On 19 December 2025, the Council of States, acting as the second chamber, adopted a significant amendment regarding the offsetting of tax loss carryforwards: the period during which tax losses may be carried forward will be extended from seven to ten years as of 2028. This amendment also applies to losses incurred by foreign permanent establishments of Swiss companies.

The extension applies both to direct federal tax and to cantonal and communal taxes, thereby ensuring uniform tax treatment at all levels. 

Scope of application

The new loss carryforward period applies to losses incurred as from the 2020 tax period, in particular those arising in the financial years affected by the COVID-19 crisis. Losses incurred in earlier periods remain subject to the current seven-year limitation.

Next procedural step

The law was published in the Federal Gazette on 7 January 2026, triggering the optional referendum period of 100 days, which runs until 17 April 2026. Provided that no referendum is called, the entry into force is scheduled for 1 January 2028, subject to formal confirmation by the Federal Council.

Our analysis

The extension of the loss carryforward period constitutes a pragmatic and welcome development. It is particularly beneficial for start-ups, which typically incur losses during their first five years of activity. In many cases, start-ups are insufficiently profitable in the subsequent one to two years to make effective use of loss carryforwards. The new rules also benefit companies with long economic cycles or those that recover only gradually.

It should also be noted that several EU countries already allow an unlimited carryforward of tax losses. The Swiss system therefore remains conservative in comparison, as 14 out of 28 EU Member States do not impose any time limitation. Nevertheless, the extension from seven to ten years represents a clear step in the right direction.

Finally, it should be recalled that Swiss tax law still does not provide for a loss carryback, as for example in Germany (so-called loss carryback, i.e. the offsetting of current losses against profits from previous financial years). The Swiss system recognises exclusively the loss carryforward principle.

Overall, this development appears to be a successful conclusion to the parliamentary winter session and a positive development for Switzerland as a business location.