Swiss tonnage tax Swiss tonnage tax: the consultation process begins

The consultation process for the tonnage tax will end on 31 May 2021. Introducing a tonnage tax in Switzerland aims at strengthening the Swiss shipping sector and maintaining Switzerland’s economic and fiscal attractiveness.

This tax instrument is applied by many countries such as Germany, France, Cyprus and the United Kingdom. Indeed, the capital-intensive nature, the level of profitability and long economic life cycle of international shipping has led a number of jurisdictions to introduce alternative or supplementary taxation regimes for this industry.

As counterintuitive as this may sound, Switzerland is also an important shipping nation. The introduction of a tonnage tax regime would constitute a targeted measure to allow the Swiss shipping sector to remain competitive.

Tonnage tax is an alternative and optional method that would replace income tax at the communal, cantonal and direct federal levels. Once the tonnage tax regime becomes applicable, the company’s net profit would no longer be relevant. Instead, its taxable basis would be determined based on its net tonnage (freight volume). This would simplify taxation for shipping companies and result in less volatile outcomes for this sector. Meanwhile, Switzerland is also considering implementing environmental incentives (lower or higher tax rates based on ecological criteria) to encourage investments in environment-friendlier fleets.

We will keep you informed of the outcome when the consultation process comes to an end, expected end of May 2021.