The Swiss Tax Reform (STAF) — What Changed in 2020
The Federal Act on Tax Reform and AHV Financing (STAF, Steuerreform und AHV-Finanzierung) took effect on 1 January 2020. STAF abolished the old preferential regimes (Holding privilege at cantonal level in its old form, principal regime, mixed company regime) that were deemed harmful by the EU and OECD. In their place, STAF introduced new internationally compliant incentives, including the IP box and the R&D super-deduction.
Participation Exemption — Still Very Much Alive
The most important Swiss holding benefit — the participation exemption (Beteiligungsabzug) — remains fully intact after STAF. Under DBG Art. 69 and StHG Art. 28, companies holding qualifying participations benefit from a tax reduction proportional to the ratio of qualifying dividend income and capital gains to total net income.
Conditions for Participation Exemption (Federal Tax)
- Minimum holding: at least 10% of the share capital of the investee company, OR
- Market value of the participation: at least CHF 1 million
- Holding period for capital gains: at least one year
- The investee must not be a passive investment entity in a low-tax jurisdiction for purposes of the anti-abuse rules
Effective Tax Rate on Dividends with Participation Exemption
Where the participation exemption applies, the net yield ratio reduces corporate income tax effectively to near zero for qualifying dividend income. A Swiss holding company in Zug with 100% qualifying dividend income would pay approximately 0.01–0.5% effective tax on that dividend stream at the federal level, with cantonal rates similarly reduced.
The Holding Company at Cantonal Level (Pure Holding)
Most cantons retain a "pure holding" regime for companies whose primary purpose is holding and managing long-term participations. Pure holdings typically pay:
- Zero or near-zero cantonal/communal income tax (often exempt)
- A reduced capital tax (Kapitalsteuer) on equity
Post-STAF, the cantonal holding privilege requires genuine holding activity and does not extend to operational income. Capital tax rates for holdings vary from 0.001% (Obwalden) to 0.1% (Zurich) on equity capital.
IP Box Under StHG Art. 24a
New under STAF: cantons must offer an IP box reducing income tax on qualifying IP income by up to 90%. Combined with participation exemption for dividends from IP-rich subsidiaries, Switzerland remains highly competitive for international IP holding structures — now within OECD BEPS standards rather than outside them.
Source basis: Art. 69 DBG · Art. 28/28a StHG · STAF Implementation Guidance 2020 · ESTV Circular Beteiliungsabzug.