Swiss Canton Abolishes 'Dumont' Tax Measure

by Ulrika Lomas, Tax-News.com, Brussels

12 November 2009

It has emerged that the so-called “Dumont-Praxis” is to be abolished in the Swiss Canton Aargau, retrospectively from January 1, 2009.

The Dumont-Praxis was introduced in Switzerland following a federal court ruling in 1973, and provides that the maintenance costs associated with an old property, incurred over the course of the first five years following the purchase, are not tax deductible.

However, the cantonal parliament recently voted to adopt a decree amending the existing tax law. The key changes to the law include the implementation of the second stage of the Corporate Tax Reform (Unternehmenssteuerreform II) from 2011, the streamlining of tax procedures from 2010, as well as the abolition of the Dumont-Praxis.

As a result of the partial revision of the law, all maintenance costs incurred following the purchase of an old and neglected property will become tax deductible.

The decision was taken to abolish the measure in a bid to stabilize the economy and to support the building and construction industry.

In accordance with the country’s Tax Harmonization Act, the Dumont-Praxis is to be abolished at cantonal level before January 1, 2012.

A decline in tax revenue for the canton (around CHF7.3m, or USD7.2m) and for local authorities (approximately CHF6.7m, or USD6.6m) is expected as a result of the latest decision.

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