Taxes in Switzerland

Switzerland offers attractive taxation, reasonable social charges, administrative flexibility and an attractive labour law.

As an international comparison, Switzerland is still a State applying reasonable taxation but not a tax haven. Its position is still solid, since it is based on numerous treaties concluded with countries around the world.

Switzerland is a Federal State composed of 26 Cantons (see map) and 2’202 Communes.

The Confederation, levies indirect taxes such as VAT and Advance Taxes, it also has a limited right to collect a tax (direct Federal tax) on a persons’ income and company profits.

The Cantons, for their part, can levy taxes in all areas which are not exclusively attributed to the Confederation.

The Communes, in a historical context of strong autonomy, also levy taxes.

There are therefore three types of fiscal sovereignty (federal, cantonal and communal).

Tax Reform

Switzerland’s prosperity is based on two key pillars: internationally competitive business taxation and a reliable old age pension system. Corporate tax reform was necessary, as some tax privileges were no longer in line with the requirements of the international community.

Switzerland has therefore abolished these various schemes. The various replacement measures that were put in place in 2020 are nevertheless a fundamental asset for Switzerland’s attractiveness.

They enable the maintenance of an attractive and internationally competitive business tax.

For example:

Here are the percentage of corporate taxes in the cantons where we are located:

Canton de Vaud : 13.79%
Canton de Lucerne : 12.32 %

With regard to holdings, the privileged regime has been abolished, but there remains the “compensation regime” which favours a virtually zero tax on dividend returns from subsidiaries.

Many other tax benefits exist.
We will provide accurate tax information for each client file studied.

Swiss VAT

Legal basis for Value Added Tax in Switzerland is the LTVA (Art. 641.20 and 641.201).

VAT is a general tax imposed on the consumption of goods and services, anyone who carries out a business is subject to tax, unless they are released from the subjugation.

In the case of VAT, the distinction is made between services which are tax-exempt and those which are excluded from the tax scope, in either of these categories of services, no tax is levied

Tax rates since 01.01.2020

0 %

NORMAL RATE

Rate applied for most goods and services.

0 %

HOTELS RATE

Rate applied to overnight stays at the hotel (breakfast included).

0 %

REDUCED RATE

Rate levied on certain everyday goods such as food, non-alcoholic drinks, books, newspapers, magazines and medicines.

Is released from subjugation when:

Generates less than CHF 100,000 of taxable services in one year in Switzerland,
Has a turnover of less than CHF 150,000 from taxable services on Swiss territory as a non-profit sports or cultural company or as a non-profit institution.

Are exempt from tax when:

Delivery of items that are shipped directly or sent abroad;
Cross-border transport services;
Provision of services to recipients having their head office abroad or residing there.

Excluded from the scope of tax:

For social, economic and other considerations, certain services should not or only be subject to VAT to a limited extent.

In this case, services in the fields of health, training, culture, renting and sale of real estate and insurance are totally excluded from the scope of the tax.

Exceptions:

The only exceptions to this principle are the cases of services excluded from the tax scope, because those who provide them are not entitled to deduct the prepaid tax.

Social Contributions TAXES

In principle, any remuneration or benefit paid to an employee shall be considered as salary subject to contributions. The latter owes the total of the contribution.

Rates since 01.01.2020

AVS
AI
APG

10,55%*

Unemployment
insurance
< CHF 148’200 gross salary

2,20%*

Unemployment
insurance solidarity
> CHF 148’200 gross salary

1,00%*

Family
Allowance

2,45%**

*In principal shared equally by the employer and the employee.
**Fully paid by the employer.

A deductible of CHF 16,800. – per year is applicable to persons who have reached the ordinary age giving entitlement to the retirement pension and who are still carrying on a dependent gainful activity.

Legal basis for Social Contributions are covered in
chapter 8, point 83 of Droit Interne Suisse (FR-IT-DE only).

Glossary:

AVS · Old age and survivor’s insurance [1st PILLAR] Art. RS 831.10.
AI · Invalidity Insurance
APG · Loss of earnings insurance
LPP · Professionnal pension [2nd PILLAR] Art. RS 831.40.