Switzerland extends loss carry-forward period to 10 years from 2028: a strong signal for tax competitiveness
InsightsSwiss tax newsletterSwiss tax newsletter - March 2026
Switzerland extends tax loss carry-forward
On 27 November 2024, the Federal Council adopted a proposal to extend the tax loss carry-forward period from seven to ten years.
This reform, which amends both the Federal Act on Direct Federal Taxation (LIFD) and the Federal Act on the Harmonisation of Direct Taxes of the Cantons and Municipalities (LHID)1 , will enable uniform application across all cantons. It increases the flexibility of Swiss companies, particularly those that have suffered significant losses or losses spread over several years.
A measure aligned with the post-COVID economic environment
The amendment is scheduled to come into force on January 2028, subject to a possible referendum. The legislator has explicitly taken into account the losses linked to the pandemic: companies will thus be able to carry forward losses incurred from the 2020 financial year until 2030.
This three-year extension will make it possible to:
- Smooth the tax burden on companies that are still struggling to absorb the effects of the health crisis
- Strengthen their cash flow, a key issue in an uncertain economic environment
- Improve Switzerland's international competitiveness by aligning with a trend already observed in several European countries.
In practice: how tax loss carry-forward works
From an accounting perspective
Losses incurred by a company can be carried forward to subsequent financial years.
According to accounting law, when the closing balance sheet shows a loss rather than a net profit, this must be offset in the order specified in Article 674 of the Swiss Code of Obligations, namely:
- Carried forward profits
- Optional reserves from profits
- The legal reserve from profits
- The legal reserve from capital.
From a tax perspective
Currently, losses from one financial year can be offset against profits made in the following seven financial years, provided they have not already been considered in calculating taxable income for the years concerned.
From 2028, this period will be extended to 10 years.
Illustrations with figures for a company whose financial year runs from 01.01.N to 31.12.N
1. Before the reform: seven-year loss carry-forward period
Losses incurred during 2020 will expire in 2027 at the latest.
| Years | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
| Result in year N | -2,000,000 | -500,000 | 100,000 | 200,000 | 400,000 | 400,000 | 600,000 | 200,000 | 200,000 | 100,000 | 500,000 |
| Losses carried forward as at 31 December N | 0 | -2,500,000 | -2,400,000 | -2,200,000 | -1,800,000 | -1,400,000 | -800,000 | -600,000 | -400,000 | 0 | 0 |
| Taxable income as at 31 December N | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 | 500,000 |
2. After the reform: extension of the loss compensation period to ten years
Losses incurred in 2020 can be used until 2030. Losses incurred prior to 2020 remain subject to the current seven-year limit.
| Years | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 |
| Result in year N | -2,000,000 | -500,000 | 100,000 | 200,000 | 400,000 | 400,000 | 600,000 | 200,000 | 200,000 | 100,000 | 500,000 |
| Losses carried forward as at 31 December N | 0 | -2,500,000 | -2,400,000 | -2,200,000 | -1,800,000 | -1,400,000 | -800,000 | -600,000 | -400,000 | -300,000 | -300,000 |
| Taxable income as at 31 December N | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 200,000 |
Conclusion
This reform is an effective fiscal instrument for supporting the resilience and competitiveness of Swiss companies. By extending the loss carry-forward period, Switzerland is enhancing its fiscal attractiveness and offering companies an additional tool for managing unfavourable economic cycles.
Our teams are closely monitoring the practical implementation of this reform and will keep you informed of developments.
Article written by Nathalie Pellanda Gaud, Jean Gafan and Simana Muggler
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