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Tax in Switzerland


First of all, for any advice about Swiss taxation and residency we recommend you contact a local Swiss "fiduciaire".


Income Tax

The income tax is levied at federal, cantonal and communal level. Personal income tax is progressive in nature. The total rate does not usually exceed 40% and in most cases, the maximum tax rate is much lower than this. For example, in the canton of Schwyz, the top rate, inclusive of federal, cantonal/communal tax is approximately 22%. The progressive tax is levied up to a maximum of 11.5% for incomes over CHF682,200 at federal level, and approximately twice that at cantonal level. There is considerable variation between cantons. Municipal rates are usually a small fraction of cantonal rate

 

VAT

The current VAT rate is 8%, last rise on January 1st 2011. Certain goods like food, medicines, books are taxed at the favourable rate of 2.5%.


Social Security Taxes

These taxes are payable by employers, employees and the self-employed. Currently, the total annual old age and disability contribution is 10.1% of total employee remuneration (no ceiling). Half is pad by the employer and half by the employee. Social security represents approcimately 13.1% of an employee's salary, excluding health insurance costs and some cantonal payments.


The Fiscal Deal
This involves negotiation between the individual and the canton where residency is planned. It is a lump sum method to couple tax payment and residency, it is the easier method and the benefit is that you can end up paying considerably lower tax than a Swiss national.

Corporation Tax
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 that a company pays on its profits before deduction of tax is 7.83%. Cantonal tax rates can be levied at rates of up to 20% and like the federal tax are progressive, using a scale based on the relationship of profits to net worth. The average cantonal tax rate in 2010 was approximately 21%.

UK Comparison
UK VAT rate: recently risen to 20% UK Max. Income Tax: 50% UK Corporation Tax: 26% UK National Insurance: up to 26% (employee 12%, employer 13.8%)
 TAX IN SWITZERLAND