Depreciation is based either on the cost of acquisition or the cost of production. Acceptable methods are the straightline method or the declining balance method. Rates on the acquisition value vary between 2% for real property and 20% for machines (rates for the declining method are double this), although in many cantons higher rates are allowed on new investments.
Under special circumstances, higher depreciation allowances can be agreed in advance with the fiscal authorities.
There is no general minimum debt/equity ratio; the same depends on the kind of assets (real property, participations, etc.) held by the Swiss company. Shareholders’ loans over the allowed debt/equity ratio are considered as capital (capital tax is due, interests non-deductible and subject to withholding tax as hidden dividend distribution).
Special allowances among others are granted without further questioning on stocks (up to 1/3 of the gross stock value) and debtors (10% on foreign debtors, 5% on Swiss debtors). Effective, higher losses are deductible if justified.
Inter-company charges (including charges made with respect to physical shareholders) are recognised as deductible expenses to the extent that they are at arm’s length. Otherwise they are treated as hidden profit distribution, and thus withholding tax is due and, as they are not recognized as expense, they are also subject to income tax.