Tax holidays and conditions for the granting of a tax holiday
At the start of a new company or start of a new business in an existing company, it is possible for the company to apply for the granting of a temporary tax holiday. It may also there be cases where a significant development of an existing business may be sufficient to obtain a temporary tax holiday.
There is two different level of tax holiday, the tax holiday at cantonal and communal level and the tax holiday at federal level.
Cantonal and communal tax holiday
The application has to be submitted to the cantonal finance department. The tax holiday is temporary, i.e. it is limited to a certain period of time (generally 5 to 10 years). It is restricted to the cantonal and communal direct taxes, i.e. profit tax and capital tax. Depending on the importance of the project, the tax holiday can be a full or only partial tax holiday.
The main conditions for the granting of the tax holiday are:
- The importance of the project for the canton
- Number of jobs created
- Investments realized in the canton
The main criterion is the number of jobs created. Usually, no tax holiday is granted with less than 10 jobs created.
Federal tax holiday
The application has to be submitted to the federal economic department. The tax holiday is currently granted based on the federal law on regional politic. It applies only to the federal direct tax which the tax rate is (8.5%) and is restricted to the regions defined by the federal ordinance. In the French speaking regions, there are only a limited number of regions which still can profit from the federal tax holiday. Some regions (Yverdon and Jura notably) can still profit from a partial federal tax holiday (50%) for any new project starting before 2010.
The request, should it be cantonal of federal, have to be submitted in written together with a complete file that presents the project, the investments, the interest for the canton, respectively Switzerland and a business plan which sometime has to be well detailed. The ability to present a file of a great quality is determining in the chances of obtaining a tax holiday. Our experience in that field and our valuable contacts will ensure you to get the most out of your project.