Tax planning – 2020 changes and other considerations

Tax planning – 2020 changes and other considerations

As there remains, at the date of writing of this article, a quarter to act with a view to reducing its taxes 2020 and if for you as for Keynes, the famous British economist (1883-1946), “avoiding to pay taxes is the only intellectual research rewarding” or if you simply want to project your future taxes closer to reality, given the many changes we are all experiencing as a result of the health crisis, However, we must not forget to take into consideration a few changes so as not to distort your calculations:

I. Changes at the cantonal level (VD):

1. The cantonal coefficient goes from 154.5 to 156. Note that it will be 155.0 in 2021.

2. Increase in the deduction limit for child care expenses from 7100 to 9100).

3. Increase in the health insurance deduction. It goes from Fr. 2200 to Fr. 2400 for single persons and from Fr. 4400 to Fr. 4800 for married couples. However, up to the amount of costs paid, which was not the case before (thus the subsidy to be taken into consideration).

4. Increase in the social deduction for modest taxpayers to Fr. 2000 for married couples and Fr. 1000 for single-parent families. This is to mitigate the effect of point 3. for those receiving subsidies.

5. For associations, a decrease is to be expected in the taxation of capital. The threshold goes from fr. 56’000 to fr. 200’000.

II. Changes at the national level (affect all cantons and federal tax):

1. for real property projects, demolition costs for replacement construction will be deductible. These costs, as well as those intended to save energy, will be carried forward over the following two tax periods if necessary.

2. The various RFFA measures, very specific to be studied carefully for the companies that might be concerned (patent box, R&D deductions, reduction in corporate tax rates).

III. Miscellaneous

1. The change in practice following the case law of the Federal Court of 16.12.2019 concerning the deduction of a banking penalty following a breach of a mortgage contract. In the event of a change of bank or early repayment, the compensation will no longer be deductible. The penalty is deductible as passive interest only if you stay in the same bank. On the other hand, in the event of a refund for reasons of sale, the penalty remains deductible at the level of the special tax on the real estate gain.

2. For real estate in the Canton of Vaud, already in place since the 2019 tax period but not to be forgotten, the changes related to building maintenance fee plans and the rate of adaptation of the rental value which rises by 1%.