Taxes and law - overview of the main changes as of January 1, 2023

Every year at the turn of the year, a large number of changes and/or amendments to the law come into force. With this newsletter we inform you in short form and without claim to completeness about the most important and for you relevant topics.

Do not hesitate to contact us if you have any questions.

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I. Law

Inheritance Law Revision

Changes to both mandatory parts

The most important change in the revision of inheritance law concerns the right to a compulsory portion - i.e. that part of the legal share of the inheritance which cannot be withdrawn from certain heirs even against their will.  

Without a testamentary disposition, the statutory share of the inheritance (standard cases: spouse ½ and children ½ or spouse ¾ and parents ¼) continues to apply. However, by means of a testamentary disposition, the statutory heirs (spouse/registered partner and descendants) can be placed on the so-called compulsory portion. 

The compulsory share of the descendants has been reduced from ¾ to ½ of the statutory share of the inheritance (i.e. ½ of ½, i.e. ¼). The compulsory portion of the parents (previously ½ of the statutory share of the inheritance) is eliminated completely. There are no changes to the compulsory share of the surviving spouse or registered partner (½ of the statutory share of the inheritance).  

The reduction of the compulsory portion leads to an increase in the testator's freedom of disposal - in any case, at least half of the estate can be freely disposed of. For example, the freely disposable part can be allocated to a specific Eben, or a person outside the circle of legal heirs or a charitable organization can be granted.

Cohabiting partners will not be considered legal heirs in the future either and accordingly will not be entitled to a compulsory portion. In this respect, their position will not change as a result of the revised inheritance law. On the other hand, cohabiting partners can be given a larger share of the freely disposable inheritance in their wills. The inheritance taxes payable depend on cantonal law and vary accordingly. 

The new rules apply to all inheritances (i.e. date of death) from January 1, 2023. However, the new rules also apply to wills and inheritance contracts drawn up earlier. We therefore recommend that you review existing wills and inheritance contracts and clarify whether they are also up-to-date, correct and clear under the new inheritance law.

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Useful capacity

Due to the changes in the right to a compulsory portion, the surviving spouse can now be allocated half as a share of the inheritance and the second half as a usufruct (previously ¼ of the estate as property and ¾ of the estate as usufruct).

Change in the protection of the compulsory portion in the event of pending divorce proceedings

Under the previous inheritance law, the spouse lost his or her entitlement to inheritance and compulsory portion only upon the existence of a final divorce or dissolution decree.  

With the entry into force of the revision of the law of succession, the compulsory share of the still-spouse shall cease to apply if, at the time of the death of one spouse, the spouses are in divorce proceedings on joint request or in divorce proceedings after two years of separation.

If the surviving spouse/partner is to be excluded from the succession while the divorce or dissolution proceedings are still pending, a testamentary disposition is mandatory, with which the legal share of the inheritance is withdrawn from the spouse/partner. Without active intervention, the surviving spouse/partner retains his/her statutory inheritance entitlement until a final divorce or dissolution decree has been issued.

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Gifts after the conclusion of an inheritance contract

A weighty change arises in the admissibility of gifts in the existence of an inheritance contract.  

Now, gifts after the conclusion of an inheritance contract are only possible to a limited extent. With the exception of the usual occasional gifts, gifts inter vivos are voidable if they (a) are incompatible with the obligations under the inheritance contract and (b) have not been reserved in the inheritance contract. 

New inheritance contracts to be concluded must therefore stipulate whether and to what extent the testator may make gifts to descendants and other persons after the inheritance contract has been concluded. Since the new rule also affects existing inheritance contracts, these must also be reviewed and adapted if necessary.

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Clarification for pillar 3a assets

Until now, the pension agreement (pillar 3a as bank savings = estate) and the pension insurance (pillar 3a as pension insurance ≠ estate) were treated differently from an inheritance law perspective. 

Now, all pillar 3a pension assets are not (or no longer) included in the estate. The testator can therefore choose beneficiaries independently of their inheritance status. However, any surrender value of the pension insurance as well as the capital in the bank savings will be added to the inheritance estate protected by the compulsory portion and is thus potentially subject to a reduction action (should the pension assets violate the compulsory portion of the legal heirs).

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Revision of stock corporation law

The revision of stock corporation law, which came into force on January 1, 2023, brings a large number of changes in the areas of share capital, general meetings, shareholder rights and reorganizations. Nadja Haldimann-Good presented the most important changes to you in the November newsletter(https://www.gfeller-partner.ch/news/news-zu-der-aktienrechtsreform).

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Associations in light of the revision of the Anti-Money Laundering Act (AMLA)

In 2016, the Financial Action Task Force (FATF) published the fourth country report on Switzerland, which criticized, among other things, the transparency regulations on charitable organizations. Essentially, incomplete regulations that pose a particular risk in connection with terrorist financing were criticized. Together with this report, corresponding recommendations were also proposed. Parliament subsequently passed a revised Federal Act on Combating Money Laundering and Terrorist Financing (Anti-Money Laundering Act, AMLA) to implement these recommendations, and certain provisions of the AMLA amendment have already entered into force.  

The revised Money Laundering Ordinance, which will come into force on January 1, 2023, contains changes to the law on associations that will impose additional obligations on many (especially charitable) associations. The transition period for implementing the new obligations runs until June 30, 2024. Against this background, we recommend that you check at an early stage whether there is a need for action at your association.

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Extended registration obligation

As a basic principle, an association may refrain from being entered in the commercial register as long as it does not operate a commercial business for its purpose or is not subject to auditing.  

With the revision, an association will in principle be subject to registration if it "mainly collects or distributes assets abroad, directly or indirectly, which are intended for charitable, religious, cultural, educational or social purposes". However, such associations are exempt from the obligation to register if neither the assets collected annually nor the assets distributed annually in the last two years exceed CHF 100,000, the distribution of the assets is carried out through a financial intermediary or at least one person authorized to represent the association is domiciled in Switzerland. If one of these exceptions applies, the association remains exempt from its registration obligation.

Maintenance of a membership directory

In future, associations subject to registration must keep a register of members. This must contain the full names/companies of the persons including addresses. In addition, the directory must be kept in such a way that it can be accessed in Switzerland at any time. Finally, all data on members must be kept for five years after a member has been removed from the register. 

It should also be noted that all associations subject to registration will in future be obliged to be represented by a person domiciled in Switzerland (analogous to the provisions of company law).

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II. taxes 

1. legal entities 

Withholding tax: reporting procedure within the group

In the case of withholding tax, the national reporting procedure is now possible within the group from a participation quota of 10% and for all legal entities that hold such a qualified participation. Previously, the required minimum participation rate was 20% and the reporting procedure was reserved for corporations and cooperatives. Now, foundations and associations can also apply for the national notification procedure, provided that the other requirements are met. 

The validity of the authorization for the reporting procedure in the international relationship is now five years instead of three years. The extended authorization period applies to all new authorizations issued or extended after January 1, 2023.

Value added tax: Increase of the turnover limit for exemption from the obligation to pay value added tax for sports and cultural associations

The turnover limit for the VAT liability of non-profit, voluntarily run sports and cultural associations and non-profit institutions will be increased from the previous CHF 150,000 to the new CHF 250,000. 

According to a rough estimate by the Federal Tax Administration (FTA), around 180 associations and non-profit institutions can have themselves deleted from the VAT register because they do not reach the new turnover threshold. This requires a written and timely deregistration with the FTA. Without or in case of late deregistration, the tax liability continues to apply.

2. natural persons 

Deduction for pillar 3a

For pillar 3a, the following maximum amounts that will be allowed as a tax deduction apply for the 2023 tax period:

 Taxpayers with 2nd pillar: CHF 7,056

Taxpayers without 2nd pillar: CHF 35,280

Increase in childcare expense deduction (from tax period 2023)

Starting with the tax period 2023, the proven costs up to a maximum of CHF 25,000 (until the end of 2022 CHF 10,100) for third-party care for each child can be deducted from the taxable income. The prerequisite for the deduction is that the child has not yet reached the age of 14 and lives in the same household as the taxpayer who provides for his or her maintenance. In addition, these costs must be directly related to the taxpayer's employment or education. 

In the upcoming 2022 tax return, the previous deduction of CHF 10,100 is still applicable (direct federal tax and cantonal and communal taxes).

If you have any further questions or would like to call on our assistance, please email our tax department.