Corporate and individual taxes
Moderate tax rates for corporations and individuals and the smooth cooperation with tax authorities are a major advantage of Switzerland and especially the Greater Zurich Area.
The Greater Zurich Area provides attractive corporate and individual taxation compared to the rest of Europe. In Switzerland, the combined effective corporate tax rates (federal, cantonal and municipal) range from 12% to 24%. This wide range is due to the fact that there is a lot of tax autonomy on the regional and local level.
Individual taxation in Switzerland is also very moderate. Unlike corporate tax, there is a progression which makes it impossible to indicate a steady rate. However in the Swiss cantons, progression is much flatter than in any other European country. Middle-class incomes are typically taxed at one third or half of the European rates. The maximum rate applies from an income of CHF 300,000 to 400,000 per year, ranging from 23% to 35% in the Zurich region. The BAK Taxation Index shows a median of 29.4% for Greater Zurich, well below the average European tax rate of 42.9%.
The corporation and individual tax system at a glance
- Switzerland's decentralized structure shapes the country's tax system. Companies and individuals are taxed at federal (national), cantonal and municipal (communal) level. All these taxes are collected by a single authority, usually by the canton.
- Some cantons may offer tax incentives after a thorough screening of business plans
- At just 7.7 %, Switzerland has the lowest value-added tax rate in Europe.
- Currently, Switzerland has double taxation agreements (DTA) with approx. 120 countries.
- At 27.8%, Switzerland enjoys the lowest fiscal quota in Europe (tax revenues including social security contributions as a percentage of GDP).
Swiss corporate tax reform
On 19 May 2019, the Swiss people will vote on the upcoming Swiss tax reform which will abolish certain tax structures and, in compensation, trigger a significant lowering of regular corporate tax rates in the cantons. In Greater Zurich, several cantons will ultimately offer rates of 12% to 13%.
In addition, the cantons can and will introduce specific tax categories and tools to further lower the overall tax rate:
- Patent box compliant with OECD practices
- Super-deduction for R&D expenditure
- There may be further incentives depending on the canton of choice