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The responsibilities of the taxpayer in Switzerland: understand the Switzerland tax system and how it affects your income...
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 Zürich the highest marginal income tax rates for federal, cantonal and municipal taxes amount to 40% of the taxable income in the city of Zürich. For some municipalities the highest marginal income tax rate might differ slightly.
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 so-called unlimited taxation. Hence, such individual is obliged to declare and pay taxes on 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 so-called limited taxation in Switzerland. In such cases, the taxation is limited to the income derived from such employment, real estate or permanent establishment.
What deductions can be made from income?
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?
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.
Every effort has been made to offer information that is current, correct and clearly expressed. The information in this summary is intended to be no more than a general overview of the position and certain details have been deliberately omitted. The contents of this page should not be taken as an authoritative statement of Swiss law and practice. Neither the author nor the publisher are responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. This text is not intended to render legal, accounting or tax advice. Readers are encouraged to seek professional advice concerning specific matters before making any decision.