Many cantons do not levy inheritance taxes between spouses or between parents and children, or only levy a very modest tax of less than 10% on descendants. The highest tax rates apply to gifts and inheritances between unaffiliated persons: in such cases, the applicable tax rates may increase to 50% or more. In other words, it is important to pay attention to the applicable cantonal systems of gift and inheritance tax when choosing your canton of residence in Switzerland. It is difficult to assess the taxpayer`s cost of living and, therefore, in practice, the notional minimum income (based on the taxpayer`s main dwelling) explained above is used. The annual tax base is determined by a tax agreement concluded with the cantonal tax authorities of the canton in which the person wishes to reside. Foreign employees residing in Switzerland whose gross salary does not exceed CHF 120,000 per year (CHF 500,000 in the Republic and Canton of Geneva), but who have additional sources of income or assets (e.g. income from securities, real estate), are also required to file a tax return. In most cantons, however, this only applies to additional income or assets. In cases where the beneficiary resides in Switzerland, a refund of the withholding tax may be obtained if the income in question is duly declared for income tax purposes. The tax is intended to encourage domestic taxpayers to report their capital gains. For non-resident taxpayers, withholding tax is a definitive tax burden. A partial or total refund is granted only on the basis of a double taxation agreement concluded between Switzerland and the country of residence of the beneficiary of the income. Withholding tax covers taxes at all levels of taxation – see the table of tax levels.

The limited liability to tax liability applies to non-residents and companies with economic relations with Switzerland. In these cases, Swiss tax is only levied on certain income from Switzerland. Earned income – In general, an employer`s total compensation is considered earned income and is included in the employee`s total taxable income. However, some refunds for necessary business expenses are not subject to tax if they are properly documented. As the flat-rate tax system is negotiable, the cantonal tax authorities are free to set a different and even higher tax base in the coming years. Total assets in the world, age, family situation and community in which the holder of the residence permit lives are important. In general, notional income is reviewed every three to five years and can be indexed. The maximum total federal income tax rate is 11.5%. The various cantonal and communal taxes are also levied at progressive rates, with a combined cantonal and communal maximum rate of around 36%. In addition, cantonal and communal wealth taxes are levied. The tax rate for single, widowed, divorced or separated persons with whom a dependant lives (a dependant may be a child or an adult) is the rate applicable to 50% of his or her income.

The distribution of income is carried out in accordance with the rules for the distribution of intercantonal tax drawn up by the Federal Supreme Court, unless otherwise provided for in an applicable double taxation agreement. In addition, certain cantonal rules may influence the international distribution of income. However, contract law still takes precedence over Swiss domestic law. Residents pay their taxes based on the numbers on the tax return. Cantonal and communal taxes are generally levied provisionally on the basis of the previous year`s figures for the entire respective tax year (see below), while federal taxes are levied until 31 September. March of the year following the taxation year in question. See the table in the full PDF. (PDF, 582 KB) Property taxes are cantonal or municipal taxes on land and buildings. It is payable by natural and legal persons registered in the land register as owners or users (usufructuaries) of a property. In general, the tax is calculated on the total taxable value of the property, i.e. without taking into account the associated debts or mortgages.

The property is taxed at its location, regardless of where the owner lives. Several cantons have decided not to levy this tax (e.g. Zurich, Zug). The other cantons apply a variety of systems (tariffs are 1 to 3 ‰). The following table shows the income and wealth taxes levied at each level, including the Swiss ecclesiastical tax: ExpatTax, a company that provides financial and tax advice in Switzerland, explains the circumstances that determine who should pay Swiss taxes and at what tax rate. Each municipality of the canton of Geneva determines the multiplier applied to the cantonal tax rate and therefore to its municipal tax rate, autonomously according to its financial needs. As a result, municipal taxes can vary widely. Communal taxes, as mentioned above, are a percentage of cantonal taxes and are levied at the same time as cantonal taxes.

For example, the effective municipal tax of the city of Geneva is 45.5% of the canton`s property tax. The highest municipal tax rate is 51% of the cantonal property tax and is levied in the communes of Chancy and Avully. On the contrary, the lowest municipal tax rate applies in the municipalities of Genthod (25%), Cologny (29%) and Vandoeuvres (31%). As a general rule, Switzerland applies the progression exemption method for eligible foreign income and not a tax credit method. However, if the investment income comes from a country with which Switzerland has a tax treaty, a tax credit is available for the non-refundable portion of the withholding taxes on dividends, interest and royalties. Interest and dividend income from Swiss sources is usually subject to a WHT of 35%, which must be retained by the payer (e.g. a Swiss bank or company) and deducted directly from the gross amount to the beneficiary. Due to the facts and circumstances, this tax may be credited or refunded on the total amount of income tax in Switzerland. Switzerland is a federal republic, officially known as the Swiss Confederation, and is divided into administrative areas called cantons.

Taxes are levied both by the various cantons and by the government. Municipalities may also levy taxes, often referred to as municipal taxes. Since the Federal Tax Harmonization Act of 1990, the cantons can set their tax rates or introduce new taxes, with the exception of taxes set by the state. Many property taxes strongly distort and add significant complexity to the life of a taxpayer or business. Inheritance and inheritance taxes discourage additional work and savings, which affects productivity and production. Taxes on financial transactions increase the cost of capital, limiting the flow of investment capital to its most efficient allocations. Wealth taxes limit the capital available in the economy, which hinders long-term economic growth and innovation. In 2011, federal income tax ranged from a range of 1% (for single taxpayers) and 0.77% (for married taxpayers) to a maximum rate of 11.5%. People earning less than 13,600 francs and couples under 27,000 francs were exempt. At the cantonal level, tax rates vary considerably, Obwalden adjusted a flat-rate tax of 1.8% on all personal income after a cantonal referendum in 2007. In most cantons, the rate is proportional to a maximum rate of 6.5% in Bern, while in Zurich it was 13% and in Geneva from 17.58 to 0.76% (depending on taxes as single or spouse). [19] [20] In the case of creditors resident in Switzerland, withholding tax is only a means of guaranteeing the payment of income or profit tax, from which the creditor can then deduct the amount already withheld or request its repayment.

The same applies to foreign creditors, to the extent that a tax treaty so provides. Other foreign creditors are not entitled to repayment; Compared to them, the withholding tax is a real tax. Federal income tax applies to global income from both labor and capital. Residents who own a property in Switzerland and live there themselves are required to add a notional rental value to their taxable income. Gross income from Swiss capital is taxable, while income from foreign capital is taxed only after deduction of foreign withholding taxes. If the tax resulting from this control calculation is higher than the tax due under the flat-rate taxation system, the tax ultimately due is the highest amount determined by the control calculation. Foreign securities held in a Swiss bank on behalf of an individual and foreign fiduciary deposits held with a Swiss bank are not included in the calculation of the control. Notional taxable income is used to calculate the income tax due. For the purpose of calculating the tax due, the standard rates of income tax apply to notional income. As already mentioned, tax rates can vary considerably depending on the canton of residence and the taxpayer`s family situation. The advantage of flat-rate taxation is not the application of special tax rates, but the fact that notional income (in practice based on the value of the main dwelling in Switzerland) can be much lower than the tax base on the basis of real income and assets. Income tax rates are progressive at the federal level and in most cantons.

In 2020, federal income tax ranged from a range of 0.77% (for single taxpayers) and 1% (for married taxpayers) to a maximum rate of 11.5%. No federal tax is levied on persons with taxable income of less than CHF 14,500 and on couples with taxable income of less than CHF 28,300. At the cantonal level, tax rates vary considerably with a maximum rate in Zurich of around 41.3%, compared to 23.1% in Zug, 32.6% in Lucerne, 41.5% in Lausanne and 48.0% in Geneva (all rates include federal income tax).