【KPMG Global】Switzerland – Geneva_ Tax Rulings on Employee Stock Plans; Family Child-Related Deductions

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侵权投诉

2024-106 | May 8, 2024

GMS Flash Alert

2024-106 | May 8, 2024

Switzerland – Geneva: Tax Rulings on Employee Stock

Plans; Family/Child-Related Deductions

This GMS Flash Alert reports on recent tax-related developments in Geneva, Switzerland

concerning (i) the applicability of open-ended tax rulings relating to employee stock ownership

plans, and (ii) family/child-related tax measures which could lead to a reduction in the overall tax

burden for parents with dependent children.

WHY THIS MATTERS

Open-ended tax rulings relating to employee stock ownership plans – Tax authorities will no longer be

bound by pre-2021 rulings after 1 January 2025, therefore companies currently benefiting from open-ended

rulings are advised to submit new applications based on the updated guidelines. This applies to multinational

employers as well as smaller businesses that have such rulings in place.

Family/child-related tax measures – As long as certain conditions are met, parents with dependent children

could see a lightening of their tax burdens. This could apply to Switzerland-outbound and -inbound

international assignees subject to Swiss tax law and entitled to claim child-related deductions.

Update on Tax Rulings Relating to Employee Stock Ownership Plans

In the past, the Geneva Cantonal Tax Administration may have approved the tax treatment of employee

shareholding plans by issuing a ruling with no specified end date. As a result, some employers have

continued to apply these rulings for many years.

The protection of past tax rulings with no end date will no longer apply after 1 January 2025, in line with the

principle of time-limited legal certainty. The Geneva tax administration has now clarified its position which is

in accordance with the federal regulations contained in the circular from 2020.1

2024-106 | May 8, 2024

This circular standardised the tax treatment of employee share ownership and limited the validity period of

rulings to five years in general for current schemes. As a result, the Geneva tax authorities will not be bound

by pre-2021 rulings beyond 1 January 2025.

KPMG INSIGHTS

Companies should review their current rulings on this subject and apply for a new ruling where necessary, in

line with the current framework in force.

Family/Child-Related Tax Measures

Automatic Deduction for Children under 25

New tax rules in Geneva allow a taxpayer to claim a deduction for dependent children over the age of 25 who

are students or apprentices.2

Prior to 1 January 2024, children over the age of 25 were not considered to be dependents for tax purposes.

However, with the recent changes this position has been amended and children over 25 who are students or

apprentices can be recognised as dependents for tax purposes if the following three conditions are met (the

conditions are cumulative):

• The child is enrolled in a secondary or higher education establishment during the tax year, and

• The child is in possession of net assets below the value of CHF 92,432, and

• The child’s annual gross income does not exceed CHF 16,197 (full dependence) or CHF 24,296

(partial dependence) thresholds.

KPMG INSIGHTS

It is important to note for the 2024 tax year, the tax deduction for dependent children over the age of 25 will

not be taken into account in the level of tax withheld by employers on monthly employment income.

Taxpayers eligible for this deduction will therefore have to request it by completing the tax withholding

amendment form (DRIS/TOU) and file it by 31 March 2025, together with a revised calculation of the 2024

taxes.

Fair Taxation for Parents with Equal Responsibility for their Children

Separated parents who share responsibility for their children equally can now benefit from a reduction in their

tax burdens through partial splitting of the tax reduction, rather than having this attributed fully to just one

parent.3 The aim is to achieve fairness and equality when parental care is split between two homes.

This provision applies to parents living in separate households including single, divorced, or separated

parents with joint parental authority over children under the age of 25.

The reduction in the tax burden is implemented through partial splitting with a divisor of 1.8.

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©2024KPMGAG,aSwisscorporation,isasubsidiaryofKPMGHoldingAG,whichisamemberoftheKPMGglobalorganizationofindependentfirmsaffiliatedwithKPMGInternationalLimited,aprivateEnglishcompanylimitedbyguarantee.Allrightsreserved.PrintedintheU.S.A.2024-106|May8,20241GMSFlashAlert2024-106|May8,2024Switzerland–Gene...

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