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Apr 08, 2013

Swiss rental income tax is high


INDIVIDUAL TAXATION

Nonresidents are taxed on Swiss-sourced income. Taxation occurs at the federal, cantonal and municipal levels. Spouses are taxed together. Investment income of a minor child is included in his parents’ income but his earned income is taxed separately.

INCOME TAX

Income from different sources are aggregated and taxed at the federal, cantonal and municipal levels. Different rates apply for married taxpayers (including those widowed, divorced, or single and supporting children or destitute persons) and unmarried taxpayers. Nonresidents are not entitled to any personal deductions and allowances.

Federal Income Tax

Taxable income is generally computed as the aggregate of all kinds of income, less allowable deductions.

FEDERAL INCOME TAX 2011 FOR MARRIED TAXPAYERS

TAXABLE INCOME, CHF (€)
TAX RATE
Up to 28,100 (€22,524)
0%
28,100 – 50,400 (€40,399)
1% on band over €22,524
50,400 – 57,900 (€46,410)
2% on band over €40,399
57,900 – 74,700 (€59,877)
3% on band over €46,410
74,700 – 89,700 (€71,901)
4% on band over €59,877
89,700 – 102,700 (€82,321)
5% on band over €71,901
102,700 – 113,900 (€91,299)
6% on band over €82,321
113,900 – 123,300 (€98,834)
7% on band over €91,299
123,300 – 130,800 (€104,846)
8% on band over €98,834
130,800 – 136,300 (€109,254)
9% on band over €104,846
136,300 – 140,200 (€112,380)
10% on band over €109,254
140,200 – 142,100 (€113,903)
11% on band over €112,380
142,100 – 144,000 (€115,426)
12% on band over €113,903
144,500 – 889,400 (€712,917)
13% on band over €115,426
Over 889,400 (€712,917)
11.5% on all income over €712,917
Source: Global Property Guide

If taxable income exceeds CHF889,400 (€712,917), then the whole taxable income is taxed at a flat rate of 11.5%.


FEDERAL INCOME TAX 2011 FOR SINGLE TAXPAYERS

TAXABLE INCOME, CHF (€)
TAX RATE
Up to 14,400 (€11,543)
0%
14,400 – 31,500 (€25,250)
0.77% on band over €11,543
31,500 – 41,200 (€33,025)
0.88% on band over €25,250
41,200 – 55,000 (€44,086)
2.64% on band over €33,025
55,000 – 72,200 (€57,873)
2.97% on band over €44,086
72,200 – 77,700 (€62,282)
5.94% on band over €57,873
77,700 – 103,000 (€82,562)
6.60% on band over €62,282
103,000 – 133,900 (€107,330)
8.80% on band over €82,562
133,900 – 175,000 (€140,275)
11% on band over € 107,330
175,000 – 751,300 (€602,220)

13.20% on band over €140,275

Over 751,300 (€602,220)
11.5% on all income over €602,220
Source: Global Property Guide

If taxable income exceeds CHF751,300 (€620, 524), then the whole taxable income is taxed at a flat rate of 11.5%.

FEDERAL INCOME TAX 2010 FOR MARRIED TAXPAYERS

TAXABLE INCOME, CHF (€)
TAX RATE
Up to 27,000 (€21,642)
0%
27,000 – 47,900 (€38,395)
1% on band over €21,642
47,900 – 54,900 (€44,006)
2% on band over €38,395
54,900 – 70,900 (€56,831)
3% on band over €44,006
70,900 – 85,100 (€68,214)
4% on band over €56,831
85,100 – 97,400 (€78,073)
5% on band over €68,214
97,400 – 108,100 (€86,650)
6% on band over €78,073
108,100 – 117,000 (€93,784)
7% on band over €86,650
117,000 – 124,000 (€99,395)
8% on band over €93,784
124,000 – 129,300 (€103,643)

9% on band over €99,395

129,300 – 132,900 (€106,529)
10% on band over €103,643
132,900 – 134,700 (€107,972)
11% on band over €106,529
134,700 – 136,500 (€109,414)
12% on band over €107,972
136,500 – 843,600 (€676,205)

13% on band over €109,414

Over 843,600 (€676,205)
11.5% on all income over €676,205
Source: Global Property Guide

If taxable income exceeds CH843,600 (€676,205), then the whole taxable income is taxed at a flat rate of 11.5%.

FEDERAL INCOME TAX 2010 FOR SINGLE TAXPAYERS

TAXABLE INCOME, CHF (€)
TAX RATE
Up to 13,600 (€10,901)
0%
13,600 – 29,800 (€23,887)
0.77% on band over €10,901
29,800 – 39,000 (€31,261)
0.88% on band over €23,887
39,000 – 52,000 (€41,682)
2.64% on band over €31,261
52,000 – 68,300 (€54,747)
2.97% on band over €41,682
68,300 – 73,600 (€58,996)
5.94% on band over €54,747
73,600 – 97,700 (€78,314)
6.60% on band over €58,996
97,700 – 127,100 (€101,880)
8.80% on band over €78,314
127,100 – 166,200 (€133,221)
11% on band over €101,880
166,200 – 712,400 (€571,039)

13.20% on band over €133,221

Over 712,500 (€571,039)
11.5% on all income over €571,039
Source: Global Property Guide

If taxable income exceeds CH712,500 (€571,039), then the whole taxable income is taxed at a flat rate of 11.5%.

Cantonal Income Tax

Cantons levy their own tax on income, and the tax rates vary from canton to canton. Just like the federal income tax, the cantonal income tax has progressive rates and is different for married couples and unmarried individuals.

CANTON OF BERN - INCOME TAX RATE

TAXABLE INCOME, CHF (€)
TAX RATE
MARRIED TAXPAYER
SINGLE TAXPAYER
Up to 2,900 (€2,325)
1.55%
1.95%
2,900 – 5,800 (€4,649)
1.65%
2.90%
5,800 – 14,600 (€11,703)
2.90%
3.65%
14,600 – 29,200 (€23,406)
3.75%
4.25%
29,200 – 53,500 (€42,884)
4.10%
4.65%
53,500 – 77,800 (€62,362)
4.65%
5.25%
77,800 – 102,100 (€81,840)
5.10%
5.65%
102,100 – 126,400 (€101,319)
5.35%
5.85%
126,400 – 150,700 (€120,797)
5.50%
6.00%
150,700 – 175,000 (€140,275)
5.65%
6.10%
175,000 – 209,000 (€167,528)
5.80%
6.20%
209,000 – 291,600 (€233,738)
6.10%
6.30%
291,600 – 437,400 (€350,607)
6.40%
6.40%
Over 437,400 (€350,607)
6.50%
6.50%

The cantonal tax rates of Geneva are calculated based on a complex formula. The following is a simplified summary containing only selected tax brackets to give an indication of the basic cantonal tax rates in Geneva.

CANTON OF GENEVA - INCOME TAX RATE

TAXABLE INCOME, CHF (€)
TAX RATE
MARRIED TAXPAYER
SINGLE TAXPAYER
100 (€80) - 10,000 (€8,016)
0.25% – 3.10%
0.30% – 5.17%
10,100 (€8,096) – 20,000 (€16,031)
3.13% – 5.17%
5.20% – 7.81%
20,100 (€16,112) – 29,900 (€23,967)
5.19% – 6.66%
7.83% – 9.34%
30,000 (€24,047) – 50,000 (€40,079)
6.68% – 8.67%
9.35% – 11.04%
50,500 (€40,479) – 75,000 (€60,118)
8.71% – 10.16%
11.07% – 12.16%
75,500 (€60,517) – 100,000 (€80,157)
10.18% – 11.20%
12.17% – 12.88%
101,000 (€80,959) – 120,000 (€96,189)
11.23% – 11.86%
12.90% – 13.32%
121,000 (€96,990) – 150,000 (€120,236)
11.89% – 12.67%
13.34% – 13.85%
152,000 (€121,839) – 200,000 (€160,314)
12.71% – 13.65%
13.89% – 14.55%
202,000 (€161,917) – 250,000 (€200,393)
13.68% – 14.36%
14.57% – 15.08%
260,000 (€208,409) – 350,000 (€280,550)
14.49% – 15.36%
15.18% – 15.87%
360,000 (€288,566) – 450,000 (€360,707)
15.44% – 16.03%
15.94% – 16.42%
460,000 (€368,723) – 550,000 (€440,864)
16.08% – 16.50%
16.47% – 16.83%
560,000 (€448,880) – 650,000 (€521,021)
16.54% – 16.85%
16.86% – 17.13%
660,000 (€529,037) – 750,000 (€601,178)
16.89% – 17.13%
17.16% – 17.37%
760,000 (€609,194) – 850,000 (€681,335)
17.15% – 17.34%
17.39% – 17.55%
860,000 (€689,351) – 990,000 (€793,555)
17.36% – 17.57%
17.57% – 17.75%
1,000,000 (€801,571)
17.58%
17.76%

CANTON OF ZURICH - INCOME TAX RATE

TAXABLE INCOME, CHF (€)
TAX RATE
MARRIED TAXPAYER SINGLE TAXPAYER
Up to 12,400 (€9,940) Up to 6,200 (€4,970)
nil
12,400 – 18,100 (€14,508) 6,200 – 10,500 (€8,417)
2%
18,100 – 25,200 (€20,200) 10,500 – 14,800 (€11,863)
3%
25,200 – 33,800 (€27,093) 14,800 – 21,800 (€17,474)
4%
33,800 – 43,700 (€35,029) 21,800 – 30,400 (€24,368)
5%
43,700 – 56,500 (€45,289) 30,400 – 40,300 (€32,303)
6%
56,500 – 84,900 (€68,053) 40,300 – 51,700 (€41,441)
7%
84,900 – 113,300 (€90,818) 51,700 – 67,300 (€53,946)
8%
113,300 – 156,000 (€125,045) 67,300 – 97,200 (€77,913)
9%
156,000 – 207,100 (€166,005) 97,200 – 126,900 (€101,719)
10%
207,100 – 262,500 (€210,412) 126,900 – 173,900 (€139,393)
11%
262,500 – 326,400 (€261,633) 173,900 – 234,900 (€188,289)
12%
Over 326,400 (€261,633) Over 234,900 (€188,289)
13%

Municipal Income Tax

Municipalities also levy their own taxes on income. The municipal income taxes are generally similar to the cantonal income tax laws. The local authorities also determine their own coefficient, and they are levied in accordance with the cantonal income taxes.

RENTAL INCOME
Rental income in Switzerland is taxable at the federal, cantonal and municipal levels. Administration costs invoiced by third persons, necessary maintenance and improvement costs, as well as interest payments in respect of loans used to acquire income, are deductible from the taxable amount. The rates of the federal, cantonal and municipal income taxes are then applied. Since the cantonal and municipal income taxes are imposed on rental income, the total tax liability varies according to the location of the property.

CAPITAL GAINS
At the federal level, gains from the sale of private property are not taxable, and gains from the sale of business property are taxed as income. At the cantonal and municipal level, a real estate gains tax is imposed on the sale of both private and business property.

The rates for capital gains are usually progressive and the longer the property is owned, the lower the taxes. A shorter owning period would require a surcharge and both cantonal and municipal levels are applicable. The following are the cantonal rules for the disposal of immovable property:

  • The standard rate is applicable after the holding period of four to five years. The top burden usually ranges from 25% to 50%.
  • Tax is gradually reduced after exceeding the four to five years of ownership. The maximum relief allowed is 50% to 70% of the payable tax.
  • A surcharge of up to 50% of the normal tax may be imposed on short term gains i.e. properties sold within the first four or five years.

Two systems are used to compute for taxable capital gains, the Zurich system and the St. Gallen System. The two systems are highly similar, since the computation for the taxable gains is selling price less acquisition costs and improvement costs for both systems. Their main difference lies in the computation for capital gains on business property. The Zurich system basically applies the same formula to business property as private property, and subjects recaptured depreciation to income tax, while the St. Gallen System subjects all capital gains from business and private property fully to income tax.


PROPERTY TAXATION


Wealth Taxes

Annual wealth taxes are levied at the cantonal level. Individuals pay taxes on enterprise assets and real estate situated in Switzerland. The tax payable varies from canton to canton. The assets are valued at their market value. Personal debts, mortgages, bank loans and overdrafts are deductible, as well as certain personal deductions and allowances from the taxable base, depending on the canton.

Property Taxes

Many municipalities and some cantons impose real property taxes on real estate located in Switzerland. The rates usually range from 0.05% to 0.3%, levied on the value of the property. The rates and the coefficient vary from canton to canton.





Comments

#1 IVANOV | August 23, 2010

Can You please explain for example if I buy house for 1mln chf what tax(usualy circa) must be paied every year(incl. govermetal,cantonal and etc. )and also how can be obtain this permition B (but only to buy house in Swiss notto work,how much funds must be declared and how much will be the tax on it? Many thanks !

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