Switzerland
Financial Year – 1 January – 31 December
Currency – Swiss franc (CHF)
Corporate Tax Summary
Residence – Switzerland is a confederation of 26 cantons (states). Taxes are levied at three levels: federal, cantonal and communal. As a result of this multi-layered tax system, no standard tax rates exist.
In general, a resident corporation is a corporation that is incorporated in Switzerland. In addition, a corporation incorporated in a foreign country is considered a resident of Switzerland under Swiss domestic law if it is effectively managed and controlled in Switzerland.
Basis of Taxation – Resident companies are subject to corporate tax on worldwide income. Income realised by a foreign permanent establishment of a Swiss company or derived from foreign real estate is excluded from taxable income. Losses incurred by a foreign permanent establishment are deductible from taxable income. However, if a foreign permanent establishment of a Swiss company realises profits in the seven years following the year of a loss and if the permanent establishment can offset the loss against such profits in the foreign jurisdiction, the Swiss company must add the amount of losses offset in the country of the permanent establishment to its Swiss taxable income.
A company not resident in Switzerland is subject to Swiss income tax if it has a permanent establishment in Switzerland.
For Swiss tax law purposes, the definition of a ‚permanent establishment‘ is generally in line with the criteria according to the current Article 5 paragraph 2 of the OECD Model Tax Convention on Income and Capital. It means a fixed place of business through which the business activity of an enterprise is wholly or partly carried on. In particular, PEs are branches, factories, workshops, sales agencies, permanent representations, mines and other places of extraction of natural resources, as well as building or construction sites that are maintained for at least 12 months.
| Reference | ||
| Corporate Income Tax Rate (%) | – | As a general rule, the overall approximate range of the maximum CIT rate on profit before tax for federal, cantonal, and communal taxes is between 11.9% and 21.6%, depending on the company’s location of corporate residence in Switzerland. |
| Branch Tax Rate (%) | – | |
| Withholding Tax Rate: | ||
| Dividends – Franked | – | |
| Dividends – Unfranked | – | |
| Dividends – Conduit Foreign Income | – | |
| Interest | 0% / 35% | Withholding tax is levied on bank interest and bond interest, but as long as the arm’s length principle is observed, not on interest on commercial loans, including loans from foreign parents to Swiss subsidiaries. |
| Royalties from Intellectual Property | 0 | |
| Fund Payments from Managed Investment Trusts | ||
| Branch Remittance Tax | 0 | |
| Net Operating Losses (Years) | ||
| Carry Back | 0 | |
| Carry Forward | 7 Years |
Individual Tax Summary
Residence – An individual who is resident or domiciled in Switzerland is subject to federal, cantonal and communal taxes on worldwide income, except income derived from real estate located abroad and income from either a fixed place of business or a permanent establishment located abroad. Nevertheless, the above-mentioned income which is tax-exempt, will be relevant for the decisive tax rate.
Individuals are subject to Swiss income tax and net wealth tax as of their first day of residency until they officially leave the country.
Individuals are considered resident in Switzerland if they take up legal residence in Switzerland or if they remain in the country/territory for an extended period of time, typically more than 90 days (30 days if working), even if they are not engaged in gainful activity.
Non-residents are subject to tax on income from the following Swiss sources:
- Interest in Swiss real estate
- Interest in a Swiss partnership or sole proprietorship
- Trade or business attributable to a Swiss permanent establishment or fixed place of business
- Professional practice in Switzerland
- Trade and agency of real estate located in Switzerland
- Services performed in Switzerland (with exceptions)
- Interest income derived from a mortgage secured by Swiss real estate
- Services rendered as a director or officer of a Swiss corporation (with exceptions)
- Payments by Swiss pension funds
Basis of Taxation – In general, taxable income for federal tax purposes consists of all types of income earned by a resident individual, including the following:
- Remuneration from an employer (base salary, bonus, stock options, home leave, and payment of rent, taxes, school fees and utilities)
- Self-employment or business income
- Pension payments and compensation for loss of work or health
- Income from private investments (including interest and dividends)
- Income from real estate
Capital Gains and losses
- Private capital gains derived from sales of movable assets are not taxed at the federal level nor at the cantonal level.
- Capital gains derived from sales of immovable assets are subject to a separate tax in all cantons.
Interest
Switzerland generally does not levy withholding tax on interest under domestic law. Exceptions apply to interest derived from deposits with Swiss banks, bonds, and bond-like loans, which are subject to a 35% withholding tax at the federal level. Interest paid to a non-resident on receivables secured by Swiss real estate is subject to tax at source. The 35% withholding tax and the tax at source levied under domestic law may be reduced under a tax treaty.
Filing Status – A married couple/registered partnership is assessed jointly.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| – | – | – |
Goods and Services Tax (GST)
| Rate | 7.7% / 3.7% / 2.5% / 0% |
| Taxable Transactions | VAT applies to the sale of goods and services in Swiss territory, the acquisition of services from businesses domiciled abroad, and to the import of goods. Exports of goods and most services provided to non-resident recipients are, in principle, either zero-rated or not subject to Swiss VAT. The acquisition and sale of intellectual property are VAT-able transactions. As from 1 January 2019, a distance selling company that generates an annual turnover of at least CHF 100,000 with consignments of low value goods (i.e., those on which the import VAT does not exceed CHF 5) from abroad into Switzerland is required to charge Swiss VAT. |
| Registration | Enterprises conducting business in Switzerland with annual worldwide turnover exceeding CHF 100,000 must register for VAT purposes, irrespective of the level of VAT-able turnover in Switzerland. Persons not registered as VAT payers that acquire services from abroad exceeding CHF 10,000 in a calendar year subject to VAT under the reverse charge mechanism, must register with the Swiss Federal Tax Administration in writing by 28 February of the following year and account for VAT at 7.7% on the services. |
| Filing and Payment | VAT returns must generally be filed quarterly, and the relevant VAT amount remitted to the Federal Tax Administration within 60 days after the end of the quarter. |
Other Taxes Payable
| Tax | Reference |
| Payroll Tax | There is no general payroll tax, but payroll tax is levied on the wages of foreigners without permanent Swiss residence. For all other Swiss resident employees, wages are taxed as part of ordinary income. |
| Stamp Duty | The ordinary tax rate of Swiss securities transfer tax is 0.15% for securities issued by a tax resident of Switzerland and 0.3% for securities issued by a tax resident of a foreign country. |
| Land Tax | Some cantons levy real property tax |
Stamp Duty (Issuance Tax)
A 1% stamp duty is levied on contributions to the equity of a Swiss company, whether in cash or in kind. A CHF 1 million exemption threshold applies to the issuance of shares. Reorganisations, such as mergers, spinoffs of corporate assets, or transfers of a company’s domicile from abroad to Switzerland typically are exempt from stamp duty.
Inheritance Tax
- Federal: Exempt
- Spouse: Exempt
- Direct descendants: Exempt in most cantons
- Others: Depending on relationship to deceased and varies per canton
Gift Tax
- Federal: Exempt
- Spouse: Exempt
- Direct descendants: Exempt in most cantons
- Others: Varies per canton
Last updated: 01.07.2020