Switzerland will extend the corporate loss carryforward period from seven to ten years from 1 January 2028, applying to losses from 2020 onward and providing additional relief for companies affected by the COVID-19 pandemic, including rules for losses incurred by foreign permanent establishments.
Switzerland’s Federal Council enacted the Federal Act on the Extension of Loss Carryforward on 18 September 2026. The change allows companies to offset losses against taxable profits over a ten-year period instead of the current seven years at both federal and cantonal levels.
The extension takes effect on 1 January 2028 and applies to loss carryforwards from the 2020 tax period onward. Parliament approved this amendment through Motion 21.3001 (WAK-N), which sought to support businesses facing economic hardship from the COVID-19 pandemic.
The new ten-year carryforward applies retroactively to losses generated from 2020 onwards.
Swiss companies operating foreign permanent establishments gained additional clarity. These companies may deduct losses from their foreign branches against Swiss taxable profits for federal income tax purposes, provided the foreign jurisdiction has not already recognised the loss.
The deduction remains provisional. If the foreign permanent establishment generates profits within the next ten years (extended from the previous seven-year limit), Switzerland can reverse the deduction to recover the loss already credited. The cantonal authorities retain the right to establish their own rules regarding permanent establishment losses.
