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Switzerland: Taxes and Costs

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Last Updated: Oct 16, 2007

Swiss rental income tax is very high

INDIVIDUAL TAXATION


Non-residents are taxed on Swiss-sourced income. Taxation occurs at the federal, cantonal and municipal levels. Spouses and minor children are taxed together.

INCOME TAX

Non-residents are liable to tax on income from Swiss sources at the federal, cantonal and municipal level. Different rates apply for married taxpayers (including those widowed, divorced, or single and supporting children or destitute persons) and unmarried taxpayers.

Federal Income Tax

Federal income tax is levied on the income of taxpayers at progressive rates. Taxable income is generally computed as the aggregate of all kinds of income, less allowable deductions.

Federal Income Tax Rates 2007 for Married Taxpayers

TAXABLE INCOME, CHF (€) TAX RATE
Up to 26,699 (€15,926) nil
26,700 – 47,899 (€28,565) 1% on band over €15,926
47,900 – 54,899 (€32,740) 2% on band over €28,567
54,900 – 70,899 (€42,275) 3% on band over €32,741
70,900 – 85,099 (€50,748) 4% on band over €42,276
85,100 – 97,399 (€58,082) 5% on band over €50,749
97,400 – 108,099 (€64,478) 6% on band over €58,083
108,100 – 116,999 (€69,778) 7% on band over €64,478
117,000 – 123,999 (€73,946) 8% on band over €69,779
124,000 – 129,299 (€77,107) 9% on band over €73,949
10% on band over €77,108 10% on band over €77,108
132,900 – 134,699 (€80,316) 11% on band over €79,250
134,700 – 136,499 (€81,393) 12% on band over €80,317
136,500 – 843,599 (€503,036) 13% on band over €81,394
Over 843,600 (€503,037) 11.5% on all income over €503,037
* Exchange rate as of 16 October 2007. 1 EUR = 1.67826 CHF
Source: Global Property Guide

Federal Income Tax Rates 2007 for Single Taxpayers

TAXABLE INCOME, CHF (€) TAX RATE
Up to 13,599 (€8,108) nil
13,600 – 29,799 (€17,768) 0.77% on band over €8,109
29,800 – 38,999 (€23,253) 0.88% on band over €17,768
39,000 – 51,999 (€31,006) 2.64% on band over €23,253
52,000 – 68,299 (€40,720) 2.97% on band over €31,007
68,300 – 73,599 (€43,880) 5.94% on band over €40,721
73,600 – 97,699 (€58,258) 6.60% on band over €43,881
97,700 – 127,099 (€75,790) 8.80% on band over €58,259
127,100 – 166,199 (€99,118) 11% on band over €75,791
166,200 – 712,399 (€424,822) 13.20% on band over €99,118
712,400 – 712,499 (€424,867) 0.13% on band over €424,423
Over 712,500 (€424,867) 11.5% on all income over €424,867
* Exchange rate as of 16 October 2007. 1 EUR = 1.67826 CHF
Source: Global Property Guide

Cantonal Income Tax

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

BERN CANTONAL TAX RATES

TAXABLE INCOME, CHF (€) MARRIED COUPLES INDIVIDUALS
Up to 2,900 (€1,729) 1.55% 1.95%
2,901 - 5,800 (€3,458) 1.65% 2.90%
5,801 - 14,600 (€8,706) 2.90% 3.65%
14,601 - 29,200 (€17,412) 3.75% 4.25%
29,201 - 53,500 (€31,902) 4.10% 4.65%
53,501 - 77,800 (€46,391) 4.65% 5.25%
77,801 - 102,100 (€60,881) 5.10% 5.65%
102,101 - 126,400 (€75,371) 5.35% 5.85%
126,401 - 150,200 (€89,563) 5.50% 6.00%
150,201 - 175,000 (€104,351) 5.65% 6.10%
175,001 - 209,000 (€124,624) 5.80% 6.20%
209,001 - 291,600 (€173,899) 6.10% 6.30%
291,601 - 437,400 (€260,829) 6.40% 6.40%
Over 437,400 (€260,829) 6.50% 6.50%
* Exchange rate as of 16 October 2007. 1 EUR = 1.67826 CHF

CANTON OF GENEVA TAX RATES

TAXABLE INCOME, CHF (€) SINGLE MARRIED
100(€60) - 10,000(€5,972) 0.30% - 5.27% 1.95%
10,100(€6,032) - 20,000(€11,944) 5.31% - 7.93% 3.20% - 5.27%
20,100(€12,004) - 29,900(€17,856) 7.95% - 9.45% 5.29% - 6.78%
30,000(€17,916) - 50,000(€29,860) 9.46% - 11.13% 6.80% - 8.79%
50,500(€30,159) - 75,000(€44,790) 11.16% - 12.23% 8.83% -10.27%
75,500(€45,096) - 100,000(€59,730) 12.25% - 12.95% 10.29% - 11.31%
101,000(€60,331) - 120,000(€71,681) 12.97% - 13.39% 11.34% - 11.97%
121,000(€72,278) - 150,000(€89,601) 13.41% - 13.93% 12.00% - 12.77%
152,000(€90,795) - 200,000(€119,468) 13.96% - 14.62% 12.82% - 13.75%
202,000(€120,662) - 250,000(€149,335) 14.64% - 15.15% 13.78% - 14.46%
260,000(€155,308) - 350,000(€209,069) 15.25% - 15.94% 14.58% - 15.44%
360,000(€215,042) - 450,000(€268,802) 16.00% - 16.49% 15.52% - 16.10%
460,000(€274,801) - 550,000(€328,567) 16.53% - 16.88% 16.15% - 16.57%
560,000(€334,541) - 650,000(€388,264) 16.92% - 17.18% 16.61% - 16.91%
660,000(€394,237) - 750,000(€447,997) 17.21% - 17.41% 16.94% - 17.18%
760,000(€453,970) - 850,000(€507,730) 17.43% - 17.59% 17.20% - 17.39%
860,000(€513,703) - 1,000,000(€597,329) 17.61% - 17.80% 17.41% - 17.63%
* Exchange rate as of 16 October 2007. 1 EUR = 1.67826 CHF

CANTON OF ZURICH TAX RATES

TAXABLE INCOME, CHF (€) SINGLE MARRIED
Up to 12,400(€7,389) Up to 6,200(€3,694) nil
12,400(€7,389) – 18,100(€10,785) 6,200(€3,694) – 10,500(€6,256) 2%
18,100(€10,785) – 25,200(€15,016) 10,500(€6,256) – 14,800(€8,819) 3%
25,200(€15,016) – 33,800(€20,140) 14,800(€8,819) – 21,800(€12,990) 4%
33,800(€20,140) – 43,700(€26,039) 21,800(€12,990) – 30,400(€18,114) 5%
43,700(€26,039) – 56,500(€33,666) 30,400(€18,114) – 40,300(€24,013) 6%
56,500(€33,666) – 84,900(€50,588) 40,300(€24,013) – 51,700(€30,806) 7%
84,900(€50,588) – 113,300(67,510) 51,700(€30,806) – 67,300(€40,101) 8%
113,300(€67,510) – 156,000(92,953) 67,300(€40,101) – 97,200(€57,917) 9%
156,000(€92,953) – 207,100(€123,402) 97,200(€57,917) – 126,900(€75,614) 10%
207,100(€123,402) – 262,500(€156,412) 126,900(€75,614) – 173,900(€103,619) 11%
262,500(€156,412) – 326,400(€194,487) 173,900(€103,619) – 235,800(€140,503) 12%
Over 326,400(194,487+) Over 235,800(€140,503+) 13%
* Exchange rate as of 16 October 2007. 1 EUR = 1.67826 CHF

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. Non-residents 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.

CORPORATE TAXATION


INCOME TAX

Corporate income is taxable at the federal, cantonal and municipal levels. Federal income tax is imposed at a flat rate of 8.5%. The cantonal income tax rates, as well as the municipal rates, vary depending on the canton and municipality the company is liable to pay taxes in.

Capital Gains Tax

Capital gains on the sale of real estate property are taxable at the federal and cantonal levels. At the federal level, the gains are generally included in the taxable income. At the cantonal level, cantons use either the Zurich system or the St. Gallen System. Under the Zurich system, a separate real estate gains tax is levied on capital gains, while under the St. Gallen System, capital gains are included in corporate income tax.

 

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