Taxes

The tax regime in Switzerland is defined by the country's federal structure, meaning it comprises three levels: federal, cantonal and local. The 26 cantons each have their own tax laws, with different tax rates. The canton of Vaud is the most generous to natural persons in French-speaking Switzerland in this regard. Another advantage of the Swiss tax system is that capital gains on private investments are not taxed.

The three levels of tax are levied on the basis of a single annual tax declaration. The amount payable is determined with regard to the taxpayer's place of residence rather than place of work. Federal tax is calculated as a percentage of cantonal tax. Moreover, all income worldwide, with a few exceptions (such as income from property abroad), is taken into account.

Who is subject to tax?

As a general rule, anyone domiciled or resident in Switzerland is subject to tax. You are liable for tax in Switzerland as soon as you satisfy one the following conditions:

  • You reside in Switzerland for at least 30 days and perform gainful employment
  • You reside for at least 90 days in Switzerland, even without gainful employment

To avoid the double taxation of foreign residents, Switzerland has signed bilateral tax agreements with several states, including European countries, Australia, Canada, China, New Zealand, South Africa, the United States, Russia and others. You will find a full list on the homepage of the Swiss Federal Tax Administration

See additional information on the Swiss tax system

Taxation at source or regular taxation

There are two types of taxation, at source and regular:

  • Taxation at source

Taxation at source is applicable for the majority of foreigners moving to Switzerland until they obtain a type C residence permit. Tax is not levied at source if one of the spouses is a Swiss national, holds a permanent residence permit (C) or has political refugee status. Such couples are subject to the regular tax regime.

The principle of taxation at source is that the tax is deducted straight from the salary by the employer in accordance with the tax tables published by the tax office, and transferred at the end of the year – it comprises federal, cantonal and local taxes. This means that the employee receives a salary net of tax. The tax rate depends on the salary, the marital status of the employee and the number of children in the household. For more information and complete tax tables, go to "impôt à la source"

  • Regular taxation

The regular tax regime requires taxpayers to complete an annual tax declaration, which is used to calculate the different taxes payable:

    • Federal tax is levied solely on income and is progressive. The rate varies from 0.1% to a maximum of 11.5% on a taxable income in excess of SFr700,000.
    • Cantonal tax is levied on income and wealth. The income tax rate varies between 1% and a maximum of 12.441% on incomes of SFr300,000. Wealth tax rates are tapered from 0.502 per mille on amounts in excess of SFr50,000 (tax threshold) or SFr25, and 3.095 per mille on SFr2,000,000 or SFr6,190
    • Local tax, calculated as a percentage of cantonal tax, varies from municipality to municipality.

For more information about taxes in the canton of Vaud, the processes involved and the tax tables, go to "impots-individus-personnes-physiques"

Numerous deductions are permitted when calculated taxable income. For details, please refer to the instructions sent with the declaration or go to "deductions-impot-sur-le-revenu"

Self-employment

Natural persons with income from self-employed activities are required to attach their signed annual accounts  (balance sheets, profit and loss statements, annexes) to their tax declaration or, in the absence of commercial accounts, the balance of their assets and liabilities, their income and expenses, and their withholding taxes and personal accounts. The general form intended for self-employed taxpayers must also be submitted with the declaration.

For more information, go to "Indépendant"

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