Tax in Switzerland

Swiss tax system
Updated 2018-08-17 12:31

If you are moving to Switzerland, whether for professional or commercial purposes, you will be subject to the Swiss tax system. The good news? Taxes in Switzerland are generally lower than in many European countries – plus the Swiss authorities have signed non-double taxation agreements with a hundred countries. There are several types of taxes in the country, levied at a federal, cantonal and local level: income, corporate, capital gains, and value-added tax, among others.

How the Swiss system works

In Switzerland, any person (expat or local) who earns more than 17,000 CHF (â¬14,665) per year, must pay federal taxes. Income tax is calculated according to the employee's total income as a result of any allowable deductions. The tax rate varies, however, since each canton follows its own tax system ' you should use the Tax Authorities Tax Calculator to find out what applies to you based on your canton of residence.

As an expat, the way taxes will be levied depends if you're a holder of a C permit or not (consult our article on Work Permits). If you have a C permit, you will have to complete a tax declaration every year, where the amount you'll need to pay will be determined by the amount you earned and your assets, as well as your canton's tax system. If you don't have a C permit, the tax will be withheld directly from your salary each month.

Good to know:

Frontier workers are also subject to income tax. Those who work in the cantons of Valais, Bern, Basel City, Basel Country, Vaud, Neuchâtel, Jura, and Solothurn will pay income tax in their country of residence. However, special rules apply to Swiss frontier workers and those who spend a week in a Swiss canton or more than 45 nights each year. Income tax is then levied at source if they are employed by a public body. As for those who work in Geneva, they will have to pay tax in Switzerland.

What you need to know about tax returns & deductions

If you need to fill out a tax return each year, it's best to think in advance. Throughout the year, you should be collecting the following documents:

  • your payslips
  • your bank or post office account statements
  • records of securities
  • Medical, professional and continuing education (aka further training) summary of expenses & receipts
  • Private pension statements
  • Occupational pension fund contributions
  • Receipts of any other donations
  • For home-owners: property tax records, debt/mortgage interest, bills for maintenance and renovations, running and administrative costs

Good to know:

Married couples in Switzerland must complete and sign a joint statement.

There are certain things you can deduct from your tax bill. These also vary depending on your canton of residence, but in general include any work-related expenses (like transport and meals allowance), social security contributions and charitable donations, life insurance or medical costs, child care expenses, dependents, interest paid on private debt etc.

Note that tax return can be completed online at your cantonal tax administration's website.

VAT & other tax types

Companies operating in Switzerland but which are located abroad must register for VAT. Value-added tax (VAT) in Switzerland is levied at 8%, which is one of the lowest rates in all of Europe. It is levied at a rate of 3.8% on accommodation and hotel services and at a rate of 2.5% on consumer products. However, companies with an annual turnover of less than CHF 100,000 (â¬86,266), or CHF 150,000 (â¬129,399) for charitable institutions and non-profit-oriented sports and cultural associations, are exempt from this obligation.

Other tax types include corporate tax, levied at a federal, cantonal and communal level for companies operating in Switzerland (both on their profits and capital). There is also capital tax, generally levied at the federal level at a rate of 8.5% and at the cantonal and communal levels, at rates varying between 10% and 14%. Finally, property gains tax is levied in the cantons of Berne, Zurich, Uri, Jura, Basel-Stadt, Schwyz, Nidwalden, Basel-Country, Ticino, and Thurgau.

Useful links:

Swiss Federal Tax Administration
The Swiss Authorities Online: Tax Returns
Tax Authorities: Tax Calculator

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.