be due or become due: federal income taxes for the 2019 calendar year become due on 31 March 2020 whereas the due date of cantonal income taxes varies significantly. Most cantons levy a compensatory/late interest for amounts owed and paid after the due date. Therefore, tax payer may seek to pay taxes in instalments or request a deferral of payment to safeguard cash:
- Revised preliminary invoices: taxpayers may request revised preliminary tax invoices. Invoices can also be set at CHF 0 (nil) to avoid any cash expenses. In most cantons, this will not hinder interest charges (e.g., compensatory interest in Zurich for 2019 taxes is 0.50%). Taxpayers may, however, always request a deferral of tax payments and/or a relief from taxes due to extraordinary circumstances.
- Deferral of federal income tax: deferrals can also cover interest and have to be filed in writing with the cantonal tax authority or via online tools to the extent available on the website of the cantonal tax administration. A deferral can also extent to preliminary tax invoices. Tax payers may also request a payment in instalments (see below latest emergency measures).
- Deferral of cantonal income taxes: in most cantons deferrals do not cover interest charges. However, in most cantons interest rates are low (e.g., 0.00% in Zug, 0.50% in Zurich for compensatory interest) or have already been lowered to 0.00% (e.g., in Solothurn). Taxpayers may even consider requesting a partial abatement. Requests for tax deferrals have to be submitted to the competent tax authority (e.g., the communal tax administration). Most cantons allow for online filing of the request. Tax payers may also request a payment in instalments.
Taxpayers may also request a full or partial abatement of income taxes. It is expected that abatements are still subject to strict requirements as a lot of cases can be handled through deferrals. Given the special circumstances, tax authorities have been urged to review requests for deferrals and abatements favourably. Some cantons already announced to treat the impact of COVID-19 as an extraordinary hardship for purposes of tax-related measures.
The same possibilities apply for Swiss VAT where taxpayers may request a deferral of VAT (see our separate VAT update). The federal government is expected to announce additional tax-related measures in the course of the next days.
No interest charges for most federal taxes and levies
Separately, on 20 March 2020 the federal council announced to lower interest charges for most federal taxes and levies.
- Direct federal taxes: for direct federal taxes (individual income and wealth as well as corporate income and capital taxes) the interest rate has been lowered to 0.00% from 1 March 2020 to 31 December 2020. As 2019 taxes become due on 31 March 2020, taxpayers will therefore not be required to pay interest even if they would not request a deferral and leave taxes unpaid.
- VAT, customs and special consumption taxes: For VAT, customs, excise duties and special consumption taxes (tobacco, alcohol, beer, heavy vehicle, automobile and petroleum taxes) the interest rate has been lowered to 0.00% from 20 March 2020 to 31 December 2020.
- Social security (first pillar): Finally, employers may also request a deferral of social security levies (old-age and survivors’ insurance, i.e., the first-pillar) without interest being levied.
Note that these measures notably do not apply to Swiss withholding taxes (Verrechnungssteuer) and stamp taxes (Stempelabgaben) for which the current interest is 5% p.a.
No debt enforcements and suspension of civil and administrative proceedings
The federal government has suspended the possibility to start debt enforcements in Switzerland for the period between 19 March 2020 to 4 April 2020 pursuant to article 62 of the federal act on debt enforcement and bankruptcy. The suspension will tie in to the general debt enforcement holiday until 19 April 2020 pursuant to the Swiss debt enforcement and collection act.
Separately, the government also enacted a general suspension for civil and administrative proceedings until 19 April 2020. However, please note that the regular suspension does not apply to federal income taxes as the relevant act does not contain a suspension of deadlines. Therefore, measures taken by the federal council will not hinder legal deadlines with respect to these taxes.
Fabian SutterPartner Attorney at law, Swiss certified tax expert
Fabian Sutter, attorney at law and Swiss certified tax expert, is a partner in our Zurich office. He focusses on Swiss and international taxation, in particular corporate reorganizations and restructurings, M&A, financing and capital market transactions, transfer pricing, private equity, real estate transactions as well as tax litigation.T: +41434346700 E: [email protected]