Paying taxes is a crucial part of living in Switzerland. Taxes in Switzerland are used to fund large projects from the government as well as small local initiatives that have a profound impact on where you live. It is also how Swiss social security is funded. Swiss taxes usually amount to around 15 to 35 percent of your salary. There are many different types of taxes in Switzerland, which all have their own various deductions and exemptions, so we recommend consulting a tax advisor for advice on paying your taxes if you earn a large income.
Federal income tax
The only tax that is administered directly by the federal government is a federal income tax. Federal taxes are used for funding large projects such as public transport and national service. If you earn money in Switzerland, your income is taxed progressively. If you are married, your taxes are taken as one payment which combines both of your salaries.
Swiss federal income tax rates 2021
Swiss taxes are paid by charging a percentage tax on each segment of your income, as follows:
|Taxable income (in Swiss francs, over)||Percentage tax (%)|
You are only taxed that specific rate on funds in between each bracket. For example, if you were to earn 41.400 Swiss francs a year, 17.100 Swiss francs would be charged at 0,77 percent, and then the remaining 8.900 Swiss francs would be taxed at 0,88 percent.
This tax rate changes based on your marital status. If you are married or are in a civil partnership, then the average rate is dropped by 0,5 percent.
County and local taxes (Stadts und Gemeindesteuern)
The majority of taxes in Switzerland are charged by your canton and local community, who use the money to fund local transport, basic services, maintenance, and emergency services. Many of these taxes are set by the needs of the community such as additional transport links or road maintenance. Cantonal and local taxes are charged together and will be requested by your county of residence.
Canton income tax
In addition to your federal income tax, your canton also charges income tax which is spent on regional services. If you are earning an income from a job, business, or through freelancing, you will be charged a canton income tax on your earnings. This rate depends on your canton and is determined by the needs of the community. As an example, the county tax for the Canton of Zurich is shown below.
|Taxable income (in Swiss francs, over)||Percentage taxed (%)|
This tax rate is also reduced if you are married. The rate is usually reduced by around 0,5 percent on total earnings shared by the couple.
Cantonal wealth tax
Many cantons in Switzerland have a wealth tax. This tax is a charge against all your collective assets in Switzerland and abroad and is charged every year. The rate is typically around 1 to 3 percent of your total assets. This could include:
- Bank balances and investments
- Commodities like vehicles
- Owning a house in Switzerland
- Cumulative income
- Income from a Swiss pension
Local taxes in Switzerland
The majority of taxes levied on Swiss residents are local taxes. If you earn any form of income, you will need to pay local taxes to your specific Gemeinde. It is their responsibility to allocate your money to investments within the local community. These can include schools, bus and rail services, churches and community events. Each Gemeinde uses its tax income on different services depending on the needs of the community, although most councils follow a similar system of taxation.
Council tax (Gemeindesteuern)
Local council tax in Switzerland is a tax designed to fund all local initiatives in your area. The tax is based on your annual income and is paid alongside cantonal taxes. The level of taxation is raised and lowered by councils in order to accommodate social programmes as well as initiatives within the community. One example could be subsidising a local bus or funding a local theatre production. Rates vary but generally can range from 1 to 5 percent of one’s personal income.
School tax (Schulgemeindesteuern)
This tax is specifically for the funding of public schools and higher education in your community. This is the largest tax administered by your local Gemeinde and is used to fund all levels of education, from childcare to other types of school. If your council does not have any schools, your contribution will be sent to the nearest school to where you live. Tax rates vary, but a general rate is around 3 to 8 percent of personal income.
Church tax (Kirchesteuern)
Church tax is used to support places of worship in your local community. The tax is only applied if you registered as Protestant, Catholic, Jewish or another denomination that is recognised in your county (canton) during your registration for a Swiss residence permit. The contribution is paid to your closest place of worship that follows your denomination. This tax is voluntary and can range from between 1 and 3 percent of personal income. If you would like to stop paying this tax, then you must inform your Gemeinde and your place of worship.
Social security taxes in Switzerland
As well as federal, regional and local taxes, you are also expected to pay into Swiss social security. These are programmes that support you during periods of illness, unemployment or retirement. Some of the general contributions to these schemes are:
- 0,7 percent of income for disability insurance
- 2 percent of income for unemployment benefits
- 0,5 to 2 percent for accident and occupational diseases insurance
- 8 to 28 percent for your first and second pillar pension
Other social security programmes are paid for directly by your federal income tax.
Tax exemptions in Switzerland
There are many incomes and expenses in Switzerland that are tax-deductible. This means that if you declare these expenses while filing your tax return, they will be treated as either partially or fully tax-exempt. There are over 200 different expenses that are tax-deductible, as well as several that may be exempt specifically in your local area. Please check with your local Gemeinde or canton as to what is tax-exempt. Due to the complex nature of some tax exemptions, we highly recommend consulting an accountant, who will be able to recommend which tax exemptions apply to you.
Some of the things that are tax-deductible or exempt everywhere in Switzerland are:
- Each child reduces your taxable income by 6.500 Swiss francs a year.
- Childcare is tax-deductible up to 10.100 Swiss francs a year.
- Commuting is tax-deductible up to 3.000 Swiss francs if travel is essential.
- Donations are tax-free up to 20 percent of your income.
- Insurance premiums up to 1.700 Swiss francs a year.
- Interest charges on debt.
- Professional education up to 12.000 Swiss francs a year.
- Voluntary pension fund contributions and retirement savings.
Due to the complex nature of Swiss taxes, it is advisable to have an accountant take you through the process and deliver the best deal for you. For more rough guides on how much you will be paying, there is this handy tax calculator. You can also use the official government tax calculator to see how much is paid to local, cantonal and national services based on where you live.
Other types of Swiss tax
There are many other types of tax that can be applied depending on your situation. This can range from taxes on property to those on investments.
Are you taxed on investments in Switzerland?
If your investments produce a returnable income, they are taxed in Switzerland as part of withholding tax. Any income generated through these means must be declared while filing your tax return. Earnings on investments are treated as income and taxed in the same way as other earnings.
Are pensions tax-free in Switzerland?
If you have claimed your mandatory first, second or private third pillar pension then you must declare it as income on your tax return. Your pension will be treated as income and taxed as such both federally and regionally.
Are there property taxes in Switzerland?
In some cantons, you are taxed if you own any property that is considered to be viable to live or work in. Many cities like Zurich and Bern do not have property taxes and most cantons that do are rural cantons in the region around Swiss mountains. If your canton does have a property tax, this is usually capped at around 0,5 percent of the value of the property. For more information on property taxes, we recommend you look at our guide to buying a house in Switzerland.
Swiss taxes on businesses are similar in nature to regional and local taxes, with some additional taxes as well. In order to start a business in Switzerland, you must pay the appropriate taxes such as capital gains tax and a modified form of income tax. If you do plan on starting a business, it is highly recommended that you consult a trained accountant who will be able to give you all the information you need.
Swiss TV licence
The Swiss television licence is designed to provide adequate funding to the multiple public broadcasters in Switzerland. Anyone who owns a television or radio (including the radio in your car) must pay a flat fee. As of 2021, the fee is 335 Swiss francs a year for private households, and 670 Swiss francs a year for shared accommodation. For exceptions, please consult the Serafe website.
Every car that you own in Switzerland will be taxed by your county authorities in order to pay for road maintenance. This rate is decided upon by each county individually. Most counties charge the tax based on the cubic centimetres of space that the car takes up, as well as its weight. This means prices can range from 69 to 3.000 Swiss francs per car, per year. This price also goes up for additional cars. This tax is separate from the motorway charge.
The financial year in Switzerland begins in January and concludes in December. Once the year is complete, you have until March of the next year to file your first tax return (Steuererklärung). If you go beyond this deadline, your taxes will include interest based on the time delay between the deadline and when you file the return. This is the first part of completing your taxes in Switzerland. Please check out our guide on how to file a tax return.