The Swiss R&D tax incentive schemes, focusing on additional R&D tax deductions, are designed to recognize and reward companies investing in R&D projects. As of 1 January 2020, qualifying expenditure attracts an additional R&D tax deduction if the R&D is conducted in Switzerland. The level of the additional R&D tax deduction varies from canton to canton but could provide up to an additional 50% deduction against the claimant’s taxable income on qualifying R&D expense calculated as follows:
- qualifying personnel expenses consider an additional lift-up of 35% (to cover other R&D costs), and
- third-party costs (contract R&D with a related or third party) may be eligible based on 80% of invoiced costs.
Scientific research and science-based innovation activities across any sector may qualify for the additional R&D tax deduction. In order to qualify, R&D activity generally needs to meet the respective criteria (i.e. novelty, creativity, uncertainty, systematic approach and transferability and/or reproducibility) of the OECD Frascati Manual.