Tax appraisal of employee’s participation plans

On May 4, 2018, the Swiss Federal Tax Administration did publish a new guideline (Guideline n° 37A in French only) regarding the direct tax treatment of Employees’ Participation Plans (EPP) from the employer’s perspective.

The guideline deals with the tax treatment of a variety of situations such as capital increases, shares buy-back programs (on the market or from existing shareholders) or acquisitions of shares from other group companies.

Besides, it does not only cover transactions with shares (listed or unlisted) but it also outlines the tax consequences attached to the grant of options, RSUs, RSAs, etc.

Next to guidance on the accounting and tax treatment of EPPs, the guideline confirms that the general principle of dealing at arm’s length also applies as far as EPPs are concerned.

The practice outlined in the guideline applies immediately.

In our view it is advisable to give all the necessary attention to the practice set forth by this new guideline in order to avoid as much as possible any recapture at the level of the employers and/or the group companies involved in the EPPs.

Our specialists do remain at disposal for any advice or implementation in lien with your employees’ participation plan and the above guideline.

For additional information, do not hesitate to contact us:

  • Denis Chahidi (Tax) - T 021 552 63 63 - email: denis.chahidi[at]mercuris.legal 
  • Olivier Cherpillod (Legal) - T 021 552 63 63 - email: olivier.cherpillod[at]mercuris.legal