Subsidies and Public Aid under Swiss Law
Subsidies and public aid are financial benefits paid by public bodies (Confederation, cantons, municipalities) to individuals, companies or organisations, to support activities in the general interest. In Switzerland, their regime is principally governed by the Federal Act on Financial Assistance and Subsidies (SubsA) of 5 October 1990. PBM Avocats advises beneficiaries and applicants in Geneva and Lausanne.
Forms of Public Financial Aid
| Type of Aid | Description | Examples |
|---|---|---|
| Financial assistance | Subsidy granted to encourage a meritorious but non-mandatory activity | Cultural, sporting, ecological subsidies |
| Compensation | Compensation for charges imposed by law (public service) | Compensation for public transport services |
| Direct agricultural payments | Aid to agricultural holdings conditional on ecological services | AgA, direct payments ordinances |
| Loan guarantees | Public bond to facilitate access to bank credit | COVID-19 credit, SME bonds |
| Tax reductions | Conditional tax exemptions or allowances | Special economic zones, R&D deductions |
Principles Governing the Granting of Subsidies (SubsA)
The Subsidies Act (SubsA) sets out the fundamental principles applicable to federal financial assistance and compensation:
- Legality: every subsidy must rest on a formal legal basis (law or ordinance)
- Subsidiarity: public aid must not substitute for the beneficiary's own resources
- Proportionality: the subsidy amount must be appropriate to the beneficiary's needs and resources
- Equal treatment: beneficiaries in similar situations must be treated identically
- Conforming use: funds must be used exclusively for the purposes for which they were granted
Charges and Conditions Attached to Subsidies
Authorities may attach charges and conditions to subsidies:
- Conditions: future and uncertain events on which the granting or maintenance of the subsidy depends (e.g. obtaining a permit, maintaining employment)
- Charges: obligations imposed on the beneficiary in return for the subsidy (e.g. providing annual reports, maintaining a specified use)
- Deadlines: using funds within a specified period
- Accountability: obligation to provide proof of the use of funds
Repayment of Subsidies: Obligations and Deadlines
Subsidies may be repaid (in whole or in part) in the following cases:
- Non-compliance with the charges and conditions of granting
- Inaccurate or false declarations in the application
- Non-completion or partial completion of the subsidised project
- Use of funds for purposes other than those provided
- Premature alienation of a subsidised asset (e.g. sale of a building renovated with public aid)
Repayment decisions may be contested through objection and then administrative appeal. The beneficiary's good faith may, in certain cases, limit or exclude the repayment obligation if the authority misled the beneficiary.
Cantonal Aid in Geneva and Vaud
In addition to federal aid, the cantons of Geneva and Vaud have numerous assistance programmes for businesses, associations and individuals:
- Geneva: innovation aid (Geneva eLab), energy renovation subsidies (SiRE), business creation aid, support for arts and culture
- Vaud: SME digital transition aid, cantonal agricultural subsidies, renewable energy support (SIRE Vaud), economic promotion (COQ)
Can a refusal of public subsidy be challenged in Switzerland?
Yes, subject to conditions. If the subsidy is provided for by law and you meet the statutory eligibility criteria, you have a right to the subsidy and may challenge its refusal through administrative appeal. If the subsidy is discretionary (the authority has a margin of appreciation), the appeal is more difficult but possible for abuse or excess of the margin of appreciation.
Can the State claim repayment of an already paid subsidy?
Yes, in several hypotheses: if the eligibility conditions were not met, if the information provided was inaccurate, if the beneficiary did not comply with the charges and conditions attached to the subsidy, or if the subsidised project was not carried out in accordance with the plan. Limitation periods vary depending on the applicable law. The beneficiary's good faith may limit repayment.
Can COVID-19 aid still be subject to appeals or repayments?
Deadlines for appeals against COVID aid refusals are generally expired. However, checks on aid already paid (COVID earnings replacement, short-time working, hardship cases) continue. Repayment requests may still be addressed to beneficiaries if it is established that the conditions were not met. These repayment decisions may be contested by appeal.
Are agricultural subsidies subject to the same rules as other subsidies?
Direct agricultural payments are governed by the Agriculture Act (AgA) and its implementing ordinances. They are subject to the same general principles of subsidy law (legality, equality, proportionality) but with specific rules relating to agricultural operating conditions, environmental requirements and commitments made by the farmer.
Can a company challenge the granting of a subsidy to a competitor?
In principle, a third-party company does not have standing to challenge the granting of a subsidy to a competitor, unless it can demonstrate a personal and current interest in annulling that subsidy (for example, impact on competition in a regulated market, violation of Swiss State aid rules). Standing to appeal is assessed restrictively.