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March 5 2020

2020 Fiscal News Overview for Geneva

As you most certainly know, you will soon have to meet your tax obligations for the fiscal year of 2019. Therefore, we kindly offer you below a reminder of the different deadlines relevant in the canton of Geneva.

  • Regarding the withholding tax, if you consider that certain deductions were not taken into account concerning your tax file, a request for the adjustment of the withholding tax must be filed before March 31, 2020.
  • Private individuals must complete and send their income tax return before March 31, 2020.
  • Corporations, which close their annual accounts on December 31, 2019, must complete and send the corporate tax return before April 30, 2020.

Under Swiss tax law it is possible to obtain additional deadlines for a tax return. Audiconsult SA can take good care of such a task with maximum diligence. We would also be pleased to inform personally the taxpayers domiciled in other cantons about the deadlines applicable to their tax files.

The biggest tax event of the year 2020 is particularly the entry into force of the Federal Act on Tax Reform and AHV Financing (TRAF)), following the adoption of the referendum of May 19, 2019. Thus, we highlight bellow a summary of the main changes to be taken into account as a consequence of the aforementioned referendum:

  • The TRAF led to the repeal of those corporations enjoying special tax regimes, which did not comply with international tax standards. In order to remain attractive, the canton of Geneva will tax, for the financial years ended from January 2020, the corporate profit of commercial companies at the reduced single tax rate of 13, 99% (that means an increase for the companies that have previously enjoyed a special tax regime).
  • In order to mitigate the fiscal impact of the disappearance of the cantonal tax statutes, the corporations concerned can benefit from a reduced tax rate of 13%, for a period of 5 years, on the latent reserves and goodwill, which appear in the financial statements on December 31, 2019.
  • Since innovation is a major driver force for the economic development, a “super tax deduction” on research and development (R&D) expenses has been introduced with the possibility of charging 50% of these expenses to the corporate taxable net profit.
  • Similarly, and in proportion to the R&D expenses, the corporate net profit from patents and similar IP rights can enjoy a reduced tax rate of 10%.
  • However, the Tax authority of the canton of Geneva has decided that the aforementioned tax deductions cannot result in a corporate profit tax rate of less than 13.48%.
  • Finally, it is important to mention the changes on the tax regime of dividends brought by TRAF. Dividend income of individuals from qualifying participations (i.e. participation of at least 10%) is currently partially exempt from income taxation to mitigate double taxation at the shareholder level. Following TRAF, at the federal level, the taxation rate increases from 50% (business investments) and 60% (private investments) respectively to a standard rate of 70%. At the cantonal level, there is a harmonization of the relief method and an introduction of a minimum taxation rate of 50% (rate at discretion of cantons).

Our tax advisers remain at your disposal to assist you in the process of preparing your tax return as well as to answer any questions about the tax law applicable to your personal tax file.

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