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In Switzerland income tax is levied both by the Confederation (direct Federal
tax) and by the cantons and municipalities (cantonal and municipal taxes). For
this reason, the tax burden in the 26 Swiss cantons varies in accordance with
each canton's tax legislation.
As a rule, taxpayers must file a tax return annually. When the return has
been filed, tax scales are determined on the basis of income and wealth,
allowing the tax payable to be assessed.
Most cantons do not apply this principle to taxpayers domiciled abroad and to
foreign workers not in possession of a permanent residence permit; in these
cases the employer deducts taxes (Federal, cantonal and municipal) direct from
pay (which is thus taxed at source) to cover the amounts payable.
Where a contract of employment provides for a specific level of remuneration,
this is a gross amount, from which social security contributions must be
deducted, as follows:
- unemployment insurance (AC): 1.25% of pay up to CHF 106 800 or 0.5% in the
pay range CHF 106 801 and 267 000;
- old-age and surviving dependants’ insurance (AVS), invalidity insurance
(AI) and loss of earnings benefit: 5.05%;
- occupational pension scheme (LPP): approximately 7.5%:
- accident insurance (AA): approximately 0.8%.
The rates of unemployment insurance, old-age and surviving dependants’
insurance, invalidity insurance and loss of earnings benefit contributions are
laid down by law. The other deductions may vary according to the type of
insurance provided by the employer.
Tax may also be deducted at source; the amount varies considerably from
canton to canton.
Source: European Union
© European Communities, 1995-2006
Reproduction is authorised.
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