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Lump-sum provisions for major renovations: No longer permitted

Based on the Swiss Federal Supreme Court decision of December 1, 2020 (BGE 2C_1059/2019), lump-sum provisions for major renovations are not permitted.

 

After some delay, the Swiss Federal Tax Administration (“SFTA”) has now instructed the cantons to adapt their tax practices to the court decision. Accordingly, lump-sum provisions will no longer be recognized for legal entities and in the business assets of natural persons from the 2026 tax period (in some cases already from 2025).

The cantons handle the implementation required by the SFTA differently, which is why it is essential to clarify the adjusted tax practice (at the main and, if applicable, secondary tax domicile(s)). Some cantonal examples:

 

  • Lucerne/Schwyz: Lump-sum provisions will no longer be permitted from 2026 onwards; provisions existing at the end of 2025 must be dissolved by December 31, 2030, at the latest.

  • Zug: Lump-sum provisions will no longer be permitted from 2026 onwards. The balance at the end of 2025 will be fixed, and future actual expenses for major renovation work will be charged to the provision account.

The necessary reversal of the provision, e.g. in the cantons of Lucerne and Schwyz, affects net income and results in taxable income.

 

Provisions for individually verifiable costs/risks remain permissible and therefore deductible as business-related expenses. Planned provisions must be carefully and individually documented in future (including specific planning) in order to remain deductible.

We would be happy to review the applicable cantonal practice for you or advise you on the dissolution of existing provisions and any provisions planned for the future. Please note that in the case of intercantonal tax allocation, two or more cantonal practices must be taken into account.

 

If you have any questions about what this could mean for your personal situation, please contact us for individual advice or further information. Remo Merz, certified tax expert remo.merz@fineac.ch.

 

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Remo Merz, 21.01.2026