Fiscal Facts H2 2019 Corporate Tax Reform 2020: Implementation

Canton Current tax rate1 Proposed tax rate1 Proposed min. & max tax rate2

Glarus 15.70% 12.43% Min.12.4% / Max.12.52%

14.73% (Community-independent tax rate Grisons 16.12% 14.73% for the entire canton) 2020-2024: 14.18% 2020-2024: Min.13% / Max.14.93% Schaffhausen 15.75% From 2025: 12.27% From 2025: Min. 11.43% / Max. 12.8%

Solothurn 21.38% 13.12% (tbc) Min. 12.8 / Max. 16% (tbc)

Schwyz 15.00% 14.13% Min. 11.77% / Max. 14.54%

2020-2024: Min. 17.18% / Max. 19.21% 2020-2024: 19.21% Ticino 20.55% From 2025: Min. 13.78% / Max. 15.89% From 2025: 15.89% (tbc) (tbc)

Uri 14.92% 12.64% Min. 12.61% / Max. 13.45%

Zug 14.62% 11.9% Min. 9.1% / Max. 11.9%

From 2021: 19.70% (confirmed) From 2021: Min. 17.4% / Max. 20.4% Zurich 21.15% From 2023: 18.19% (tbc) From 2023: Min. 16.2%/ Max. 18.8% (tbc)

1) Cantonal capital: Max. rate on pre/tax income 2) Minimum & maximum tax rate in canton depending on the location in the respective canton Corporate Tax Reform 2020: New Measures

Taxation of R&D super Relief Patent box dividend deduction limitation4 Canton income5 Exemption Max. possible Entry cost Deduction quota Min. 50% quota relief

10% Acc. federal law1 Glarus Not available 10% 70%

90% Yes2 Grisons 50% 55% 50%

90% Yes2 Schaffhausen 25%3 50% 60%

90% Not yet communicated Solothurn 50% 70% 50-70% (tbc)

90% Yes2 Schwyz 50% 70% 50%

0.2% on R&D expenses 90% acc. to federal law Ticino 50% 70% 70%

30% Acc. to federal law1 Uri Not available 50% 50%

90% Yes2 Zug 50% 70% 50%

90% Yes2 Zurich 50% 70% 50% / 60%6 1) R&D expenses deducted in the current and the previous ten years are subject to entry cost 2) Historic development costs are offset against eligible income during first five years 3) Upon transition period of 5 years (from 2025) 4) Patent box, R&D super deduction, notional interest deduction, and possible amortization resulting from an old law step-up are subject to a relief limitation of max. 70% 5) Adjustments in taxation of dividend income from qualifying participations. Federal law allows max. 50%. 6) An increase to 60% is scheduled within the second tax reform effect from 2023 (tbc) Industries & Flagship Companies

Canton Key industries Flagship companies

Netstal Maschinen, Eternit, Kunststoff Food processing, plastic, metalworking, Schwanden, Chocolatier Läderach, Kopter Glarus building and construction, aircraft Group, Life sciences, medtech, plastics, precision Hamilton, Baxter, Integra Biosciences, EMS- technologies, photonics, information and Grisons Chemie, TRUMPF, Würth, Viega, Bizerba communications technology Life sciences, medtech, blockchain for Cilag-Janssen, GF, SIG, Unilever, Bosch, industries/industrial, smart mobility, cyber Schaffhausen Xylem, Medtronic, Pharmacyclics security, packaging, plastics Medtech, precision mechanics, logistics, J&J DepuySynthes, Biogen, Stryker, ETA, Solothurn watch making, biotech Jura, Breitling, Invacare, Barnes Life science, financial services, information Estée Lauder, Octapharma, LGT Capital Schwyz and communications technology, machinery, Partners, Man Investments, Kühne + Nagel, headquarters Briggs & Stratton, Victorinox Helsinn Healthcare SA, Humabs BioMed SA, Life sciences, fashion, mechatronic, VF International Sagl, Agie Charmilles SA, Ticino information and communications technology Medacta International SA Machinery, electronics and metals, tourism, Datwyler Group, Andermatt Swiss Alps, Gipo Uri construction, health services, transportation AG, Sisag Wholesale trading, life science, high tech, Roche, Siemens, Glencore, J&J, V-Zug, information and communications technology, Zug Biogen, Amgen, Partners Group financial services, headquarters Financial services, insurance, information IBM Research, Google, Sonova, Zimmer and communications technology, life Zurich Biomet, Tecan, Autoneum sciences, high tech, tourism Innovation Support & R&D Grants

Canton Approach

Glarus Incentives on request: maximum CHF 50,000 at a time.

Tax holidays up to 100% for up to 10 years and financial incentives for Grisons innovative projects of export-oriented companies with contributions and loans up to 25% of investment costs. Tax reductions and financial incentives are available for investments dependent Schaffhausen on number of jobs created, capital investments, long-term tax income, economic importance (granted via cantonal legislation). Tax reductions (holidays) might be available, no cash though. Support might be Solothurn available for members of the Innovation Park Biel. Special offers for health tech startups. Consulting support from the Technology Schwyz Center Schwyz for new entrepreneurs and corporate developments. Support for R&D & innovation projects up to CHF 1,000,000. Tax incentives Ticino might be available for innovative startups. Through a cantonal fund existing and new companies can be supported in their Uri innovation projects. Funding amounts decided on a case-by-case assessment.

Zug R&D support through patent box and super deduction.

Zurich R&D support through patent box and super deduction. Individual Taxation: Single person (100,000 €)

Hong Kong 15.5%

Greater Zurich Area Min 23.0% The tax burden on the gross Greater Zurich Area Median 29.3% salary for highly qualified individuals is a central cost factor Greater Zurich Area Max 33.7% for corporations. Boston 38.2% Greater Zurich Area is excellently Berlin 40.9% positioned in the individual München 40.9% income tax competition.

San Francisco 41.4% Within the Greater Zurich Area, London 45.8% effective tax rates for highly qualified individuals are well Amsterdam 46.7% below average European tax Kopenhagen 46.8% rates. Irland 47.5% Milano 51.6% BTI average 38.5%

Average tax rate (%), Greater Zurich Area stands for the member cantons Data at regional level, for a highly qualified employee with available income after taxes: 100,000 EURO, single, 2017 Source: BAK Taxation Index (BTI), 2018 Individual Taxation (Total Tax Burden): % of Brutto Salary Sample calculation for brutto incomes of CHF 150k & CHF 800k (single/married with 2 children and no religious affiliation) living in the respective cantonal capital based on 2018

Canton CHF 150k / single CHF 800k / single CHF 150k / married CHF 800k / married

Glarus 17.47% 29.45% 11.38% 10.28 %

Grisons 18.21% 28.97% 9.88% 27.31%

Schaffhausen 20.01% 29.96% 11.39% 28.84%

Solothurn 21.27% 31.69% 13.50% 30.62%

Schwyz 15.16% 23.89% 8.99% 22.81%

Ticino 20.95% 35.59% 11.17% 33.44%

Uri 14.86% 23.41% 9.80% 22.26%

Zug 12.97% 21.01% 4.87% 19.95%

Zurich 17.78% 34.67% 9.84% 31.82%

Calculations based on the calculator by the Swiss Federal Tax Administration: http://www.estv2.admin.ch/d/dienstleistungen/steuerrechner/steuerrechner.htm Social Security

Social security costs in Switzerland are much lower than in other European countries: 12.4-17% of the gross salary, paid half by employer, half by employee. Other characteristics include: • All contributions deductible from taxable income • Healthcare is fully paid by the employee, not the employer • Pension fund: 50% by both parties • Older employees pay higher percentage

50% 45% 40% 35% 27.65% 6.35% 30% 20.38% 11.00% 18.50% 25% 20% 15% 29.90% 23.75% 10% 6.23% 18.96% 19.38% 19.50% 5% 6.23% 0% Switzerland Netherlands Germany Spain Portugal Hungary Employer Percent Employee Percent

Social security/social insurance taxes: employers & employees' share Source: KPMG Taxation Index 2018 Name of Canton Cantons of the Greater Zurich Area: Corporate tax rate pre reform / max & min. tax rate post reform

Pre & Post Corporate Schaffhausen 15.75% / 2020-2024: Min.13%; Max. 14.93% Tax Reform From 2025: Min. 11.43%; Max. 12.8%

Zurich 21.15% / From 2021: Min. 17.4%; Max. 20.4% Solothurn From 2023: Min. 16.2%; Max. 18.8% (tbc) 21.38% / Min.12.8%; Max. 16% (tbc) Zug 14.62% / Min. 9.1%; Schwyz Max.11.9% 15.00% / Min: 11.77%; Max: 14.54% Glarus 15.7% / Min.12.4%; Max. 12.52% Uri 14.92% / Min. 12.61%; Max. 13.45% Grisons 16.12% / Min./Max.14.73% (tbc – see next page)

Ticino 20.55% / 2020-2024: Min. 17.18%; Max. 19.21% From 2025: Min. 13.78%; Max. 15.89% (tbc)

80km/50mi Cantons of the Greater Zurich Area: Pre & Post Corporate Tax Reform

Additional information to previous page

Canton of Grisons The introduction of the proposed implementation of the tax reform is subject to the optional cantonal referendum. The tax reform will be put into effect from January 1, 2020 in case of the referendum is not to come about. In case of the referendum is to come about, the tax reform will be put into effect retroactively from January 1, 2020 as proposed or with certain modifications.

Canton of Schaffhausen The legislative authority of the canton of Schaffhausen (“Kantonasrat") approved with vast majority (min. 80% yes-votes were needed) the cantonal bill proposal in July 2019. It will be effective from January 1, 2020.

Canton of Schwyz The tax reform passed the cantonal council and the referendum was not called. The tax reform comes into force on January 1, 2020. Cantons of the Greater Zurich Area: Pre & Post Corporate Tax Reform (continued)

Additional information to previous page

Canton of Ticino The legislative authority of the canton of Ticino (“Gran Consiglio") will discuss the partial revision in autumn 2019. The partial revision could be subjected to a public referendum. In case of no referendum, it will be put into force with effect from January 1, 2020.

Canton of Uri The parliament of the canton of Uri approved the implementation on the cantonal level on June 19, 2019. The legislation will be effective from January 1, 2020.

Canton of Zurich The cantonal vote on September 1, 2019 on the proposed implementation measures and the first tax rate reduction to 19.70% effect from January 1, 2021 was successful. The second tax rate reduction to 18.19% effect from January 1, 2023 has to be confirmed. Depending on the concrete business activities and depending on the impact of the patent box and additional R&D deductions, a further reduction of the tax burden from 18.2% down to 11.2% is possible (tbc: maximum reduction of 70%). Greater Zurich Area

Where Else?