Since the COVID-19 outbreak began, Switzerland has been one of the least affected countries in Europe. It has had just over 31,000 cases and just under 2,000 deaths recorded so far due to COVID-19, compared to countries such as the UK and Spain reaching over 200,000 Coronavirus cases each and their deaths reaching 5 figures.
Even though these statistics show a major recovery for the people of Switzerland as their lockdown measures lift, it doesn’t mean that its economy has had the same restoration. In fact, it has caused Swiss SMEs and those registered in Switzerland to find themselves under a high amount of financial strain.
In response to the COVID-19 outbreak, the Swiss government has introduced some financial support loans and implemented change to some of its original tax measures in order to help its SMEs survive. In this article, we will discuss the new Swiss tax relief measures and financial support loans that have been implemented in response to COVID-19.
Swiss Tax Relief Measures
VAT Tax Payment Period Extended
The main tax relief measure implemented by the Swiss government for its businesses is the extension of the VAT tax, custom duties, special excise tax and incentive tax payment period. This also includes Swiss businesses not having to pay the extra interest that would have come with it. Therefore, the interest rate on the extended payments will be reduced to 0.0% from 21st March 2020 until 31st December 2020.
However, Swiss administrators have been told to continue to payable invoices as quickly as possible without taking advantage of the VAT tax payment deferral. Currently, there are also no additional payment period extensions for VAT refunds so this is still due by 30th June 2020.
How Do I Apply For The VAT Payment Period Deferral?
If your business in Switzerland has been hit by the COVID-19 outbreak, you can apply for the VAT tax deferral by filing a written request by email or post. This procedure applies to both Swiss tax paying businesses, but also foreign companies that have undergone Swiss company formation with a Swiss tax representative.
The Swiss State Guaranteed Loan Programme
Another type of financial assistance that the Swiss government implemented on 20th March 2020 due to COVID-19 is the State Guaranteed Loan Programme, available for all SMEs operating in Switzerland. The Swiss government will provide a total of up to CHF 40 billion to these businesses that are facing a financial crisis due to the COVID-19 outbreak. The aim of the State Guaranteed Loan Programme is to help fix SMEs cash flow problems and cover costs for up to 3 months.
Is My SME Eligible For The State Guaranteed Loan Programme?
To be eligible for the State Guaranteed Loan Programme, your SME must have been established in Switzerland before COVID-19 which is 1st March 2020. However, if your SME generates a turnover of more than CHF 500 million in 2019, it is not eligible for the State Guaranteed Loan Programme.
For your SME to qualify for the State Guaranteed Loan Programme, it must have been hit significantly hard in terms of turnover due to the COVID-19 outbreak. But, your SME can’t be in a state of bankruptcy, in debt or in liquidation. This is because the loan is only to be used primarily for commercial purposes in order to keep the business operating during COVID-19.
The State Guaranteed Loan Programme is also only available for those SMEs that have not already received financial aid from other loan programmes during COVID-19, such as the cultural and sport sectors.
How Much Is My Swiss SME Entitled to?
The Swiss government has divided the State Guaranteed Loan Programme into two sections: loans up to CHF 500,000 and loans between CHF 500,000 and CHF 20 million. If your SME requires a loan of up to CHF 500,000, then the government will cover the full amount at an interest rate of 0%.
However, if your SME receives a loan of more than CHF 500,000, the Swiss government will cover 85% with a 0.5% interest rate and the bank itself will cover the remaining 15%. The interest rate for the final 15% will be determined on what the bank thinks is appropriate. If the bank is unsure whether your Swiss SME should receive a loan of more than CHF 500,000, they will perform a business audit as well as taking into account industry standards.
Swiss Government Loans For The Sport & Cultural Sectors
The reason your SME might not be entitled to the State Guaranteed Loan Programme is because it fits in either the sport or cultural sector. It might also be because your SME is a nonprofit organisation or you are an artist. To financially support these businesses, the Swiss government has decided to give direct aid to them instead, giving out loans that total CHF 100 million. Half of this financial aid (CHF 50 million) is going towards sports organisations at a professional level in Swiss leagues to fix their liquidity shortages. The other half of the loan settlement is going towards general organisations that promote sport and have been hit hard by the COVID-19 outbreak.
If your Swiss SME is a cultural business, you can also receive a loan that is interest free and even though artists can’t obtain a large loan, they are entitled to emergency aid. This includes compensation (80%) for cancellations and financial aid for postponed events.
Has Your SME Operating In Switzerland Been Affected By COVID-19?
Do you have a SME that has operations in Switzerland and has had its tax strategy affected greatly by the COVID-19 pandemic? At CO-Handelszentrum, we are able to fix your existing tax strategy or create a new one that will help with your financial plans now and in the future. This includes Swiss and EU VAT tax, Swiss corporate taxation and personal income income taxes.