A new tax law came into force in Zug on 1 January 2020, with the following effects:

• The effective income tax rate for the federal, cantonal and municipal levels will initially decrease to 11.91% (capital city, previously 14.35%)
• The ordinary capital tax rate will remain at 0.0717% (municipality of Zug). Taxable equity, originating from qualifying equity interests, group receivables as well as qualifying patents, will only be included at 2% when calculating the taxes.
• With the introduction of the patent box, the net profit from patents and similar rights will be included in the calculation of the taxable net profit with a maximum reduction of 90%.
• The Canton of Zug now allows a deduction for research and development costs of 50%.
• Tax privileges for holding companies, domiciliary companies and mixed companies have been abolished.
• The Canton of Zug has foreseen the following transitional solutions: (1st) the tax-neutral disclosure and subsequent amortization of hidden reserves (the so-called step-up under previous law) or (2nd) the application of the special tax rate of 1.15% up to 2.30% (cantonal and municipal taxes of Zug) over a period of five years to tax hidden reserves and goodwill realized in the next 5 years (the so-called special rate solution).
• The relief restriction was set to 70% (if using the step-up) of taxable net profit (excluding income from participations and offsetting of losses).
• The partial taxation of natural persons’ dividends from qualifying equity interests remains at 50% in the Canton of Zug – for federal tax there will be an increase to 70% (previously 60%).