Ticino's economic promotion and its conditions

The Legge per l'innovazione economica

Ticino does not simply wait for Italian businesses to arrive. Since the 1990s the canton has pursued an active economic policy, whose current instrument is the Law on Economic Innovation (Legge per l'innovazione economica, LInn) of 14 December 2015, implemented by a regulation of 2016 (RLInn).¹ The law replaced an older system that had subsidized investment in general and was criticized for supporting businesses that would have come anyway. Its declared purpose is to promote innovation, research and the creation of qualified jobs. The regulation distinguishes several types of support: contributions to immaterial investments such as research and development, contributions to material investments in machinery and equipment, support for internationalization, prizes for innovative entrepreneurial initiatives and relief from cantonal and communal taxes.² The Office for Economic Development (Ufficio per lo sviluppo economico, USE) within the Department of Finance and Economy administers the law, assisted by an advisory commission of experts that assesses applications.

The law reflects a political choice that runs through Ticino's dealings with Italian businesses. The canton wants companies that bring capital, know-how and jobs for residents. It does not want companies that use Ticino as an address for Italian business, pay wages below the local level or compete with Ticinese firms by importing cheap labour. Every instrument of the LInn is therefore tied to conditions about jobs, investment and the content of the activity. The cantonal administration examines business plans before it grants support. For an Italian entrepreneur this means that promotional support is available only to a genuine Ticinese business, which is the same test that Italian tax law will later apply.

Tax relief for new companies

The most valuable instrument for a relocating company is the temporary tax relief under Article 11 LInn. According to the directive of the Office for Economic Development of 2 January 2024, the canton may grant relief on cantonal profit and capital taxes "as a rule for a maximum of 5 years, and up to complete exemption". In exceptional cases the period may extend to ten years.³ The directive sets demanding conditions. Relief is available to new companies that have been entered in the cantonal register of taxpayers for less than one year, or to existing companies that undergo a substantial reorientation of their business. The company must create at least 15 jobs within three years and invest at least CHF 1 million while satisfying requirements of sustainability defined case by case. The total relief may not exceed CHF 1 million over the whole period.⁴ The regulation adds that the benefit must be repaid if the company leaves the canton within five years.⁵ The procedure has four steps. The promoters meet the Office together with an expert of the economic innovation commission, present a business plan with a self-certification, the commission issues an opinion and the Office formalizes the decision.⁶ The relief covers only cantonal and communal taxes. Federal profit tax at 8.5 per cent remains due. The federal regional policy allows relief from direct federal tax only in communes that the Federal Department of Economic Affairs, Education and Research designates among the structurally weakest regions of the country, and these areas may together cover at most ten per cent of the Swiss population.⁷ Since the reform of 2020 the canton also offers the instruments that the Federal Act on Tax Reform and AHV Financing (TRAF) introduced for all cantons, among them a patent box with relief of up to 90 per cent on qualifying profits and an additional deduction for research and development. Chapter F.II describes them in the context of trading companies.⁸

Notes

1. Regolamento sulla legge per l'innovazione economica (RLInn), text at LexFind, https://www.lexfind.ch/tolv/119793/it, implementing the Legge per l'innovazione economica (LInn) of 14 December 2015. ↩
2. RLInn (above), Art. 1 (competences of the Council of State) and Art. 11 (cantonal tax relief: maximum exemption of CHF 1 million; repayment if the company leaves within five years). The list of support measures follows the structure of the regulation. ↩
3. Repubblica e Cantone Ticino, Divisione dell'economia, Ufficio per lo sviluppo economico, Direttiva concernente le agevolazioni fiscali (LInn), 2 January 2024, https://m4.ti.ch/fileadmin/DFE/DE-USE/LINN/agevolazioni_fiscali/USE_DIRETTIVA_agevolazioni_fiscali.pdf ("Il Cantone può concedere agevolazioni per le imposte cantonali sull'utile e sul capitale, di regola per un massimo di 5 anni, e fino all'esonero completo"). ↩
4. USE directive (above): new companies registered for less than one year or substantial reorientation; at least 15 jobs within three years; investment of at least CHF 1,000,000; ad hoc sustainability requirements; ceiling of CHF 1 million; incompatibility with certain other measures. ↩
5. RLInn (above), Art. 11. ↩
6. USE directive of 2 January 2024 (above). ↩
7. Ordinance of 3 June 2016 on the granting of tax relief under the regional policy, SR 901.022, Art. 3 paras 1 to 3, text at droit-bilingue.ch, https://www.droit-bilingue.ch/de-fr/9/90/901.022-3-6.html ("Diese Anwendungsgebiete dürfen zusammen höchstens zehn Prozent der Schweizer Bevölkerung umfassen"; "Das WBF legt die Gemeinden, die zu den Anwendungsgebieten gehören, nach Anhörung der Kantone fest"). ↩
8. Federal Act on Tax Harmonization (StHA), SR 642.14, Art. 24a and 24b (patent box, relief of 90 per cent in proportion to the nexus quotient) and Art. 25a (additional deduction of at most 50 per cent of research and development costs, at the option of the cantons), text at droit-bilingue.ch, https://www.droit-bilingue.ch/de-fr/6/64/642.14-24b-40.html and https://www.droit-bilingue.ch/de-fr/6/64/642.14-25a-44.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.