Lucerne plans to introduce Qualified Refundable Tax Credits (QRTC)

Lucerne is the fourth canton after Basel-City, Grisons, and Zug to publish its plans to remain attractive as a business location despite the global minimum tax (media release, in German). The focus is on the introduction of Qualified Refundable Tax Credits (“QRTC”). The consultation process will last until 9 June 2025 and the act will come into force on 1 October 2026 at the earliest.

Due to the global minimum tax (Pillar Two), the attractiveness of the canton of Lucerne as a location is deteriorating significantly. To maintain the competitiveness of the living and economic area, the government plans to invest CHF 300 million annually in a broad package of measures from 2026. The government has released the draft act today for public consultation.

Measures for Companies

Of the CHF 300 million in annual investments, CHF 200 million are to be used for the benefit of companies. On the one hand, the tax multiplier for legal entities is to be reduced. On the other hand, a new “innovation funds” of around CHF 160 million per year is to be introduced. The amount will be re-evaluated every year.

Qualified Refundable Tax Credits

In order for a company to receive grants from this innovation funds, the following conditions must be cumulatively met:

• The company must be registered in the commercial register and have premises and staff in the Canton of Lucerne (no shell companies).
• The company must be actively involved in basic research, industrial research or experimental research.
• The company must submit a sustainability report and have an audited annual financial statement.

The grants are to be paid out by means of Qualified Refundable Tax Credits (“QRTC”) in line with the OECD Model Rules and are determined as follows:

• 30% for R&D personnel (gross salary)
• 20% for investments (depreciation)
• 10% for contract research

Companies must submit a written application for such QRTC. The legal basis will not be in the tax law, but in the law on location promotion and regional policy.

Deloitte’s View

The topic of new tax incentives is gaining momentum in Switzerland. Following in the footsteps of the cantons of Basel-Stadt (potential referendum vote, not enacted), Grisons (pending in parliament, not enacted) and Zug (pending in parliament, not enacted), Lucerne as another important business location is coming up with its proposals. The draft act is now going into the consultation phase and will not come into force until 1 October 2026 at the earliest.

A comparison of the cantonal proposals to date shows that the new incentives are usually designed as QRTC or government grants. The main aim is to promote value-creating activities in R&D and sustainability. Interestingly, to date no canton has identified activities in the area of digitalization as eligible for promotion.

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