Patents and R&D
The patent box covers not only patents, but also further similar rights in Switzerland and abroad
In connection with the patent box, tax aspects must be assessed according to whether the focus is on
- industrial property rights, in particular patents, or
- research and development expenses with a view to tax matters.
Regardless of the term "patent box", not only patents, but also so-called "similar rights" may benefit from the advantages of the patent box.
The wording of the law1) includes the following list (art. 24a TRAF):
Patents and similar rights: Definitions
(1) Patents are:
a. patents pursuant to the European Patent Convention of 5 October 1973 as revised on 29 November 2000 with extension to Switzerland;
b. patents pursuant to the Patent Act of 25 June 1954;
c. foreign patents corresponding to the patents listed under a or b.
(2) Similar rights are:
a. supplementary protection certificates pursuant to the Patent Act of 25 June 1954, incl. their renewal;
b. topographies protected under the Topographies Act of 9 October 1992;
c. plant varieties protected under the Plant Variety Protection Act of 20 March 1975;
d. documents protected under the Therapeutic Products Act of 15 December 2000;
e. reports for which report protection exisists on the basis of the provisions for implementation of the Agriculture Act of 29 April 1998;
f. foreign rights corresponding to the rights lised under a-e.
Given this explicit wording of the law, the patent box exerts its effects on industrial property rights, too. This includes, for example, also registered utility models or other relevant industrial property rights, irrespective of their designation.
However, it should be noted that only "patents", and not mere patent applications that have not yet been granted, can be taken into consideration. Trademarks, designs and further such rights are not covered by the patent box. It is, therefore, in the interest of such companies to opt for accelerated patent procedures, namely in countries where licensing income is generated. Substantial regional differences must be taken into account in this regard. Our patent attorneys can offer guidance in this context.
For tax benefits, see here.
By contrast, the research and development costs are governed by cantonal law and regulated in art. 25a TRAF:
Additional deduction for research and development expenses
(1) Upon request, the cantons may allow R&D expenses incurred directly by the taxpayer or indirectly by third parties in Switzerland to be deducted in an amount of up to 50% over and above the commercially justified R&D expenses.
(2) Research and development shall mean scientific research and science-based innovation in accordance with article 2 of the Federal Act on the Promotion of Reseach and Innovation of 14 December 2012.
(3) Increased dedcutions are admissible for:
a. staff costs directly attributable to research and development, plus a surcharge of 35% of said staff costs up to an amount equal to the total costs of the taxpayer;
b. 80% of the research and development costs invoiced by third parties.
(4) If the principal is already entitled to a deduction, the agent is no longer entitled to any such reduction.
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