02 December 2025

Accepted: New law in the canton of Zug on location development (GSE)

  • Articles
  • Tax
  • Governance / ESG
  • Structuring / Relocation
  • Taxes / Duties

On November 30, 2025, the voters of Zug approved the law on location development (“GSE”). Below you will find an overview of the legal framework conditions that are ex-pected to come into force on January 1, 2026.

  • Dr. Samuel Bussmann

    Tax & Legal Partner

  • Hannah Dobringer

    Junior Tax Consultant

  • Christina Stocker

    Senior Tax Advisor

Background

Due to the OECD minimum tax (top-up tax) introduced in Switzerland, many multinational companies have had to bear a higher tax burden since 2024. Instead of the previous 12% corporate tax burden, companies based in the canton of Zug and subject to the minimum tax are now subject to a corporate income tax burden of 15%. This is expected to result in additional net revenue of CHF 200 million per year for the canton of Zug. In order to remain economically attractive to companies based in the canton of Zug and affected by the minimum tax, the canton of Zug has responded accordingly and determined where the expected additional revenue should go. Three areas were defined: social affairs, infrastructure and innovative projects, and subsidies to companies.

Subsidies to companies are regulated by the Location Development Act, which was approved by the Zug electorate on November 30, 2025. The main features of the Act are explained below.

Legal provisions in detail[1]

Financial resources:

  • From 2026 to 2028, a maximum of CHF 150 million will be available annually as subsidies to companies.
  • From 2029 onwards, the cantonal government will submit the maximum amount available annually to the cantonal parliament for approval.
  • Half of the net additional tax revenue from the top-up tax of the penultimate year is to be used for subsidies to companies.

CHF 150 million per year in the first three years represents an absolute upper limit for the funds available. If more applications are received than the total amount of funds available, the contributions shall be reduced proportionally.

Basic principles:

  • Companies based or operating in the canton of Zug are eligible. Individuals who are self-employed and have a personal or economic connection to the canton are treated as equivalent to companies.
  • Taking into account international developments and the national and international competitive situation, the cantonal government determines the purposes, activities, and investments of companies for which subsidies are granted.
  • Subsidies are paid as direct payments or tax credits. This is determined by the cantonal government.
  • The focus will be on the following activities[2]:
  • Impact-oriented sustainability promotion
  • Support will be provided for the reduction of greenhouse gas emissions generated during the manufacturing and further use of purchased goods and services.

Examples:

  • Raw material traders purchasing raw materials from producers with lower-emission facilities
  • Industrial companies purchasing components manufactured in a climate-friendly manner
  • Support of innovation
    • Basic research
    • Applied industrial research
    • Experimental development
    • If in line international rules and guidelines: successful companies with income from patents, software, trademark rights, or other intangible rights

Promotion instruments and type of promotion:

The State Council may provide for impact-oriented as well as income- or expenditure-based promotion in the area of “sustainability.” In the area of “innovation,” both revenue-based and expenditure-based funding may be provided.

Procedural provisions:

  • Contributions are paid upon application.
  • The cantonal government determines the responsibilities, deadlines, obligations, and rights of the applicant company with regard to the allocation of contributions.
  • An objection to a decision by the executive authority may filed in writing within 20 days.
  • Approved funding contributions are paid directly to the applicant company. The cantonal government may stipulate in the ordinance that the funding contributions are not paid out directly, but are credited against future tax claims in the form of tax credits.
  • Benefits already granted in the area of innovation must be repaid if the subsidized activity is relocated abroad within three years of the subsidy being granted.
  • The law will come into force on the date set by the cantonal government, which is expected to be January 1, 2026. It will cease to apply as soon as the federal government no longer levies a supplementary tax.
  • The Zug Cantonal Council will also draw up an implementation ordinance taking into account the current international rules and guidelines.

Do you have any questions about the new Location Promotion Act? Please contact us. We will be happy to assist you.

[1] Law available at: https://zg.ch/de/staat-politik/wahlen-und-abstimmungen/abstimmungen
[2] According to the explanatory notes for the referendum in the canton of Zug on November 30, 2025, Law on Location Development (GSE), page 7/8.

 

Click here to learn more about our expertise:
Back