Tax in Switzerland
In order to understand the tax system in Switzerland, you must know that the federal government, as well as the cantons and often the local authorities may collect taxes independently. The amount of tax differs from canton to canton and from local authority to local authority. As a result there is healthy competition in Switzerland as far as tax is concerned, from which businesses and citizens benefit at the end of the day.
VAT is a confederate tax. ESTV (Eidgenössische Steuerverwaltung – The Swiss Federal Tax Administration) is responsible for its collection. With a turnover of more than CHF 100,000 per year it is generally obligatory to pay VAT, under that amount the declaration is voluntary. As a taxpayer, the company must register itself at the ESTV.
As a rule, the tax rate is 7.6%. This can be calculated according to stipulated or collected payments.
Tax on earnings:
Direct federal tax:
Taxation by the federal government is proportional and amounts to 8.5%.
Regional and local tax:The tax on earnings collected by canton and local authorities, it varies according to the canton or local authority and is dependent upon the type of company (holding, domiciled company, mixed company, ordinary company). In the most economical case this can be 0% and in the most extreme case more than 30%.
The canton of Zug) is one of the cantons in Switzerland with the lowest taxes.
Regional and local capital tax is collected based upon the so-called taxable own capital. The tax rate is proportional and ranges from 0.3% to 1% depending on the region or local authority.
Withholding tax amounts to 35%. It is paid on return on capital such as interest, dividends and lottery wins, straight from the bank, public limited company or lottery company and can be claimed back by residents of Switzerland during the tax return. The amount is deducted from the tax to be paid.