Switzerland's corporate tax system includes federal and cantonal taxes. The total corporate tax rate includes federal income tax, cantonal income tax, and capital taxes.
Federal Taxation
Legal entities for tax purposes are divided into two categories:
1. Corporations (including stock corporations, partnerships limited by shares, limited liability companies), cooperatives, and SICAFs.
2. Associations, foundations, legal entities, and collective investment schemes with direct real estate ownership.
Corporations and cooperatives
The federal corporate income tax rate is a flat 8.5% on net profits. This rate is uniformly applied to all corporations, irrespective of size or industry. A participation deduction is provided to avoid double taxation of profits arising from involvement in other companies. This deduction applies to corporations or cooperatives that:
- Hold at least 10% of the share capital of another company.
- Have at least a 10% stake in the profits and reserves of another company.
- Own participation rights with a market value of at least CHF 1 million. The profit tax is proportionately reduced based on the net income from participation rights in relation to the total net profit.
Associations, foundations and other legal entities
Associations, foundations, and other legal entities are generally subject to profit or income tax at the federal level, with a proportional tax rate of 4.25% on net profit, provided they are not exempt from taxation due to their charitable, social, or similar purposes. The same applies to collective investment schemes with direct real estate ownership. Profits under CHF 5,000 are exempt from taxation tax.
Taxable Profit
The taxable net profit is determined by:
- Income statement balance
- Non-business-related expenses, such as costs for acquiring, producing, or enhancing fixed assets, non-commercially justified depreciation and provisions, contributions to reserves, payments to equity capital from the legal entity’s funds (unless from reserves taxed as profits), open and hidden profit distributions or unjustified donations to third parties.
- Capital gains, revaluation gains, and liquidation gains.
The taxable net profit is determined based on the result of the tax period.
Cantonal Taxation
Corporate taxes at the cantonal level are levied in the canton where the taxpayer’s registered office or actual administration is located or in the place of its economic affiliation.
The cantons levy a profit tax and a capital tax on legal entities.
The income tax rate is fixed in most cantons except Bern, Aargau, and Valais. Participation deduction is also granted at the cantonal level.
Capital tax is levied on equity capital. The cantons may offset the profit tax against the capital tax, effectively allowing them to pay only the highest of the two taxes.
Cantonal multipliers on capital and income tax may be applied.
Tax assessment
The Swiss tax year is the calendar year. Tax rates effective at the end of the tax year apply. The tax is assessed based on the annual tax returns submitted to the competent cantonal tax authority.
The deadlines for submitting a tax return vary by canton. Generally, a deadline extension is available upon request.
In a case where a tax return is not submitted, an assessment is made by the competent tax authority.
Assessment consists of provisional and definitive phases. The final assessments are issued following a review of tax returns and supporting documents submitted or when the tax base is defined by the authorities.
Objections can be lodged within 30 days of receipt of the assessment order.