The taxes in Switzerland can be divided into three major categories: federal taxes, cantonal taxes and municipal taxes. In order to avoid overlapping taxation, Switzerland has concluded double taxation agreements with most industrialized countries, to protect foreign investors from double taxation.
Direct federal taxes
The direct federal taxes are the following:
- Taxes on income, for personal income and corporate tax.
- The withholding tax, applied on income from capital, such as interests and securities, bank accounts, dividends and share profits. The withholding tax is refunded if the assets and revenue they produce are declared in tax returns. Usually, the refund is set off against the amount due to the cantonal tax, or repaid directly to the solicitant.
- The federal casino tax, for casinos or other entities providing gambling activities.
- The military and civil service exemption tax, compensating for an exemption from military or civilian service. Swiss men who do not perform military or civilian service, starting with the age of 20, until the age of 30 for those unfit for military service, or until the age of 34, if military service is postponed, pay this tax. The military service exemption tax amounts to 3% of the taxable income, or a minimum of 400 CHF.
Federal taxes on goods and services
- The VAT tax is applied to all businesses. The total annual turnover is a determining factor whether VAT needs to be deducted. A VAT rate of 8% applies to most goods and services. However, a 2.5% rate applies to certain everyday consumer goods, such as food items, non – alcoholic beverages, newspapers, magazines, medicines or even tickets for sports and cultural events. Overnight stays at a hotel benefit from a special tax rate of 3.8%.
- Stamp duties
- The tobacco and alcohol tax, applied to spirits and tobacco products. The alcohol tax does not apply to traditional fermented products such as wine and cider; however, beer is a subject to a tax levied by the Federal Customs Administration. Imported tobacco and alcohol products are also taxable.
- The mineral oil tax refers to crude oil, other mineral oils, natural gas and their processed products. The tax rate varies according to the form of mineral oil. A surtax for mineral oil on motor fuels is charged at a flat rate of 300 CHF on each 1,000 liters.
- The motor vehicle tax is paid annually for any registered motor vehicle. The amount of this tax is calculated depending on the Swiss canton in which the vehicle is registered.
- The motorway vignette
- The distance – related heavy vehicle tax
- Custom duties.
Direct cantonal and municipal taxes
- Taxes on income and on net wealth include income taxes, withholding of tax source, poll tax, wealth tax, corporate income tax, tax on equity and expenditure based taxation.
- Inheritance and gift taxes. Under certain circumstances, heirs have to pay a tax on the deceased person’s estate. Spouses, persons in a registered partnership, children, step – children and foster children are usually tax exempt. Inherited personal and household goods are not taxed. In the case of received gifts, a tax may be paid on money or assets that are given away. The gift tax is paid by the recipient, however spouses, partners in a registered partnership, children, step – children and foster children are usually exempt.
- Real estate tax and real estate transfer tax.
- Cantonal casino tax.
- Trade tax.
Cantonal and municipal taxes on goods and services
- Taxes on motor vehicles
- Dog taxes, paid annually by the owners. The tax is levied by the canton or by the commune, and is determined according to the size and weight of the dog. In most Swiss cantons, owners of guide dogs or rescue dogs pay a reduce tax or no tax at all.
- Entertainment tax
- Stamp and registration duties
- Water duty
- Lottery tax, for those who win certain sums of money at the lottery
- Visitor’s tax
For more details and assistance regarding taxes in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.