The new version of this Circular provides the following three clarifications that will come into force as of January 1, 2021:

 

Non-listed employee shares

Even if the guidelines of the Swiss Tax Conference of August 28, 2008 regarding the valuation of unlisted shares for wealth tax purposes were already mostly followed when valuing unlisted company’s shares, the updated circular  precisely refers to the provisions of these instructions as an appropriate and recognized method.

 

Sale of employee shares held in private assets

Whereas at the time of the sale of employee shares held as private assets, a taxable income may arise from a possible capital gain that took place when the valuation method of these shares was changed.

The updated circular determines that after a five-year holding period following the event triggering the change in the valuation method determining the market value, the employee can get a tax-free capital gain on any sale.

 

Shares acquired at the time of incorporation of a company

The Federal Tax Administration adds a special case to its circular about shares acquired at the time of incorporation of a company. According to the new section 3.4.4, these are not considered employee shareholdings in the sense of article 17a LIFD and if an employee acquires shares on the same terms as those granted to an independent third party, these are also not considered employee shares.

In addition, the circular includes an additional Appendix V, which proposes a new model of annexes to the salary certificate.

 

Appendix V: electronic attestation templates

Employers who grant employee participations are obliged to draw up an annex to the salary certificate detailing the various shares held and any income reported in item 5 of the salary certificate.

Annex V of Circular No. 37 proposes a new model of annexes, already required by the canton of Vaud and proposed by the canton of Zurich, which can be transmitted electronically using the ELM 5.0 version established by Swissdec.

In most cantons, however, income from participation may continue to be reported on the forms in accordance with Appendix III of Circular No. 37.

 

It is not easy to meet tax requirements related to employee shareholdings, and even more so in international situations. RSM remains at your disposal to answer any questions related to your company's LTIP plans as well as for assisting you in the preparation of any annual mandatory documents. Do not hesitate to contact us for any clarification on this subject!