Ticino's fiscal incentives for start-ups

NetComm Suisse: Could you give us a general overview of  the current innovation situation and capacity in Ticino, in terms of investment, research and workforce?

Stefano Bassan, PM Consulenze: Ticino is making strong moves to promote innovation and technological development by supporting companies, especially start-ups. Universities like SUPSI and USI, as well as entities like Tecnopolo in Manno, are centers of excellence in the technical and innovation fields. It is important to know that 26% of finance granted by the EU to Switzerland goes to SUPSI in Ticino. In our Canton there are 75 active research institutes and laboratories, USI and SUPSI count a staff of around 1,500 and a student body of 6,800. Approximately 50 million CHF is invested in research. 

 

NetComm Suisse: What are the main incentives introduced by the Tax Reform in Ticino for innovative start-up companies?

Stefano Bassan, PM Consulenze: There are 3 main fiscal incentives that benefit  innovative start-ups based in Ticino: tax rate on share capital has been reduced from 1.5% to 0.01%; taxes have been reduced for individuals investing in start-ups, meaning that income deriving from the investment is subject to a separate taxation rate of 1% (if other conditions are also met); donations received by start-ups from third parties are eligible for tax exemption. The Cantonal Council of State will, in a separate directive, define these tax relief incentives and procedures in concrete terms as well as resolve on a precise definition of “innovative start-up” to identify such target firms.  

 

NetComm Suisse: What is the status of the Federal Tax Scheme 2017, what are its main proposals and what will be the impact on the Canton of Ticino? 

Stefano Bassan, PM Consulenze: The new Federal Tax Scheme 2017, which will provide corporate tax incentives, is still in the consultation phase. Among the incentives proposed, we would like to draw attention to two: the introduction of a Patent Box scheme, which would allow a tax exemption (probably of around 90%) on incomes deriving from the activity on non-tangible assets (mainly patent and trademark exploitation); the deduction of costs for R&D activities. These incentives should motivate many companies with these features to set up or transfer their operations to Switzerland. We also expect tax rates to be reduced in the Canton (Ticino) from 9% to 6%. This would mean that the aggregate corporate tax rate in Ticino will, theoretically, be approximately 16% (Federal, Cantonal, Municipality), a highly competitive tax rate in the EU. We are currently waiting for updates on this matter. 

 

NetComm Suisse: What other fiscal impacts should a company based in Ticino consider and what advice would you give to a new business setting up? 

Stefano Bassan, PM Consulenze: Setting up a company in Switzerland involves considering the taxation landscape as a whole, and not just the taxes incumbent on the company. The BEPS project and EU directives impose a “tax compliant” corporate structure on many areas of business, in line with established practice in Europe. A high level of attention must be paid, in addition, to the definition of “effective place of management”, that is, the transfer of pricing and the requirements laid out in the application of Double Taxation Treaties. Despite the structure of the past, it is highly advisable to have a specific audit by a tax advisor before setting up a new company.

 

NetComm Suisse: What impact has GDPR had on Swiss companies and how can they check if they are compliant vis-á-vis the new requirements? 

Stefano Bassan, PM Consulenze: The General Data Protection Regulation (GDPR) enters into force on May 25th 2018 and is applicable to all subjects and entities that process personal data within the scope of its business activity. The regulation also  applies to subjects and entities that have their legal headquarters outside of Europe, including Switzerland, in the event they process the  personal data of EU residents or offer goods or services to users located in an EU country. Swiss Regulation on data protection (LPD) is currently being reviewed to adapt it to GDPR. Many Swiss companies will therefore be affected by the provisions of GDPR, including the risk of sanctions if they do not become fully “GDPR compliant”. 

Thanks to its professional network, PM Consulenze SA can help clients screen entity business and processes and, if necessary, implement actions to meet GDPR requirements in full.