The blanket formation of provisions for future major renovations or major repairs of real estate will be further constrained for tax purposes.
The Federal Tax Administration has instructed the cantons to eliminate any such remaining practices.
The Federal Supreme Court judgment 2C_1059/2019 of 1 December 2020 appears to be the basis for this.
In the cantons AI, BS, FR, GE, GL, JU, NE, SG, SO, TI and VD a lump-sum creation of provisions for major repairs has generally not been permitted to date.
In those cantons provisions for major repairs are normally accepted only if the corresponding works are already planned.
The conditions to be met differ from canton to canton.
There are some simplifications and interpretive approaches, for example regarding the deadline by which a planned major repair must actually take place for a provision to remain tax-deductible.
As a rule, a provision must be commercially justified and the principle of periodicity must be respected.
For well-maintained properties only short‑term provisions are accepted for tax purposes under certain conditions.
If, however, maintenance has been neglected, longer‑term provisions for major repairs may be permissible, provided the building has not been sufficiently depreciated.
Provisions are tax‑deductible to the extent that neglected maintenance has not been adequately reflected by depreciation and therefore extensive renovation works cannot be capitalized or can only be capitalized in part.
The Swiss Federal Supreme Court does not completely rule out the possibility of forming a flat‑rate provision for major repairs and expresses this in the following passage (BGer, 1 December 2020, 2C_1059/2019, E. 4.2.2.2):
It therefore does not seem out of the question that cantonal practices allowing lump-sum provisions for major repairs may, in certain circumstances, be consistent with Article 29(1)(c) of the Federal Tax Act (SFTA) insofar as the provisions are allocated to individual properties (and do not relate to entire portfolios).
BGer, 1 December 2020, 2C_1059/2019, E. 4.2.2.2
There are also numerous arguments in favor of continuing to permit the annual creation of flat‑rate provisions, provided this does not create significant hidden reserves.
An example of this is the smoothing of expenses (and the related income tax effects) for major repairs that will certainly be carried out at long intervals, for example facade renovations and replacement of heating and elevator systems.
If major repairs and property renovations can be derived from a company’s corporate purpose and actual activities, it can be reasonable to accept provisions based on empirical experience without demanding detailed evidence as proof of the commercial justification (procedural economy).
Major repairs should be charged against the corresponding provision, while value‑enhancing investments must be excluded and capitalized.
The overview below lists cantons that previously permitted the formation of lump-sum provisions for major renovations and provides information on the expected changes (with further links, status January 2026):
| Maximum annual allocation | 0-5% of carrying amount |
| Maximum possible amount | 3% of carrying amount |
| Publication of previous regulation | None |
| Repeal? Effective date? | Yes, 2025 |
| Release of existing provisions? | By 2027 |
| Publication? Possibly planned | Not planned |
| Maximum annual allocation | 0-5% of carrying amount |
| Maximum possible amount | 3% of the official market value |
| Publication of previous regulation | Information sheet on provisions, 6. Grossreparaturen (Major repairs, in German) |
| Repeal? Effective date? | Not yet decided |
| Release of existing provisions? | Not applicable |
| Publication? Possibly planned | Not planned |
| Maximum annual allocation | 1% of the building insurance value |
| Maximum possible amount | 15% of the building insurance value |
| Publication of previous regulation | Rückstellungen für Grossreparaturen (Provisions for major repairs, in German) |
| Repeal? Effective date? | No |
| Release of existing provisions? | Not applicable |
| Publication? Possibly planned | Not applicable |
| Maximum annual allocation | 2% of the building insurance value |
| Maximum possible amount | 16% of the building insurance value |
| Publication of previous regulation | TaxInfo Rückstellungen (Provisions, in German) |
| Repeal? Effective date? | Not planned |
| Release of existing provisions? | Not planned |
| Publication? Possibly planned | Not planned |
Lump-sum provisions are permissible if they are actually planned for the near to medium term.
| Maximum annual allocation | 0-5% of carrying amount |
| Maximum possible amount | 10% of carrying amount |
| Publication of previous regulation | Graubünden Legal Code, 2.4. Grossreparaturen (Major repairs, in German) |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | By 2028 |
| Publication? Possibly planned | Not planned |
| Maximum annual allocation | 1% of carrying amount |
| Maximum possible amount | 5% of carrying amount |
| Publication of previous regulation | 4. Major repairs, practical application until 31 December 2025 (in German) |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | By 2030 |
| Publication | 4. Major repairs, practical application from 1 January 2026 (in German) |
| Maximum annual allocation | 1% of carrying amount |
| Maximum possible amount | 5% of carrying amount |
| Publication of previous regulation | 3.4. Grossreparaturen (Major repairs, in German) |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | Yes, 2030 |
| Publication | Grossreparaturen (Major repairs, in German) |
Lump-sum provisions are permissible if they are actually planned for the near to medium term.
The repeal and release of existing provisions are likely, but not yet final as of January 2026.
| Maximum annual allocation | 1% of the tax value |
| Maximum possible amount | 15% of the tax value |
| Publication of previous regulation | Not applicable |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | Not yet decided |
| Publication | Link to the tax administration |
| Maximum annual allocation | 2% of the tax value |
| Maximum possible amount | 20% of the tax value |
| Publication of previous regulation | Rückstellungen für Grossreparaturen an Liegenschaften 69.1 (Provisions for major repairs to real estate 69.1, in German) |
| Repeal? Effective date? | Not yet decided |
| Release of existing provisions? | Not yet decided |
| Publication? Possibly planned | Not yet decided |
| Maximum annual allocation | 1% of carrying amount |
| Maximum possible amount | 10% of carrying amount |
| Publication of previous regulation | Schwyz Tax Book, Rückstellungen (Provisions, in German) |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | Yes, 2030 |
| Publication | Updates from the tax administration (in German) |
| Maximum annual allocation | 1% of the building insurance value |
| Maximum possible amount | 10% of the building insurance value |
| Publication of previous regulation | 6.Rückstellungen für Grossreparaturen, Erneuerungsfonds (Provisions for major repairs, in German) |
| Repeal? Effective date? | No |
| Release of existing provisions? | Not applicable |
| Publication? Possibly planned | Not applicable |
Either depreciation or lump-sum provisions are permitted.
| Maximum annual allocation | 1% of the building insurance value |
| Maximum possible amount | 10% of the building insurance value |
| Publication of previous regulation | 1.4. Grossreparaturen von Liegenschaften (Major renovations of real estate, in German) |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | By 2028 |
| Publication? Possibly planned | Not yet decided |
| Maximum annual allocation | 0.5% of market value |
| Maximum possible amount | 10% of market value |
| Publication of previous regulation | Rückstellungen für Grossreparaturen an Liegenschaften (Provisions for major repairs to real estate, in German) |
| Repeal? Effective date? | Yes, 2024 |
| Release of existing provisions? | By 2027 |
| Publication | Abschaffung der Praxis von Rückstellungen für grosse Reparaturen (Discontinuation of the practice of recognizing provisions for major repairs, in German) |
| Maximum annual allocation | 1% of the building insurance value |
| Maximum possible amount | 15% of the building insurance value |
| Publication of previous regulation | Not applicable |
| Repeal? Effective date? | Yes, 2026 |
| Release of existing provisions? | By 2028 |
| Publication | 37.3.6 Rückstellungen für die Renovation von Gebäuden (Provisions for the renovation of buildings, in German) |
| Maximum annual allocation | 1% of the building insurance value |
| Maximum possible amount | 15% of the building insurance value |
| Publication of previous regulation | Rückstellungen für Grossreparaturen, Erneuerungsfonds (Provisions for major repairs, renewal fund, in German) |
| Repeal? Effective date? | Not planned |
| Release of existing provisions? | Not applicable |
| Publication | Not applicable |
It appears that most cantons have decided to abolish the previously applicable rules as of 1 January 2026. Aargau already did so as of 2025 and Valais as of 2024.
Previously booked lump sum provisions must be released by 2027, 2028 or 2030 at the latest depending on the canton, or in some cases not at all.
A few cantons have not yet made a final decision. Only limited official publications are to be expected.
The cantons Basel-Landschaft and Thurgau do not plan to change current practice. The same applies to the canton of Zurich, which is likely to be especially relevant.
Review your provision positions for future major repairs, major renovations and renewal funds across your real estate portfolio.
The tax treatment is determined by the location of the properties.
Adjustments to your current accounting practice are likely if you want to avoid differences with the tax treatment.
In cantons requiring the release of lump-sum provisions, failure to document and substantiate provisions as commercially justified can result in additional extraordinary tax charges on profits.
It may be useful to analyze whether past depreciation sufficiently reflects the loss in value of each property.
The timing of any release and the definition of the future capitalization rate for renovations also offer optimization potential.
Where major repairs and property renovations follow directly from the company’s purpose and are performed on a regular cycle, consider discussing the scope for some degree of lump-sum treatment with the tax authorities so that disproportionate tax effects can be avoided.
This is especially relevant for larger real estate companies.
Please don’t hesitate to contact us with your tax-related matters. Our real estate tax team is ready to advise you.
