International tax competition and competition between business locations have changed fundamentally. Switzerland is coming under increasing pressure as key instruments of its existing location policy have lost effectiveness. A new legal opinion by Prof. Dr Robert J. Danon and Prof. Dr Pascal Hinny shows how Switzerland can restore its tax attractiveness by making use of the new international framework and strengthening tax incentives for research, development and innovation in a targeted manner.
Global minimum taxation has fundamentally changed international tax competition. Traditional corporate income tax advantages have become less important. As these advantages have traditionally played a particularly important role in Switzerland’s attractiveness as a business location, this development is having a significant impact on its competitiveness. At the same time, the OECD opened up new room for manoeuvre for substance-based tax incentives in early 2026. International competition for research, innovation and investment is therefore increasingly shifting towards the design of attractive instruments of this kind.
Existing instruments are no longer sufficient
This development is particularly significant for Switzerland, as research, development and innovation are among the key strengths of Switzerland as a business location. However, the existing tax instruments no longer adequately reflect the changed international framework. The R&D super-deduction introduced as part of the Tax Reform and OASI Financing is restrictive by international standards and does not make full use of the new room for manoeuvre. At the same time, the patent box has become significantly less attractive, particularly for companies subject to the global minimum tax.
While numerous countries are expanding their support for R&D&I and adapting their location policies to the new framework, Switzerland is losing competitiveness. Inaction is therefore not an option. To remain an attractive location for research, innovation and business, Switzerland must further develop its instruments in a targeted manner.
A reform package for a competitive research and innovation location
The legal opinion recommends broadening the scope of the R&D super-deduction and making it more attractive. This should be complemented by additional OECD-compliant instruments to promote research and innovation. In particular, Switzerland should make full use of the options permitted internationally in the area of Qualified Refundable Tax Credits and remove existing disincentives, including those arising from the National Fiscal Equalization system.
The R&D&I super-deduction should become mandatory for the cantons rather than optional, while the less effective patent box should become optional. The introduction of an R&D&I super-deduction for federal direct tax should also be examined as an additional instrument.
Safeguarding Switzerland’s innovation location and prosperity
The reforms should aim to retain existing research and development activities in Switzerland while attracting new investment and intellectual property. This will strengthen Switzerland’s innovative capacity, support highly skilled jobs and safeguard value creation and tax revenues over the long term. Competitive support for R&D&I is therefore essential to Switzerland’s prosperity.
Read the full legal opinion in German or French
The Swiss R&D Super-Deduction in Light of Recent International Developments: Analysis and Proposals for Reform
Prof. Dr Robert J. Danon and Prof. Dr Pascal Hinny
