Switzerland Extends Loss Carryforward Period to 10 Years

With the 100-day referendum period having expired unused, it is now clear that Switzerland will extend the period for offsetting tax loss carryforwards from seven to ten years. Subject to the Federal Council’s formal enactment decision, the amendments are expected to take effect from 1 January 2028 and will apply to both federal direct tax as well as cantonal and municipal income taxes.

In Switzerland, tax losses can currently be offset against taxable income for up to seven subsequent financial years, applying to both companies and self-employed individuals. As an exception, losses may be offset without any time limitation in the context of restructuring measures. Furthermore, current tax legislation allows companies and self-employed individuals with permanent establishments (“PE”) abroad to provisionally offset foreign PE losses against their taxable income in Switzerland. This provisional offsetting becomes definitive after seven years.

New Legislation

In response to the COVID-19 pandemic, the Swiss Parliament decided before Christmas 2025 (German/French) to extend the loss offset period from seven to ten years. It is important to note, however, that this extension applies only to losses incurred from the 2020 tax period onwards. Losses incurred prior to the 2020 tax period will continue to expire after seven years. The ten-year extension also applies to losses from foreign PE incurred in the 2020 tax period and later.

For companies with a fiscal year that does not align with the calendar year, the end of the fiscal year determines the applicable period. For example, a company with a fiscal year running from 1 February 2019 to 31 January 2020 that incurs a loss during this period will have that loss subject to the extended ten-year offset period.

The amendment applies to both federal direct tax and cantonal and municipal taxes, requiring the cantons to amend their respective tax laws accordingly.

Next Steps

The Parliament’s decision was subject to a 100-day referendum period, which expired unused on Friday, 17 April 2026. The Federal Council must now formally enact the amendment, with Deloitte anticipating a decision to be made shortly.

Deloitte’s View

The Parliament’s decision to extend the loss offset period from seven to ten years is to be welcomed. Compared with many other European countries, the previous seven-year period was relatively short. Nevertheless, an even longer period would be preferable, as this would more accurately reflect the principle of taxation based on economic capacity. When implementing this new regulation, it is important to note that the extended period applies only to losses incurred from the 2020 tax period onwards. Additionally, regarding losses of foreign PE, the provisional loss carryforward period should also be extended to ten years.