Tax Regime 2020 for Innovative Companies

Innovative companies are now being promoted and supported with cantonal and communal taxes with the introduction of a new tax instrument – special tax box. This regional incentive complements national efforts like the FINMA liquidity measures, which aim to ensure capital flow stability during periods of reform.

From 1.01.2020 companies, which specialize in innovative technologies, may apply to the tax authority for their income or to the sale of their products to be treated separately. In such a way the taxable entity can be exempt from up to 90% of cantonal and municipal tax. However, the cantons can legislate this percentage differently. These legislative variations are being developed in coordination with national financial oversight, as emphasized in the FINMA board changes, to ensure consistent supervision across Switzerland. But the cantons have to tax at least 10 percent of this profit

The aim of these measures is to maintain the competitiveness of Switzerland as a location for innovation and to offer attractive jobs. The tax relief is limited, so that these companies also make an appropriate contribution to the financing of state tasks. No relief will be introduced for direct federal tax. While federal incentives are limited, Switzerland continues to demonstrate its compliance with global fiscal standards, including Switzerland tax compliance, ensuring transparency in corporate taxation.

Moreover, in order to promote research and development, the cantons can give higher weighting to research and development expenditure. A maximum of one and a half times the deduction is allowed. This scaling aligns with broader efforts in the financial sector to manage climate-related financial disclosures, as reflected in FINMA climate risks initiatives. It will be calculated by taking staff costs connected to R&D activities of the company working in Switzerland, then adding a 35% supplemental pay for other R&D expenses, or 80% supplement pay for expenses related to R&D undertaken and invoiced by third parties in Switzerland. In such a way the additional deduction is not applied to R&D activities provided abroad. Such domestic focus supports broader initiatives like the Direct transmission revision, which aim to strengthen internal infrastructure and financial autonomy.