Taxation of Individuals in Switzerland

Taxes in Switzerland

The Swiss tax system provisions taxes for individuals living in Switzerland disregarding their nationality. Therefore, residents, temporary residents and other foreign individuals will be applied the income tax in Switzerland. The same income tax applies to Swiss legal entities, also. The only exceptions where limited tax liability applies are foreign individuals and companies having trading relations with Switzerland. In case of foreign companies involved in trading relations with Swiss companies, the tax will be levied on specific incomes only.

Residency according to the Swiss income tax

The first requirement when registering for taxation purposes in Switzerland is to assess the applicant’s tax residency. Residence in Switzerland is established based on where an individual resides or where a company has a registered address. The personal income tax applies if a person resides in Switzerland for more than 90 days, no matter if they earn any amount of money.

The Swiss personal income tax applies to natural persons on a federal and cantonal level. Special provisions apply to Swiss partnerships also, even if they are registered with the Companies Register. In case of partnerships, each partner will be levied the personal income tax individually.

Taxable personal income in Switzerland

The application of the personal income tax in Switzerland depends on an individual’s marital status. Individuals married in Switzerland will be applied the principle of family taxation. The personal income tax is applied on a yearly basis and is calculated on the Swiss tax returns filed by the taxpayers. Resident individuals will be applied the personal income tax on the following earnings:

• - from business activities carried abroad,
• - from salaries,
• - from the sale movable and immovable property,
• - from other subsidiary payments.

The personal income tax is also levied on the notional rent value of the Swiss property the resident lives in. With respect to the tax rates, these are applied progressively and the maximum tax rate reaches 11.5% on a federal level. On a cantonal level, the tax burden varies and can reach a maximum of 30%.

For information about how the personal income tax is calculated, please contact our lawyers in Switzerland.