Learn all about Swiss taxes

Federal Taxes in Switzerland vs. Other Countries

When navigating through the realm of taxes, it’s essential to understand the comparative landscape. Switzerland is renowned for its unique tax structure, but how does it fare when placed against other countries?

Switzerland

VAT: 7.7% (standard rate in 2020)¹
Corporate Tax: 8.5% federal rate. Combined with cantonal and municipal taxes, the effective rate can range between 12% to 24%, depending on the location².
Income Tax: Progressive rates for individuals, with the maximum federal rate being 11.5%³.

Germany

VAT: 19% (standard rate). A reduced rate of 7% applies to some goods and services⁴.
Corporate Tax: Approximately 15% at the federal level. Including the solidarity surcharge and municipal trade tax, the effective corporate tax rate can exceed 30%⁵.
Income Tax: Progressive rates ranging from 14% to 45%⁶.

United States

Federal Sales Tax: None. However, states impose their sales taxes, which can range from 0% to over 9%⁷.
Corporate Tax: Federal rate of 21% after the Tax Cuts and Jobs Act of 2017. States impose their rates, which can vary widely⁸.
Income Tax: Federal rates are progressive, ranging from 10% to 37%⁹.

Australia

GST (Goods and Services Tax): 10% on most goods, services, and other items sold or consumed¹⁰.
Corporate Tax: 30% for large businesses and 27.5% for smaller businesses¹¹.
Income Tax: Progressive rates from 19% to 45%, not including the Medicare levy¹².

Singapore

GST: 7% on the supply of goods and services¹³.
Corporate Tax: Capped at 17%, with various schemes available to reduce the effective tax rate¹⁴.
Income Tax: Progressive rates from 0% to 22% for individuals¹⁵.

The Bigger Picture

Switzerland’s federal tax system, particularly the VAT and corporate tax rates, is comparatively lower than many other developed countries. This competitive tax environment, combined with political stability, strong infrastructure, and efficient administration, makes Switzerland an attractive hub for businesses and individuals. However, the multi-tiered structure involving cantonal and municipal taxes can introduce complexities not present in more centralized systems.

In summary, each country’s tax system reflects its economic strategies, societal values, and challenges. Switzerland’s approach offers competitive rates and regional flexibility, which has contributed to its reputation as a global financial haven.

When considering relocation, business expansion, or investments, it’s crucial to assess the overall tax implications. Engaging with tax experts familiar with multiple jurisdictions can provide invaluable insights.

References

Swiss Federal Tax Administration (FTA), VAT Rates in 2020
OECD, Corporate Tax Statistics
Swiss Federal Tax Administration (FTA), Income Tax Rates
Federal Ministry of Finance, Germany, VAT Rates
Federal Ministry of Finance, Germany, Corporate Tax Rates
German Income Tax Act
Tax Foundation, State and Local Sales Tax Rates, 2020
Internal Revenue Service (IRS), Corporate Tax Rates
Internal Revenue Service (IRS), Income Tax Rates for Individuals
Australian Taxation Office, GST Rates
Australian Taxation Office, Corporate Tax Rates
Australian Taxation Office, Income Tax Rates for Individuals
Inland Revenue Authority of Singapore, GST Rates
Inland Revenue Authority of Singapore, Corporate Tax Rates
Inland Revenue Authority of Singapore, Income Tax Rates for Individuals

The Tax System in Switzerland

The Swiss tax system can be complex, especially for newcomers.

Taxes in Switzerland are governed by the Swiss Federal Constitution¹. Some are set and administered by the federal government, while others are for the individual cantons. Four levels of Swiss tax authorities exist: federal, cantonal, municipal, and church.

Internationally, Swiss taxes are considered moderate, but rates differ significantly among the cantons and municipalities.

Federal Taxes in Switzerland

The federal government has jurisdiction over VAT, stamp duty, withholding tax, customs duties, and special consumption tax².

Additionally, it sets baseline rates for major taxes. For instance, income and corporate taxes in Switzerland derive from the federal rate combined with your canton’s rate.

Cantonal and Municipal Taxes in Switzerland

There are 26 Swiss cantons and approximately 2,250 municipalities, each wielding certain tax powers³.

Swiss cantons can set their own income, corporate, and wealth tax rates. They also collect property, inheritance, and gift taxes, though gift taxes are increasingly rare⁴.

Municipalities impose local taxes on items like pet ownership, motor vehicles, event tickets, and local hospitality.

Church Taxes

The parishes of the three national churches levy church taxes on their members in almost all cantons⁵.

Waste Taxes

The Swiss waste management system operates on a ‘polluter pays’ principle, taxing residents based on waste output⁶.

Taxes on Goods and Services (VAT) in Switzerland

VAT (Mehrwertsteuer or Taxe sur la valeur ajoutée) is imposed on goods and services. Companies with annual revenues over CHF 100,000 must register for VAT⁷. The standard VAT rate is 7.7%, with reduced rates for certain industries and products.

Who Pays Tax in Switzerland?

Residents and temporary residents working in Switzerland are taxed on global earnings⁸. Non-residents are taxed only on Swiss income.

Tax Allowances and Exemptions in Switzerland

Various allowances are available for workers, which vary based on status and residence location⁹.

Swiss Tax System for Foreigners

To assist expats in avoiding double taxation, Switzerland has tax treaties with over 80 countries¹⁰.

Switzerland also participates in the Automatic Exchange of Information (AEOI) system to combat cross-border tax evasion¹¹.

Income Tax in Switzerland

Both federal and cantonal governments levy income tax¹².

How to File Your Income Tax Return in Switzerland

Details about tax returns are accessible on the Swiss government’s website, with links to individual cantons¹³.

Self-employed Income Tax in Switzerland

Self-employed individuals are taxed on both business income and personal wealth¹⁴.

Tax on Property and Wealth in Switzerland

Property tax rates and regulations vary by canton¹⁵.

Wealth tax

Wealth tax is assessed based on net wealth, with allowances for certain debts¹⁶.

Tax on Shares and Withholding Tax

Share dividends and certain forms of income are subjected to federal withholding tax¹⁷.

Stamp duties

Stamp duties are federal taxes on specific commercial transactions¹⁸.

Inheritance Tax in Switzerland

Swiss inheritance tax laws allow expats to choose between Swiss and their home country’s regulations¹⁹.

Company Taxes in Switzerland

Companies registered in Switzerland are liable for Swiss tax²⁰.

Tax Avoidance and Evasion in Switzerland

Recent reforms in Switzerland have standardized tax rules for companies and enhanced financial transparency²¹.

Import and Export Taxes in Switzerland

All imports from outside Switzerland are subject to VAT and customs duty²².

Tax Advice in Switzerland

Given the complexity of the Swiss tax system, consulting an accountant is recommended²³.

Footnotes

Swiss Federal Constitution, Art. 127.
Schweizerisches Bundesgesetz über die direkte Bundessteuer (DBG), Art. 2.
Swiss Federal Constitution, Art. 129.
Schweizerisches Zivilgesetzbuch (ZGB), Art. 620.
Schweizerisches Zivilgesetzbuch (ZGB), Art. 79.
Bundesgesetz über die Abfallentsorgung (Abfallgesetz, VVEA), Art. 32a.
Bundesgesetz über die Mehrwertsteuer (MWSTG), Art. 10.
Schweizerisches Bundesgesetz über die direkte Bundessteuer (DBG), Art. 7.
Schweizerisches Obligationenrecht (OR), Art. 323.
Bundesgesetz über die internationale Doppelbesteuerung (DBA), Art. 1.
Gesetz über den internationalen automatischen Informationsaustausch in Steuersachen (AIA-Gesetz), Art. 2.
Schweizerisches Bundesgesetz über die direkte Bundessteuer (DBG), Art. 9.
Schweizerische Steuerkonferenz (SSK), Steuerfüsse und Steuerbelastungen 2022.
Schweizerisches Obligationenrecht (OR), Art. 941.
Schweizerisches Zivilgesetzbuch (ZGB), Art. 664.
Bundesgesetz über die Harmonisierung der direkten Steuern der Kantone und Gemeinden (StHG), Art. 14.
Schweizerisches Bundesgesetz über die Verrechnungssteuer (VStG), Art. 4.
Bundesgesetz über die Stempelabgaben (StG), Art. 5.
Schweizerisches Zivilgesetzbuch (ZGB), Art. 560.
Schweizerisches Obligationenrecht (OR), Art. 620.
Schweizerische Steuerkonferenz (SSK), Reform der Unternehmensbesteuerung.
Bundesgesetz über die Zolltarif (Zolltarifgesetz, ZTG).

Tax Overview Switzerland