Property-Related Taxes in Switzerland

Non-residents are taxed in Switzerland only on income sourced within Switzerland. Taxation is levied at the federal, cantonal, and municipal levels. Married couples are taxed jointly.

Rental income is taxable at all three levels of taxation, with broad deductibility of expenses, including maintenance, administration costs, and interest on acquisition loans. Capital gains tax on real estate is levied at the cantonal and municipal levels and is generally progressive, with significantly lower rates for long holding periods. 

Corporate income is taxed at a combined federal, cantonal, and municipal rate that typically ranges from about 11.9% to 20.5%, depending on the canton. Property transaction costs are relatively low by international standards, with roundtrip costs usually between 3% and 9%. Annual wealth taxes and, in some cantons, annual property taxes also apply.

Annual Property Tax

Wealth Tax

Switzerland levies an annual wealth tax at the cantonal level. Rates generally range between 0.1% and 0.5%, depending on the canton and municipality. Wealth tax is applied to an individual’s net assets, including real estate located in Switzerland. Liabilities such as mortgages, bank loans, and overdrafts are deductible from the taxable base.

Certain personal deductions and allowances may also apply, depending on cantonal law.

Annual Property Tax

In addition to wealth tax, many municipalities and some cantons levy an annual property tax on real estate. Roughly half of Switzerland’s cantons impose such a tax. Rates typically range from about 0.02% to 0.3% of the property’s taxable value, which is usually lower than its market value.

These taxes are collected either at the cantonal or municipal level, depending on local regulations.

Income Tax

Income from all taxable sources is aggregated and taxed at the federal, cantonal, and municipal levels. Different tax scales apply to married and unmarried taxpayers, with favorable rates generally available for married individuals and single parents.

Federal Income Tax

Taxable income is calculated as the total of all income earned, less allowable deductions. Federal income tax rates are progressive and apply uniformly across Switzerland.

Cantonal and Municipal Income Tax

Cantons and municipalities levy their own income taxes, which are broadly aligned with cantonal tax law. Municipalities apply their own coefficients to the cantonal tax base, resulting in significant variation in overall tax burdens depending on the location of the property or taxpayer.

Rental Income Tax

Rental income earned in Switzerland is taxable at the federal, cantonal, and municipal levels. Deductible expenses generally include administration costs invoiced by third parties, necessary maintenance and improvement costs, and interest payments on loans used to acquire or maintain the income-producing property.

Because cantonal and municipal taxes apply, the effective tax rate on rental income varies significantly depending on the canton and municipality in which the property is located.

Capital Gains Tax

Capital gains from the disposal of real estate are taxed at the cantonal and municipal levels. The applicable rates are generally progressive and depend heavily on the holding period. Longer ownership periods result in substantially lower tax rates, while short-term resales may attract significant surcharges. Typical cantonal practices are summarized below:

• Short-term (resale within 1–2 years): can exceed 40% of the gain in some cantons.
• Medium-term (5–10 years): usually between 20%–30%.
• Long-term (20–30+ years): often reduced significantly, sometimes below 10% or even close to 0%.

Two main systems are used to compute taxable capital gains: the Zurich system and the St. Gallen system. Under both systems, taxable gains are generally calculated as the selling price less acquisition costs and qualifying improvement expenses.

The primary difference arises in the treatment of business property. Under the Zurich system, business property is treated similarly to private property, with recaptured depreciation subject to income tax. Under the St. Gallen system, all capital gains from both private and business property are fully subject to income tax.

Corporate Taxation

Corporate income in Switzerland is subject to federal, cantonal, and municipal taxes. The combined effective corporate income tax rate typically ranges from approximately 11.9% to 20.5% of pre-tax profits, depending on the canton and municipality in which the company is registered.

Rental income earned by companies is treated as business income and taxed at the applicable corporate income tax rate.

Property Buying and Selling Taxes and Costs