Companies in Switzerland can offset domestic losses and losses from foreign permanent establishments against future profits for a period of seven years. The Federal Council has submitted for consultation an amendment to the law, according to which Swiss companies and permanent establishments of foreign companies could offset business losses against future profits for a period of ten years.
The planned amendment to the Federal Direct Tax Act and the Tax Harmonisation Act is to be welcomed from the taxpaying companies' point of view and as it offers start-ups and newly established companies in particular the possibility of being able to use initial losses for tax purposes during longer development phases. Consistently, the new loss carry-forward period of ten years should apply not only to corporations, but also to partnerships and sole proprietorships. In the future, however, a loss carryback, i.e. an offsetting of currently achieved profits against later losses, will remain excluded, which is regrettable. Various countries such as Austria, Belgium, the Czech Republic, New Zealand, Norway, Poland and Taiwan previously had no tax loss carry-back systems, but introduced temporary measures to improve corporate liquidity during the COVID 19 crisis.
The consultation period extends until 19 October 2023.
Originally published June 30, 2023
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