Tax holidays
On a federal level, the confederation may provide incentives by way of tax reductions to enterprises which establish themselves in certain areas of the country that are economically underdeveloped. In addition, federal aid may be granted as security on commercial loans or as a contribution to the payment of interest on such loans.
Tax incentives
On a cantonal level, business incentives may be granted for cantonal and communal income tax purposes in connection with new business activities in the canton. Business incentives may be obtained for creating a new presence which has particular economic interest for the canton. The new business activity additionally must not be in direct competition with existing local businesses. Lastly, and perhaps most importantly, business incentives are generally granted in connection with the creation of new local jobs. The number of jobs that must be created to benefit from business incentives is generally quite low (eg, beginning at 10 to 20 jobs in most cantons). Business incentives are obtained by negotiation with the competent cantonal authorities. Incentives may include up to a full or partial 10-year tax holiday on a cantonal/communal level as well as low-interest loans on new buildings and easy access to work permits.
Furthermore, as part of the implementation of the corporate tax reform that entered into force on January 1, 2020, Switzerland abolished its tax privileged regulations – in particular, the holding company, the mixed company, domiciliary company, principal company and finance branch regimes that have been considered harmful by the OECD. These regimes have been replaced by new, internationally accepted measures. The key substitute measures for corporate taxpayers are:
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Reduction of general tax rates, whereby the majority of the cantons now have an ETR (ie, the effective combined federal-cantonal-municipal rate) between 12 and 14 percent for all companies.
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Introduction of a cantonal patent box system based on the modified nexus approach of the OECD, with tax relief for qualified income of up to 90 percent.
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Introduction of an R&D super deduction at cantonal level of up to a maximum of 150 percent of the effective qualifying expenses.
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Increase of the asset base when a company or its activities and functions migrate to Switzerland.
The expiry of the special tax regulations is subject to transitional regulations, which should make it possible for companies who benefited from such regulations to increase their tax values from before 2020 through a special release mechanism of "hidden reserves" for 5 years after the expiry of January 1, 2020. This depends on the specific facts and circumstances of the companies.
Tax rulings
Tax rulings are available for almost every aspect of taxation, and Switzerland is not subject to EU state aid rules. Under the OECD base erosion and profit shifting project, Switzerland also committed to spontaneous exchange on tax rulings for certain cross-border tax rulings (ie, rulings on preferential tax regimes, cross-border transfer pricing rulings, unilateral downward adjustment rulings and tax residency or PE rulings).
