Zug approves Location Development Act and Tax Act Revision

• Location Development Act (LDA) and Tax Act Revision approved: Zug voters endorsed the LDA and Tax Act amendment with strong majorities (66.71% and 68.21%).
• Purpose and funding: The LDA leverages CHF 200 million in additional tax revenues to support innovation, R&D and sustainability initiatives through direct payments or tax credits.
• Expected timeline and action: Effective 1 January 2026, applications due by 30 June 2026. Companies should assess eligibility and prepare documentation now.

Executive summary

The Canton of Zug has successfully passed the LDA and a Tax Act amendment. Expected starting 1 January 2026, companies domiciled or operating in Zug can apply for financial support aimed at fostering innovation, research and sustainability. Funding will prioritize projects that advance R&D or significantly reduce greenhouse gas emissions in supply chains. Applications for 2026 must be submitted online by 30 June 2026 based on fiscal year 2024 data. With an annual budget of up to CHF 150 million a year from 2026 to 2028, businesses should begin evaluating eligibility, compiling audited financials and aligning LDA benefits with existing tax relief measures such as the Patent Box and R&D super deduction.

Details

On 30 November 2025, the Location Development Act (LDA) and the amendment to the Tax Act in the Canton of Zug (Tax Act Revision) were successfully approved by the voting population of Zug with 66.71% and 68.21% of the votes (link).

We are pleased to provide you with an overview of key elements of the LDA and recommended next steps.

Entry into force:

The LDA is expected to enter into force on 1 January 2026.

Eligibility:

All companies (legal entities and self-employed persons) domiciled or operating in the Canton of Zug (personal or economic affiliation) are eligible.

Funding areas and assessment criteria:

In principle, companies active in the following areas will be supported:

1. Innovation, research and development
   Subject to national and international frameworks, contributions are expected to be based on:
   • Personnel costs for innovation, research and development, plus an additional contribution for infrastructure costs
   • Income from patents, software, trademarks or other intellectual property rights
2. Impact-oriented sustainability promotion
   Companies will receive contributions if they substantially reduce greenhouse gas emissions in their supply chains. Specifically, this concerns so-called “Scope 3.1” emissions, which arise during the production and subsequent use of purchased goods and services.

The Government Council will define the details.

Forms of support:

The Government Council will determine the form of support with the following basic forms available:

• Direct payments
• Tax credits

Budget:

• 2026 - 2028: Maximum annual funding of CHF 150 million; if applications exceed the annual budget, contributions will be proportionally reduced.
• From 2029 onward: The maximum annual funding will be approved by the Government Council.

Expected timeline:

• Effective date: expected entry into force on 1 January 2026
• Application deadline: until 30 June 2026 (online)
• Reference year for 2026 applications: fiscal year 2024
• First payments: by 31 December 2026

Next steps:

• The details of the measures will be finalized and confirmed by the Government Council in the coming weeks.
• Companies should already assess whether and to what extent they may qualify for contributions and start compiling the necessary documentation.

• It is generally expected that:
  • Claims can only be made based on properly audited annual financial statements.
  • Applicants will be required to provide evidence of qualifying activities, related costs (personnel costs / payroll) and revenues and reductions in greenhouse gas emissions.
• We also recommend reviewing the correlation between new LDA measures and potential tax reliefs, such as the Patent Box and R&D super deduction.