Ticino's cantonal taxation and the rates in Lugano

The reform of 2018 and the adaptation to TRAF

Ticino began to prepare for the end of the privileged regimes before the federal reform was complete. A cantonal fiscal and social reform, approved by the cantonal electorate on 29 April 2018, combined relief for companies with social measures financed by employers. On the fiscal side it introduced a partial credit of 10 per cent of the profit tax against the capital tax. Companies whose assets consist predominantly of qualifying participations received a further reduction. It raised the taxable portion of dividends from qualifying participations held by individuals to 70 per cent. On the social side the employers were to finance a birth and adoption allowance of CHF 3,000 and contributions to the costs of childcare.¹ The combination of tax relief with social measures anticipated the logic of TRAF, which linked the corporate reform to the financing of old-age insurance.

After the federal vote of 19 May 2019, the Council of State proposed the adaptation of the cantonal tax law to TRAF. The message of 10 July 2019 set out a timetable in three steps for the cantonal profit tax rate: 9 per cent in 2019, 8 per cent from 2020 to 2024 and 5.5 per cent from 2025. The canton adopted the federal instruments at their maximum levels. It provided for a patent box relief of 90 per cent, an additional research and development deduction of 50 per cent and an overall limitation of relief at 70 per cent. It granted capital tax relief for patents but rejected it for participations and intra-group loans. The credit of the profit tax against the capital tax was to rise from 10 to 16 per cent. The cantonal tax coefficient applied to the cantonal tax was to fall from 100 per cent in 2019 to 98 per cent from 2020 and, subject to a later parliamentary decision, to 96 per cent from 2025.²

The delayed reduction and the rankings

The gradual approach meant that Ticino remained among the more expensive cantons for companies during the first five years after TRAF. A comparison based on the KPMG data for 2021 placed Ticino's effective profit tax rate at 19.2 per cent, twenty-fourth among the twenty-six cantons, down from 22.73 per cent in 2013.³ A Chamber of Commerce publication of February 2023 observed that even after the reduction to 5.5 per cent the canton would rank only around twentieth, behind Zug, Nidwalden and Lucerne with rates of about 12 per cent.⁴ The criticism recurred in the Ticinese economic debate of these years. Trading houses and their advisers compared Lugano directly with Zug and Geneva, where the effective rates had fallen to between 12 and 14 per cent in 2020.

The final step took effect on 1 January 2025. The KPMG Swiss Tax Report 2025 recorded for Ticino a reduction of the effective profit tax rate in the cantonal capital by 3.11 percentage points to 16.05 per cent. No other canton reduced its rate as much in that year. The Swiss average fell from 14.6 to 14.4 per cent. Zug remained the lowest canton at 11.85 per cent and Bern the highest at 20.54 per cent, with Zurich at 19.61 per cent.⁵ Geneva, which had reduced its rate to about 14 per cent in 2020, raised it to 14.7 per cent in 2025 in connection with the minimum tax. Its reasoning, which applies to every canton, was that any additional tax collected under the ordinary cantonal law stays entirely with the canton, while a quarter of the federal top-up tax goes to the Confederation.⁶

Notes

1. Repubblica e Cantone Ticino, Votazione cantonale del 29 aprile 2018 , explanatory booklet C, "Riforma cantonale fiscale e sociale: misure fiscali", https://www4.ti.ch/fileadmin/GENERALE/DIRITTIPOLITICI/votazioni/pdf/2018/29-04-2018_Opuscolo-C.pdf. ↩
2. Consiglio di Stato del Cantone Ticino, "Adeguamento della Legge tributaria cantonale alla Legge federale concernente la riforma fiscale e il finanziamento dell'AVS (RFFA) – Riforma fiscale cantonale", press kit of 10 July 2019, https://www3.ti.ch/CAN/cartellastampa/pdf-cartella-stampa-244279585512.pdf. ↩
3. Generoso Chiaradonna, "Fiscalità, le aliquote ticinesi scendono ma si marcia sul posto", laRegione, 13 January 2022, https://www.laregione.ch/cantone/ticino/1559089/servizi. ↩
4. "Fiscalità: numeri e fatti", laRegione, 28 February 2023 (publication of the Camera di commercio del Cantone Ticino), https://www.laregione.ch/temablog/-publiredazionale/1648013/servizi. ↩
5. SWI swissinfo.ch, "Swiss corporate tax rates edge down slightly", 21 May 2025, https://www.swissinfo.ch/eng/various/swiss-corporate-tax-rates-edge-down-slightly/89374335, reporting the KPMG Swiss Tax Report 2025. ↩
6. KPMG Switzerland, "Corporate tax rates decline in Switzerland – global minimum tax and US tariffs top agenda", press release, 20 May 2025, https://kpmg.com/ch/en/media/press-releases/2025/05/clarity-swiss-taxes.html. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of August 2025.