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Tax Policy


Income Tax Rate - progressive

Corporate Tax Rate 12-22%

VAT Rate 8%

Personal income tax

Tax in Switzerland is levied at three levels – federal, cantonal and communal. Most taxes are levied at cantonal and communal level and there is competition amongst the cantons as far as tax rates are concerned.

Income tax is imposed by the Federal government and also by the 26 cantons that make up the country.

Federal income tax rate is progressive up to 13,20%

The Switzerland's personal income tax is a bracketed income tax that must be paid yearly by all citizens to the government of Switzerland. Failure to pay, or underpayment of, the Switzerland income tax can result in high fees, fines, or jail time.

In addition to Switzerland's income tax, other taxes may apply to wages or profits earned, including social services, medical care, and capital gains taxes.

Switzerland Income Tax Brackets (2012)

Tax Bracket (yearly earnings)

Tax Rate (%)

€0 - €13,600


€13,600 - €29,800


€29,800 - €39,000


€39,000 - €52,000


€52,000 - €68,300


€68,300 - €73,600


€73,600 - €97,700


€97,700 - €127,100


€127,100 - €166,200


€166,200 and up


Switzerland has a bracketed income tax system with ten income tax brackets, ranging from a low of 0.00% for those earning under €13,600 to a high of 13.20% for those earning more then €166,200 a year.

Taxation of companies

Corporate income tax is levied at federal, cantonal and municipal levels.

The federal corporate income tax rate is 8.5% flat. Since income and capital taxes are deductible in determining taxable income, the effective tax rate that a company pays on its profits before deduction of tax is 7.83%.

The cantonal tax rates vary considerably. In general they are progressive (depending on different factors). The rates mentioned in the cantonal tax laws are usually subject to cantonal and municipal multipliers.

Municipal tax on corporate income is calculated as a small proportion of cantonal tax.

Resident companies are subject to:

·         the federal corporate income tax, and

·         the cantonal/municipal corporate income taxes, and

·         the cantonal/municipal net worth taxes.

Non-resident companies deriving income from certain Swiss sources may be subject to certain withholding taxes or be liable to corporate income tax in respect of such income.

Non-resident companies may be subject to Swiss corporate taxation if they:

·         are partners of a business in Switzerland

·         have a permanent establishment in Switzerland

·         own Swiss real estate

·         have claims secured by mortgage on Swiss real estate

·         deal with Swiss real estate or act as a broker

Switzerland has a classical corporate tax system which results in economic double taxation. Specific relief only applies to holding companies in order to avoid triple taxation. Nevertheless, profits after tax are often higher in Switzerland compared to other countries using an integration system, because of the low Swiss tax rates.

Tax holidays

The cantonal government may grant tax holidays up to maximum ten years to companies established in Berne or to companies moving into the canton of Berne under certain conditions.

Value Added Tax

The current Switzerland VAT (Value Added Tax) is 8.00%. The VAT is a sales tax that applies to the purchase of most goods and services, and must be collected and submitted by the merchant to the Switzerland governmental revenue department.

Standard rate: 8%

-       Reduced rate (e.g. food, medicine, newspapers, books): 2.8%

-       Special rate for lodging services: 4%

In general, the following transactions of taxable persons are subject to VAT:

-       supply of goods and services in Switzerland

-       import of services

-       import of goods.