Switzerland is a Confederation divided into cantons (states) and communes, all of which work alongside banks, lawyers, companies and consultants to develop and maintain financial and administrative procedures.

Switzerland places taxes on residents, companies, goods, real estate and savings.

Personal taxes

Personal taxes are the taxes that every Swiss resident must pay on their income and wealth. The rate of income tax depends on the amount of income and the canton of residence, with maximum tax rates varying between 24 percent and 45 percent. Wealth tax cannot exceed a maximum rate of 1 percent.

Communes within each canton may also charge different tax rates.

Income tax of employed foreigners is usually withheld directly by the employer at a fixed canton-specific tax rate and then, depending on the level of income and canton of residence, a tax return may need to be filed.

At that time any additional taxes or refund will be calculated, although there is generally a lengthy delay before any final assessment is issued.

 The logo of UBS is displayed on a branch of the Swiss bank with the house of the Swiss Parliament as background

Foreigners who do not have any economic activity inside Switzerland and who have not resided in Switzerland during the previous 10 years may be eligible for lump sum taxation. This means that instead of paying taxes on their worldwide income and wealth, they can negotiate an agreement with the fiscal authorities and pay a fixed amount of taxes every year, calculated on their living expenses in Switzerland.

This system can be interesting for individuals with substantial income, particularly where all or a large part of that income arises outside of Switzerland (at least greater than CHF 500,000 a year). A minimum age is also required; in most cantons it is for those at least 50 or 55 years old.

If a residence permit is granted and lump sum taxation is agreed, the individual is then prevented from taking up employment in Switzerland; therefore this particular situation is most appropriate for retired people.

Company taxes

Companies must pay taxes on their net taxable income, the federal tax rate being 8.5 percent and the cantonal tax varying between 12 percent and 20 percent.

At the cantonal level, new foreign companies can often get an exemption from this tax for up to 10 years. At the federal level an exemption may also be possible if the company is established in a region that has economic difficulties. It is recommended to speak with local economic development agencies about tax exemption before creating a company.

 1 2 Next >