Corporate and business taxes in Switzerland are some of the lowest in Europe. Nevertheless, it is important to know and understand the tax system if you would like to start a business in Switzerland. The amount and number of taxes your business pays are dependent on income, total assets, company size and what your company does. If you would like to become a freelancer in Switzerland, your total income generated is treated as corporate income. All legal types of company must pay these taxes if they apply.
Federal corporate income tax
All companies in Switzerland must pay a corporate income tax (CIT) to the government. This is a charge on the taxable profits made in Switzerland by a company. These charges are tax-deductible so although the flat rate of income tax federally is 8,5 percent, in reality, the total amount is around 7,8 percent of your taxable income in a year.
Cantonal and local corporate income tax
As well as federal corporate income tax, each county (canton) has its own income tax as well as your local council (Gemeinde). These taxes are determined by the canton’s needs and vary greatly throughout the country. The corporate tax rate in cantons and localities amounts to 11,9 to 21,6 percent of a company’s income.
Value-added tax in Switzerland (VAT)
If your company sells a product or provides a service, the products themselves are subject to value-added tax. This amounts to 7,7 percent of the product's value as VAT. Essential items such as toiletries have their VAT reduced to 2,5 percent of their value.
As part of value-added taxation, all goods arriving to Switzerland from another nation must pay import duty. This applies if the product has been imported for commercial use and is not a possession. In addition to the VAT amount added to domestic products, the product itself is weighed and evaluated in order to determine the amount of duty you pay. Goods such as alcohol, food items, textiles and tobacco are generally charged a higher rate when entering Switzerland.
Property taxes in Switzerland
The majority of Switzerland does not have a specific property tax. Instead, the transfer of property is taxed based on any income made in selling or switching properties. Some communities levy their own property tax, but this is rare. Any profit made on property is charged in the same way as federal corporate income tax.
Swiss securities transfer tax
If you are transferring foreign or Swiss securities from different accounts, the federal government will charge you a security transfer or turnover tax. Securities in this case refer to stocks, bonds, shares and other financial tools. The transfer of these securities is charged at 0,15 percent of their total value or 0,3 percent if it is being transferred by a foreign account. This tax is not applied during mergers, reorganisations or liquidations.
The stamp tax or capital duty tax is a wealth tax for companies levied by the federal government. The tax is charged based on the total assets of the company including real estate, products and total savings. The first one million Swiss francs of value is exempt, anything above that value is charged at 1 percent of a company’s total worth.
The capital tax is the same as the stamp tax but is charged by cantons and the Gemeinde. The tax is set by the needs of the community and can vary depending on the region where your business is based. Generally, regional and local governments charge between 0,001 and 0,5 percent capital gains tax on businesses based in their region.
Other forms of taxation
In addition to these main taxes on businesses, some other types of business may have increased costs due to other forms of taxation. These are all administered by the federal government and can include:
- Petroleum tax
- Heavy vehicle fees as part of registering a vehicle in Switzerland
- National road tax as part of the Swiss motorway vignette
- Alcohol tax
- Tobacco tax
- Personal taxes as detailed in the system of taxes in Switzerland
How to pay corporate taxes in Switzerland
The tax year in Switzerland begins in January and concludes in December. During the first few months of the year, you will be expected to pay your business taxes. The way you file your taxes differs depending on the size of your company’s income.
Financial report and audits
Companies that have an income higher than 500.000 Swiss francs a year must complete a comprehensive financial report. This report will determine how much you must pay to the federal, cantonal and local authorities. If your company has a total value of 20 million francs, a sales revenue of 40 million or more than 250 employees, you must submit to a financial audit. Please contact a tax advisor and / or a financial advisor for more information on audits.
Companies with an income less than 500.000 Swiss francs a year
If your company has an income of less than 500.000 Swiss francs a year, you will be asked to provide your accounts for the past year to the Swiss office of taxation. In these accounts you must include:
- A full overview of all income
- A detailed list of expenditures and employee salaries
- The list and valuation of any assets such as stock, production facilities, real estate and company balance
- Any costs that are tax-deductible such as contributions to social security
With this information, the tax office will contact you if they require any further information. You will receive your tax bill up to four months after the submission and can pay in either a single lump sum or as three equal payments.