Switzerland Rejects Controversial Bonus Tax

by Ulrika Lomas, Tax-News.com, Brussels

09 December 2011

Despite backing from both the Council of States and the Federal Council, Switzerland’s lower house of parliament, the National Council, has rejected the proposal seeking to introduce a bonus tax in the Confederation.

The proposal, rejected in the Council by 98 votes to 85, aimed to ensure that companies granting 'excessive' bonus payments to their employees, above CHF3m (USD3.2m), were no longer entitled to deduct the bonus from tax as a business expense, and that such excessive bonuses were prohibited in years of corporate losses.

Although the Social Democratic Party of Switzerland (SP), the Green Party and the Christian Democratic People’s Party supported the plans, the National Council deemed that introducing such a tax on bonuses would merely serve to adversely affect businesses in the Confederation, and argued that the measure would effectively amount to an increase in profit tax, and would indirectly affect the middle class.

In contrast, proponents of the initiative argued that only those companies paying out excessive bonuses would be penalized under the plans, whereas under the current system they are rewarded.

Commenting on the outcome of the National Council’s vote, the SP insisted that the party would pursue its commitment to opposing such abuse of the country’s tax system.

Recommended