Obwalden Corporate Income Tax
Last updated: 13 Dec 2025
Obwalden Corporate Income Tax — Profit Tax Rules
How corporate income tax works in the Canton of Obwalden: who is subject to profit tax, how the tax base is determined from accounting profit, how cantonal, communal and federal components interact, and what to know about participation relief, Obwalden’s STAF instruments and loss carryforwards.
Scope & Taxpayers
- Resident companies. Companies with statutory seat or effective place of management in Obwalden are subject to unlimited tax liability on their worldwide income, subject to relief for foreign permanent establishments and immovable property under double tax treaties and intercantonal rules.
- Nonresident entities. Nonresident companies are limited tax liable in Obwalden if they have local business operations, a permanent establishment, or Obwalden–situs real estate. Only the profits attributable to the Obwalden nexus are taxed.
- Juristic persons only. The corporate income tax described here applies to juristische Personen (AG, GmbH, cooperative, certain foundations and associations). Partnerships and sole proprietors are taxed at shareholder/owner level under personal income tax.
- Tax period. The profit tax period for juristic persons generally follows the financial year. A change of year-end or an extended first business year must be coordinated with the Obwalden tax office.
Tax Base: From Accounting Profit to Taxable Profit
Obwalden corporate income tax is levied on the company’s taxable profit, determined by starting from statutory financial statements (usually Swiss GAAP / OR, sometimes Swiss GAAP FER or IFRS for groups) and then making tax adjustments.
| Step | Description | Typical adjustments |
|---|---|---|
| 1. Accounting profit | Profit after tax per statutory financial statements for the relevant business year. | Profit as approved by the shareholders’ meeting, before appropriation of retained earnings. |
| 2. Add-backs | Non-deductible or partially deductible expenses are added back to profit. | Hidden profit distributions; excessive interest or royalties to related parties; non-business expenses; penalties; corporate income tax itself; provisions and value adjustments that are not commercially justified. |
| 3. Deductions | Items that are tax deductible but not expensed, or expensed differently, are deducted. | Tax-allowed depreciation exceeding accounting depreciation (within limits); specific provisions; participation relief; and Obwalden STAF instruments such as patent box and 50% R&D super-deduction where applicable. |
| 4. Allocation & exemptions | Profits allocable to other cantons or foreign permanent establishments are exempt in Obwalden under intercantonal and treaty rules. | Profit/loss attribution keys; separate determination of foreign PE income; treaty exemptions or credit methods. |
| 5. Taxable profit | Result after adjustments, before loss carryforwards and special reliefs. | Loss carryforwards of up to 7 years can be offset against current-year taxable profit (subject to general Swiss rules). |
The Obwalden tax book and cantonal practice notes provide detailed guidance on depreciation, provisions, hidden equity, participation relief and other adjustments relevant for the tax base. In practice, a clear reconciliation from accounting profit to taxable profit is expected as part of the Obwalden corporate tax return.
Rates & Effective Burden
Cantonal & communal profit tax
Obwalden is known for a very low corporate profit tax burden in an international comparison. For capital companies and cooperatives, the combined cantonal and communal profit tax is set so that the overall tax burden (including federal tax) for typical companies is around 12.7% on profit before tax.
Advisory and location-marketing sources report an effective corporate earnings tax burden of approximately:
- 12.74% combined (federal, cantonal and communal), which corresponds to roughly
- 6.1% cantonal/communal profit tax and 8.5% federal tax on profit after tax (7.8% before tax), when translated into pre-tax terms.
The effective rate does not differ dramatically between Obwalden municipalities; rather, the whole canton positions itself as a low-tax location for holding, trading and service companies.
For up-to-date Obwalden profit tax burdens and municipality-specific factors, see the Rates page and the official Obwalden tax information for juristic persons.
Federal corporate income tax
In addition to cantonal/communal profit tax, companies pay Swiss direct federal corporate income tax at a flat rate of 8.5% on profit after tax. Because federal tax itself is deductible, this corresponds to an effective rate of about 7.8% on profit before tax.
The combined effective corporate income tax rate for an Obwalden company is therefore the sum of:
- Cantonal/communal profit tax (calibrated to remain very low overall); and
- Direct federal corporate income tax.
The Obwalden tax calculator on this hub allows you to model combined cantonal, communal and federal profit tax for a given level of taxable profit.
Participation Relief & STAF Measures
Obwalden follows federal rules for participation relief and has implemented the STAF (Swiss corporate tax reform and AHV financing) toolkit in full, including a generous patent box and the maximum 50% R&D super-deduction, subject to an overall relief cap.
| Mechanism | Overview | Typical planning aspects |
|---|---|---|
| Participation relief | Qualifying dividends and capital gains from shareholdings in subsidiaries are effectively subject to reduced taxation via a deduction calculated on the basis of net participation income relative to total profit (federal and Obwalden rules). | Minimum shareholding thresholds (e.g. 10% or CHF 1m market value); holding period; treatment of write-downs and liquidation proceeds; interaction with foreign withholding tax, treaty relief and Obwalden allocation rules. |
| Patent box | Income from qualifying intellectual property (in particular patents and comparable rights) can benefit from a reduced Obwalden profit tax base under patent box rules, subject to OECD nexus requirements and tracking of R&D expenditure. Obwalden has introduced the maximum relief of 90% on qualifying net patent income. | Segregation of IP income and expenses; clear nexus documentation; managing entry costs into the box; coordination of Obwalden patent box calculations with group transfer pricing; interaction with global minimum tax (Pillar 2). |
| R&D super-deduction | Obwalden grants an additional deduction of up to 50% on certain qualifying R&D expenditure, on top of ordinary deductibility. This uses the upper limit permitted by Swiss federal law for the F&E-Zusatzabzug. | Delineating qualifying R&D vs. routine engineering or maintenance; allocation between in-house R&D and Swiss third-party research; aligning Obwalden tax treatment with internal cost accounting and transfer pricing; documenting qualifying projects, staff and cost bases. |
| Notional interest deduction (NID) | Obwalden has not introduced a cantonal notional interest deduction on equity. The canton relies on the combination of a low ordinary profit tax rate, patent box and R&D super-deduction instead. | Financing optimisation focuses on traditional debt/equity structuring, thin-capitalisation limits and the interaction with participation relief and the patent box rather than NID planning. |
As in other cantons, the combined relief from participation deduction, patent box and R&D super-deduction is subject to a maximum relief cap at cantonal level. In Obwalden, the Entlastungsbegrenzung is set at 70%: at least 30% of the underlying profit must remain taxable at ordinary rates. For material structures, modelling and advance tax rulings are standard practice.
Losses, Groups & Permanent Establishments
- Loss carryforwards. Tax losses can generally be carried forward for up to 7 years and offset against future taxable profits in Obwalden, within the standard Swiss framework. Loss carryback is not available.
- Group situation. Switzerland has no fiscal unity or tax consolidation for ordinary corporate income tax. Each Obwalden legal entity files its own return; group effects are managed via financing, transfer pricing, participation relief, and use of patent box and R&D deduction where relevant.
- Intercantonal allocation. Where a company has operations, real estate or permanent establishments in several cantons, profit and capital are allocated using generally accepted keys (e.g. payroll, assets, turnover) based on Obwalden practice and federal jurisprudence.
- Foreign permanent establishments. Under many treaties, profits attributable to foreign permanent establishments are exempt in Switzerland with progression. Accurate attribution of profits and capital is essential to support the exemption at Obwalden and federal level.
- Restructurings. Mergers, de-mergers, contributions in kind and migrations of seat can be tax neutral if Swiss conditions are met (continuity of business, carryover of hidden reserves, adequate consideration, etc.). Rulings are frequently used to secure treatment for Obwalden and federal purposes, especially where several cantons or countries are involved.
Interaction with Capital Tax
Corporate income tax and capital tax are also relevant for companies in Obwalden, but the capital tax burden is exceptionally low in a Swiss comparison.
- Since 1 January 2020, Obwalden has applied a uniform capital tax rate of 0.001% of taxable equity for all companies, regardless of legal form or municipality. This is one of the lowest capital tax rates in Switzerland.
- At such a low rate, capital tax usually plays only a minor role in the overall corporate tax burden, especially for profitable operating companies. For equity-rich holdings or finance companies, however, the combination of very low capital tax and low profit tax is particularly attractive.
- Higher equity increases capital tax slightly, but may reduce thin-cap risks and support participation and IP structures that benefit from patent box and participation relief.
- For details on the 0.001% capital tax, any minimum tax rules and examples of combined profit and capital tax burdens, see the Obwalden capital tax page and the combined tax calculator.
Compliance Snapshot
This guide focuses on the substantive rules for corporate income tax in Obwalden. For procedural aspects — who files, which forms to use and which deadlines apply — see the dedicated Forms & deadlines page.
| Area | Key points |
|---|---|
| Filing | Annual corporate tax return for juristic persons, typically using the electronic tax return tools provided by the Obwalden tax administration. Profit tax and capital tax are assessed together. Electronic filing is standard; signed confirmations may still be required. |
| Deadline | Ordinarily around six months after year-end; extensions are commonly available on request (via Obwalden’s online or written extension procedure; beyond that by special request or via advisers). |
| Documentation | Signed financial statements; profit-to-tax reconciliation; schedules for participation relief, patent box and R&D deduction; transfer pricing documentation where relevant; intercantonal and international allocation workings. |
| Assessments & objections | Combined assessments for cantonal, communal and federal tax; objection rights and deadlines set out in the assessment notice. For complex cases, structured responses and, where appropriate, follow-up discussions with the Obwalden tax administration are common. |
FAQs
How high is the corporate income tax rate in Obwalden?
Obwalden is among the lowest-tax cantons for companies. For typical capital companies, the combined effective tax burden on earnings (cantonal, communal and federal, before church tax) is around 12.7% on profit before tax. This reflects a cantonal/communal component of roughly 6.1% and federal corporate tax of 8.5% on profit after tax (about 7.8% on profit before tax). The exact burden depends on year, communal factors and use of reliefs; see the Rates page and the Obwalden company tax calculator for concrete examples.
What STAF instruments does Obwalden offer for companies?
Obwalden has implemented the full STAF toolkit: a patent box with up to 90% relief on qualifying net patent income, a 50% R&D super-deduction on certain qualifying R&D expenditure, and the standard participation relief. All reliefs are subject to an overall relief cap of 70%, so at least 30% of the underlying profit remains taxable at ordinary rates. There is no notional interest deduction on equity.
How does capital tax work for companies in Obwalden?
Obwalden levies a uniform capital tax rate of 0.001% of taxable equity for all companies, one of the lowest capital tax rates in Switzerland. There is no separate cantonal vs. communal scale; the ultra-low rate applies across the canton. For most profitable companies, profit tax dominates the overall burden, while capital tax remains a negligible component.
Are dividends from subsidiaries fully taxed in Obwalden?
Qualifying participations can benefit from participation relief at federal and cantonal level. This mechanism reduces the effective tax burden on net participation income (dividends and certain capital gains) based on a formula comparing participation income to total profit. Where the conditions are met, the effective Obwalden and federal tax on qualifying dividends can be reduced significantly, often to a low single-digit effective rate.
How are losses treated for Obwalden corporate income tax?
Tax losses can generally be carried forward for up to seven years and offset against future taxable profits. There is no loss carryback. In restructurings or changes of ownership, special Swiss rules may limit the use of losses; advance tax rulings are often used where material loss carryforwards are involved and Obwalden is an important canton in the group structure.
Can I get a ruling on a planned structure or transaction in Obwalden?
Yes. Obwalden, like other Swiss cantons, offers advance tax rulings. These are commonly used for holding and financing structures, IP arrangements (including patent box), application of the R&D deduction, reorganisations and relocations. A well-prepared ruling request can provide valuable certainty on the corporate income tax treatment and its interaction with capital tax and federal tax.
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