The Swiss Federal Council will bring the Federal Act on the Tax Treatment of Financial Sanctions into force with effect from 1 January 2022.
Just as in the past, domestic punitive financial sanctions, i.e. fines, monetary penalties and punitive administrative sanctions, are not tax deductible. In contrast, foreign punitive financial sanctions are to be tax deductible in exceptional cases if they violate Swiss public policy or if a company credibly demonstrates that it has taken all reasonable steps to comply with the law.
Bribes paid to private individuals are no longer tax deductible. This harmonizes tax and criminal law. Finally, expenses that make a criminal offence possible or are paid in return for one being committed are no longer tax deductible.
Once the Act comes into force, Switzerland will be complying with a recommendation of the OECD's Financial Action Task Force on Money Laundering. The Federal Council took the relevant decision in its meeting of 11 November 2020.