On 18 September 2026, the Swiss Federal Council brought into force the amendment to the Federal Act on Direct Federal Tax extending the loss carryforward period from seven to ten years, effective 1 January 2028. The legislative change, originally passed by Parliament, allows corporations and individuals subject to direct federal tax to offset losses against taxable profits for up to a decade, up from the previous seven-year window. The extension aligns Swiss tax law with international standards and aims to improve the competitiveness of the Swiss business environment, particularly for start-ups and research-intensive companies that may incur losses in early years. The Federal Council determined the commencement date after consulting with cantonal tax authorities and business associations, ensuring sufficient lead time for IT system updates.
The extension of the loss carryforward period has been a long-standing demand from the business community and tax experts. The previous seven-year limit was seen as a disadvantage compared to other jurisdictions where loss carryforwards are unlimited or significantly longer. The new rule applies to both corporate income tax and individual income tax at the federal level. Cantons, which have their own tax laws for cantonal and communal taxes, may also consider aligning their loss carryforward periods, though they are not obliged to do so. The Federal Council’s decision to set the effective date for 2028 provides a transition period for taxpayers to adjust their tax planning and for cantonal tax administrations to update their assessment software. The measure is expected to reduce the tax burden for loss-making companies in the medium term and encourage risk-taking and innovation.
Key Takeaways
- Extended Loss Relief: Taxpayers can now carry forward losses for ten years, providing greater flexibility to absorb past losses against future profits. This is especially beneficial for companies in cyclical industries or those investing heavily in R&D, as it reduces the risk of losing tax attributes due to time limitations.
- Alignment with International Practice: The ten-year carryforward brings Switzerland closer to OECD and EU norms, where indefinite or longer carryforward periods are common. This enhances Switzerland’s attractiveness as a location for multinational enterprises and supports the government’s strategy to maintain a competitive tax regime.
- Transitional Provisions: Losses incurred in tax years ending before 31 December 2027 remain subject to the seven-year rule. Only losses from tax years starting on or after 1 January 2028 qualify for the ten-year period. Taxpayers should review existing loss carryforwards and adjust their tax planning accordingly.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement