Taxes & Taxation in Geneva & Vaud, Switzerland

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Taxes & Taxation in Geneva & Vaud, Switzerland

Income Tax

In Switzerland, taxes are levied at the federal, cantonal and municipal levels. Federal tax law is standard throughout Switzerland. However, each of the 26 cantons has separate laws for cantonal taxes. Municipal taxes are levied as a multiple of cantonal taxes. 

The tax burden varies substantially from one canton to another and, within the same canton, from one municipality to another. Thus, although taxes are paid in function of the individual's income and wealth, the tax burden depends to a large extent on the place of residence. 

In the Canton of Geneva the highest marginal income tax rates for federal, cantonal and municipal taxes amount to 51% of the taxable income (city of Geneva) and 43% (municipality of Meyrin). In the neighbouring Canton of Vaud the highest marginal rates amount to 51% (city of Lausanne).

Who is liable to pay Swiss income tax?

This depends on whether for tax purposes a taxpayer is "resident" or "non-resident".

Who is resident?

An individual who has moved his centre of life to Switzerland or has a habitual abode of 30 days with employment activity or 90 days without employment activity in Switzerland is subject to unlimited taxation. Such individual is obliged to declare his worldwide income and wealth in Switzerland. Income from real estate or permanent establishments situated outside Switzerland are not taxed in Switzerland but taken into consideration for the determination of the applicable tax rate.

Are non-residents also taxed?

Non-resident individuals who derive income from employment, or who conduct business through a permanent establishment, or own real estate in Switzerland are subject to limited taxation in Switzerland. The taxation is limited to the income derived from such employment, real estate or permanent establishment.

What deductions can be made from income ?

The Swiss tax authorities generally allow taxpayers to deduct certain expenses that they have incurred, to enable them to earn or realise the taxable income. For example:

• from employment income: social security contributions, travel to and from work, business expenses that have not been reimbursed;
• from real estate income: interest paid on mortgages and maintenance costs

What are the personal allowances?

The Swiss cantons grant allowances in order to reflect the family status and the care for children.

When must the tax be paid?

A tax return must be completed and returned to the tax authority, by post or by the internet, usually by March 15 following the tax year.

The tax office usually issues invoices for the payment of instalments and a final statement after the tax assessment for the respective tax year.

Wealth Tax

The Swiss cantons levy taxes on the net wealth of individuals which are subject to (limited or unlimited) taxation. In the case the individual is resident in Switzerland, his worldwide wealth is subject to wealth taxes in Switzerland. Real estate or permanent establishments abroad are not taxed in Switzerland but considered for the determination of the applicable tax rate. In the case the individual is taxed on his real estate or permanent establishments located in Switzerland, the taxation is limited to the assets located in Switzerland.

• The wealth taxes in the canton of Geneva amount to approx. 0.6% of the taxable net wealth. 
• In the canton of Vaud the wealth tax amounts to approx. 0.3%.

Inheritance and Gift Tax

The cantons of Geneva and Vaud levy inheritance and gifts taxes. Inheritance tax will be levied on the inheritance of assets after the donor's death in the case the deceased has had his last residence in the canton or in the case the estate of a deceased with last domicile abroad contains assets located in the canton. Gifts taxes apply to gifts made during the donor's lifetime.

The tax is calculated on the net value of the estate or gift. The tax rate depends on the relationship between the donor/deceased and the donee/heir. The cantons of Geneva and Vaud do not levy gifts and inheritance taxes between spouses. Also the canton of Geneva does not levy gifts and inheritance taxes between parents and children.

In the case a donor gifts an amount of CHF 500,000 to a third party (i.e. not a relative or to his spouse) the taxes amount to CHF 270,000 in the case of the canton of Geneva and CHF 250,000 in the case of the canton of Vaud.

Taxation of Capital Gains

In Switzerland, no capital gains tax is due on privately held movable assets. However, the cantons levy capital gains taxes on the alienation of real estate located in Switzerland (so called real estate capital gains tax). The amount of capital gains tax usually depends on the size of the capital gain and the time the alienator was the owner of the real estate.

Official Swiss Taxes Online

The Geneva and Vaud Tax Offices website (in French) has further comprehensive information on the taxes due by individuals and companies.

• Geneva Tax Offices
• Vaud Tax Offices
• Online declarations in Geneva for individuals and self-employed people, see GeTax
• Online declarations in Geneva for companies, see GeTaxPM

Information supplied by Michael A Meer, Attorney at Law
Gruninger Hunziker Roth, Bern. Tel: +41 (0) 58 356 5050,
e-mail / web: www.ghr.ch
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