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Swiss Committee Rejects IHT, VAT Changes

by Ulrika Lomas,, Brussels

03 April 2014

The Swiss Committee for Economic Affairs and Taxes of the Council of States (CEAT-S) has rejected the Socialist Party's inheritance tax initiative, and proposals to replace VAT on energy with a dedicated consumption tax.

The first initiative calls for a national inheritance tax of 20 percent to be imposed on inheritances over CHF2m (USD2.3m), necessitating a transfer of taxing rights from the Swiss cantons to the Confederation. The proposal advocates that two-thirds of the federal IHT yield should flow to finance the nation's social security and pension fund (AHV), while the remaining third should be allocated to the cantons as compensation.

After consultations with business associations and cantons, the CEAT-S Committee warned that uncertainties surrounding a new tax on business transfers would undermine legal certainty proving harmful to Switzerland as a business location.

The body also pointed out distortions in the scheme. It said that no tax would be due in the case of a sole heir inheriting assets of CHF2m, while multiple heirs bequeathed assets of CHF2.1m would be subject to tax. Finally, the Committee stressed that the initiative would severely impinge on the taxing rights of the territory's cantons.

During its meeting, the CEAT-S Committee also rejected the popular initiative calling for value-added tax (VAT) to be replaced with an energy tax. The group highlighted the importance of VAT for the Confederation as the main source of federal income. Replacing the charge with a tax on energy would merely risk fiscal stability, the Committee said.

TAGS: inheritance tax | tax | business | value added tax (VAT) | energy | law | tax thresholds | tax rates | social security | Switzerland | Tax

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