1. Nexia European tax group meeting - Amsterdam 5th/6th February 2009 Daniel Althaus ABT Treuhandgesellschaft Andreas Baumann & Co. Zürichstrasse 27b 8134 Adliswil

2. Taxation in Switzerland – latest developments February 2009

3. Agenda 1.Swiss taxation at a glance 2.Holding, domiciliary and mixed companies 3.Political differences EU-Switzerland 4.Latest developments 5.Art. 15.4 DTT Germany « leitende Angestellte »

4. Swiss tax system  One Country (federal)  26 Cantons (different cantonal taxes)  2,100 Communities (different community taxes)  However, Harmonization Act  Politically stable country (almost same parties in power for over 50 years)  Tax payers regarded as “clients” not potential “offender” by tax authorities  Tax rulings with tax authorities are commonly related to decisive tax matters – gives stability and comfort in tax planning  Tax evasion versus tax fraud

5. Taxation at a glance  Corporate Income Tax (%) 12 - 24  Capital Gains Tax (%) 0  Branch Tax Rate (%) 12 - 24  Withholding Tax: - Dividends (%) 35 - Interests (Commercial loans/intercompany - banks) 0/35 - Royalties (%) 0  Branch Remittance Tax (%) 0  Net Operating Losses Carry Forward (years) 7  Value Added Tax (%) 7.6

6. Corporate Income Tax 1.Federal (8.5% pre-tax) 7.8 2.26 Cantons & 3.2,100 Communities (%) 5 - 17 4.Total (%) 12 – 24 Zurich 21 Herrliberg (Zurich) 19 Zug 16 Appenzell 12 Geneva 24 Exemption on dividend income/sale of participations (substantial participations)

7. Miscellaneous Matters  Holding Companies (taxation only on federal level)  Domiciliary and Mixed Companies (taxation almost on federal level)  Intercompany interest rates (arms’s length principle/save heaven rules)  Debt-to-Equity Rules (arms’s length principle/ save heaven rules)  Foreign Exchange Controls (none)  Transfer Pricing (arms’s length principle/TP methods by OECD, cost plus still common)  Reorganisations (e.g. mergers demergers are tax neutral)  Double Tax Treaties (with over 70 countries – OECD model)  Swiss-EU Agreement (EC parent subsidiary directives 1990: dividends not subject to tax)  Swiss-EU Agreement (Social security: EU regulation 1408/71)  Swiss-EU-Savings tax on interests

8. Holding company  Tax status only on federal level (political discussions with EU)  Tax rate 7.8 %  Treaty access yes  Capital duties 1 % stamp duty on equity  Dividend taxation exempt  Financing costs deductible (however, reduction of participation exemption)  CFC rulesnone  Investments must cover 2/3 of assets or income

9. Domiciliary and mixed company  Tax status fully on federal level partly on cantonal/communal level (political discussions with EU)  Tax rate 9-12%  Treaty access yes (however: misuse/ CFC regulations in Germany, Italy)  Capital duties 1 % stamp duty on equity  Foreign source incomein fact partly exempt  Swiss source income fully taxed  CFC rulessee above (several countries)

10. Mixed company (canton of Zug)

11. Differences with EU omiciliary and mixed companies  Different treatment of foreign and Swiss source income in holding, domiciliary and mixed companies  EU: « Form of unallowed government aid – against free trade agreement 1972 »  Switzerland: « Part of federalistic tax competition »  No forseeable solution in the next future  Potential solution: 1.Holdings: General ban on business activities 2.Mixed companies: Modifications in provisions 3.Domiciliary companies: Abolition of such a status 4.Reduction of tax rate on the federal level in order to keep Swiss tax system competitive

12. Planned tax reforms  Abolition of issue tax on equity and dept capital  Waive of Capital tax on Cantonal level  Adjustments to the system of participation relief for corporate bodies

13. Recent agreement on Art. 15.4 DTT with Germany (management « leitende Angestellte ») Germany (resident and work) no German income tax Swiss income excempt – Art 24 DTT Swiss Corporation, Zug „leitender Angestellter“ Salary CHF 100‘000 Swiss Income tax 22‘000 (source tax Zug)

14. Recent agreement on Art. 15.4 DTT with Germany (« leitende Angestellte »)

15.  “Verständigungsvereinbarung” dated 18.09.2008:  “Leitender Angestellter” if at least procura or leading function is registered in the Swiss commercial register

16. Thank you for your attention Daniel Althaus ABT Treuhandgesellschaft Andreas Baumann & Co. Zürichstrasse 27b 8134 Adliswil