Which Swiss Canton Has the Lowest Income Taxes

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] “If family allowances, childcare costs and family-specific tax parameters are included in the analysis of disposable income, it is clear that the canton of Valais offers the best possible living conditions for couples with children,” says Credit Suisse. Swiss tax legislation considers families as a single entity for tax purposes. If you are married, you will need to file a joint tax return and your calculation will be based on the combined income of you and your partner. If you have a child under the age of 18 who is gainfully employed, this must also be indicated on your tax return. The property tax, also known as property tax or property tax, is a cantonal tax on land and buildings. This is payable to the owners or registered users of the property registered in the land register.

It also sets the basic amounts for other important taxes. For example, if you pay income tax or corporation tax in Switzerland, your final calculation will consist of the federal rate plus the cantonal rate. Given the complexity of the Swiss income tax system and the importance for self-employed expatriates to file their tax returns correctly, it is advisable to seek advice from an accountant. All cantons with casinos with a Type B concession have amended their tax legislation and introduced a tax on gross casino gaming revenues. The tax cannot exceed 40% of the total casino tax to which the federal government is entitled. The above tax rates apply in principle to taxpayers who file a tax return. The effective cantonal tax on income and wealth is determined by multiplying the property tax by the multiplier applicable to the relevant tax year (calendar year) and then adding the additional wealth tax. The cantons levy a proportional wealth tax of around 0.3 to 0.5% on the assets of natural persons[21].

Tax is levied on the value of all assets (such as real estate, shares or funds) after deduction of any debt. [22] All tax residents are taxed on their global income and wealth. Non-resident natural persons are only taxed on Swiss sources of income and wealth. 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. Expatriate workers love the high wages and landscape of Switzerland, but often complain about the exorbitant cost of living. Credit Suisse has just created a map of areas with the lowest taxes, cheapest housing and best childcare rates. Several provisions limit the double taxation of profits at company level and contribute to Switzerland`s status as a tax haven. First, companies that own 20% or more of the shares of other companies benefit from an “exemption from participation”; The amount of tax due on the corresponding profit is reduced in proportion to the percentage of shares held.

[27] Only at the cantonal level does a “holding privilege” apply to pure holding companies. They are exempt from cantonal corporate income tax. [27] In addition, cantonal law confers a “domicile privilege” on companies that are administered only in Switzerland but whose activity is carried out abroad; including mailbox companies. [28] The cantons tax only about 10% of the global profits of these companies. [28] While Valais performs best for families, a handful of cantons in central and eastern Switzerland are the most favourable among all income groups, families, couples and single persons. The tax rate applicable to a married couple or natural persons in a Swiss registered partnership is the rate applicable to 50% of their total income (so-called “splitting”). The tax rate for single, widowed, divorced or separated people living with a dependant (child or adult) is the rate applicable to 50% of income. A year-on-year comparison shows virtually no change in the ranking of the cantons with the most attractive corporate tax rates. The cantons of Central Switzerland and the cantons of Glarus and Appenzell-Innerrhoden still have the lowest ordinary corporate tax rates. The canton of Zug, for example, has the lowest corporate tax rate at 11.9%, followed by the canton of Nidwalden, which slightly reduced its rate by -0.7 percentage points to just under 12%, surpassing the canton of Lucerne (12.3%).

The canton of Bern is at the bottom of the scale with a corporate tax rate of 21% – although it has lowered the rate by -0.6 percentage points. Income taxes are levied at three different levels: at the federal level (which is the same throughout Switzerland), at the cantonal level (which is the same in a given canton and is based on cantonal tax law and tax rates) and at the communal level (municipalities follow cantonal tax law, but have the right to set their own municipal tax rate within certain parameters). Income tax rates are progressive at the federal level and in most cantons. Some cantons have recently introduced flat-rate taxation. Stamp duty includes the issuing tax levied on the issuance of securities such as shares and bonds, and the transfer tax charged to securities dealers and holding companies when trading securities. Federal withholding tax (withholding tax / withholding tax / Imposta preventiva) is levied on certain forms of income, in particular on dividend payments, interest on bank loans and bonds, proceeds of liquidation, lottery winnings and payments from life insurance companies and private pension funds. [35] The debtor of these payments is liable for payment of the tax; You only have to pay the creditor the net amount. [36] The tax rate is 35% for movable income and lottery winnings of CHF 1 million or more, 15% for life annuities and annuities and 8% for other insurance benefits. [37] Another example: the canton of Zug, which already has one of the lowest tax rates among Swiss cantons, will temporarily lower the tax rate due to COVID-19 in 2021-23 in order to mitigate the economic impact of the pandemic on taxpayers. As a result, the total tax rate in the city of Zug will fall to only 11.79% in these years (combined federal/cantonal/communal effective rate). In Switzerland, taxes are levied by the Swiss Confederation, cantons and municipalities. Switzerland is a federal republic in which the sovereignty of the constituent states (the cantons) is limited by the enumerated powers conferred on the federal state (the Confederation) by the Federal Constitution.

Therefore, the original fiscal sovereignty through their constitutions belongs to the individual cantons of Switzerland. [1] Within the framework of the powers conferred on them by cantonal law, municipalities may also levy taxes. The extent of these powers varies from canton to canton. [2] While the formal framework for the main cantonal direct taxes was harmonised by the Federal Tax Harmonisation Act of 1990, the cantons (and, where appropriate, the communes) are free to set their tax rates or introduce new taxes, with the exception of tax objects already taxed under federal law. [3] Switzerland has long been considered a tax haven. A Swiss government amnesty, which allowed citizens to declare untaxed assets without fear of legal consequences, brought in CHF 44.2 billion in 2018. Under federal legislation, notional income based on the cost of living is reviewed annually based on specific verification calculations. Taxes due under the notional income approach should not be lower than those determined in a control calculation based on certain elements. The specific points are as follows: in addition to the above-mentioned taxes, the cantons are free to introduce more. Several cantons levy inheritance tax (inheritance tax / Imposta di successione) and gift tax (gift tax / Imposta di donazione), although there is a tendency to abolish them.

[46] In addition, the cantons are required by federal law to levy a tax on the profit from the sale of immovable property (tax on real estate gains / Imposta sugli utili immobiliari). [47] Most also levy a tax on the value of the property sold (transfer tax / transfer tax / Tassa di mutazione) to discourage real estate speculation. [48] Taxes are also often levied on the ownership of dogs and motor vehicles,[49] lotteries, the sale of tickets for public entertainment, or overnight stays in certain tourist destinations. [50] All income is generated on the basis of the same tax return with generally the same tax rate (i.e. . . .