One of the most famous parts of Swiss culture is the system of taxation. In the past, Switzerland was known as a tax haven due to its company-friendly regime of business taxes. Today, several large reforms of the tax system have meant that these loopholes and exemptions no longer exist. If you are working in Switzerland, are looking for a job, or have just started a business, you will have to pay into the tax system.
Brief history of taxes in Switzerland
Switzerland has always been known for its local system of taxation. Even today, the majority of your taxes will go to local authorities rather than a centralised government. Before 1848, the entirety of taxes were administered by local authorities, with each canton giving a small amount to the central government, mainly for maintaining national service. Early taxes were based on goods produced or housing.
After the Sonderbund War of 1848, Switzerland began a long process of making taxation uniform throughout the country. Despite these efforts, the majority of taxes are still determined by local governments, with some cantons such as Zug being famous for offering low business taxes. Although these loopholes no longer exist, their legacy can be found with each community having different tax rates and different types of tax.
Tax advisors & services
Doing your taxes, especially for expats or business owners, can be challenging. The system necessitates that you declare each stream of income and navigate the series of rebates and exemptions, such as repayments on mortgages. In order to help you through this intricate system of taxation, there are a diverse range of English-speaking tax advisors. They will be able to make your annual tax return easy and will take the pressure off you and your family.
Swiss tax system
The Swiss system of taxation is divided between the government, your county (canton), and your local council (Gemeinde). Each level of government has its own taxes that are levied on you and your family. In order to explain where these taxes go and what is funded through them, you can use our guide to the Swiss tax system. If you are planning to buy a house or plan to make investments through banking, it is important to know what taxes may restrict your activity.
Annual tax return in Switzerland
Every year, every household in Switzerland must submit an annual tax return. This is used to calculate how much you need to pay in tax to each government authority. Once this is complete, you will be expected to pay the amount predicted. One of the special parts of Swiss taxation is that there is a high chance that your tax estimation will be incorrect, meaning that you will receive money back or receive further requests for payment over the next few years.