Extension of Loss Carryforward Period in Switzerland to 10 Years
Good news for companies in Switzerland: the loss offsetting period is being extended from seven to ten years. The Swiss Parliament adopted the corresponding legislative amendment in December 2025. The referendum period expired unused on 17 April 2026, clearing the way for implementation. The effective date will be determined by the Federal Council, but no later than 1 January 2028.
The new rules (Federal Act on the Extension of the Loss Carryforward Period) apply to Swiss federal direct tax as well as cantonal and communal taxes. As the extension is implemented via the Tax Harmonisation Act (StHG), all cantons are required to amend their tax legislation accordingly. The change primarily affects legal entities, but also individuals, in particular self employed persons.
The extended loss offsetting period applies to tax losses incurred as from the 2020 tax period. Losses generated in earlier periods remain subject to the previous seven year limitation.
Special considerations for foreign permanent establishments
A noteworthy aspect concerns losses from foreign permanent establishments that were offset against Swiss taxable profits. Such losses are now likewise subject to a ten year recapture period in the event of subsequent foreign permanent establishment profits. In practical terms, this means that foreign PE losses incurred from 2020 onwards and utilised in Switzerland may be reversed if the foreign permanent establishment generates profits in the subsequent ten years. This ensures that the system of loss utilisation remains coherent and consistent also in an international context.
Practical relevance
In practice, the extended loss offsetting period provides welcome additional planning flexibility, particularly for businesses with long start up or recovery phases, for example following the economically challenging years of the Covid 19 pandemic.
Companies are therefore well advised to review their existing loss carryforwards and to incorporate the extended utilisation period into their tax planning at an early stage. We would be pleased to support you in this process.
