On 27 November 2024, the Federal Council adopted the proposal to extend the loss carryforward period from seven to ten years.
The current limitation of loss carryforward to seven fiscal years leads to over-taxation if not all losses can be offset against profits within this period. The planned extension to a ten-year period aims to reduce the risk of over-taxation. This measure would allow newly established companies a longer start-up phase or give existing companies more time to recover after incurring significant losses. This tax relief leaves companies with more funds for investment, growth and operational activities, thereby enhancing their survival and competitiveness.
The proposed extension received broad approval from political parties, organizations and associations during the consultation process. However, two-thirds of the cantons reject the proposal, partly on the grounds that effective tax measures for viable companies that are worth restructuring already exist under current law. Furthermore, the Confederation, the cantons and the municipalities would suffer a loss of revenue, which cannot be quantified due to a lack of sufficient statistical data.
By comparison, numerous European countries have an unlimited loss carryforward period, although typically subject to a quantitative limit in order to protect the public fiscal interest.
The Federal Council supports the proposal to extend the loss carryforward period to ten years in principle. However, given the federal government’s strained financial situation, it refrains from recommending parliamentary approval of the proposal.