Patent box and R&D tax relief: Opportunites in Switzerland

24 May 2019

New rules under the Swiss tax reform law

Switzerland has always been a particularly interesting country in terms of tax breaks, both for companies already located in Switzerland and for companies thinking of creating a startup or a spin-off. But now things are even better: on 19 May 2019, Switzerland voted on the federal law on tax reform and financing of pensions. All cantons and 66.4% of the electorate voted in favour, with a turnout of 43.2%.

Of the issues dealt with by this federal law, two are of great importance for companies that drive innovation: tax deductions for R&D, and the measure is known as “Patent Box”. These are some of the most important relief schemes that are considered by the OECD to foster economic growth and improve the fiscal attractiveness of innovation-related activities in the country that adopts them, in this case, Switzerland.

It all makes the already considerable Swiss propensity for innovation even keener, as it now makes even more sense to innovate in this Alpine country. Just two figures are all you need to understand why this is: profits from intangible rights that qualify for Patent Box relief are tax-deductible up to a maximum of 90%, while R&D costs can be deducted up to a maximum of 150% of the costs sustained. Each Swiss canton is free to set the percentages for its territory within these parameters, and the canton of Ticino has already signalled that it intends to apply the maximum allowed values. This would confirm Ticino's already the well-established policy of fiscal attractiveness, demonstrated for example in its Economic Innovation Law which made available (and still does) aid for companies to enhance their competitiveness and capacity for innovation.

But applying for the relief schemes for Patent Box and deductions for R&D costs entails preliminary work and professional follow-up, which only a specialist firm can provide. With its presence in Lugano, Switzerland for almost a decade, Studio Modiano & Partners SA, part of the Modiano & Partners group, is one of the leading European firms specializing in intellectual property law.

Some examples of the activities that can qualify for the new tax breaks is invention harvesting (identifying and collecting company inventions), support for managing the company's existing portfolio of IP rights, identifying and quantifying the costs sustained for innovation, or analyzing a company's existing and future contracts in order to simplify the accounting for tax relief and, if applicable, to charge any royalties deriving from patent licenses under the available tax reduction schemes.

Modiano & Partners can help companies optimize their taxes, drawing on expert accountants for the necessary technical operations to obtain the deductions afforded by the Patent Box scheme or associated with R&D activities. All this is made possible by using only consultants who are selected on the basis of their academic qualifications, their technical expertise and their knowledge of the law, in order to ensure clients can always rely on high quality, highly professional assistance.


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