On Sunday 19th of May 2019, Swiss voters approved the implementation of new innovation incentives in 2020.
This tax reform will align the Swiss tax system with OECD standards by introducing two major tax incentives.
The first one is the R&D super deduction. Each canton will have the ability to grant additional deductions based on R&D activities carried out in Switzerland. Companies will be able to claim a super deduction up to 50% of their R&D expenses. The R&D expenses will take into account :
– R&D personnel expenses (salaries and social contributions),
– 35% of the personnel expenses calculated to cover overheads,
– sub-contracting costs.
The tax reform also introduced a patent box regime. On the cantonal level, the new regime allow profits coming from patents and other qualifying IP rights to qualify for a maximum tax base reduction of 90%. Cantons have the option to adopt a less generous percentage.
These new measures (notwithstanding variances at a cantonal level) add Switzerland to the long list of OECD countries adopting innovation incentives, bringing the Swiss in to alignment with their neighbours. France, for example, has the most favourable R&D-friendly regime in the world, Italy strongly improved its tax incentives recently, Austria offers an R&D tax relief and Germany is introducing a scheme in 2020.