The Swiss Confederation is the governing body of taxes in Switzerland. Normally Switzerland is the top choice for investors looking to establish businesses as Switzerland's tax rates are far lower than almost all other countries in the world, also adding Switzerland's extremely stable government and political position Switzerland comes out as one of the top choices in the world for business development.
Switzerland is made up of 26 cantons, which are similar to states. Each canton features its own types of taxation, regulations and court systems but almost all of the canton's decisions are determined through unicameral parliaments. The newest canton to form is Jura, which was split from its original canton, Bern, in 1979. Responsibilities placed on each canton include that of healthcare, welfare and taxation. Corporate taxes, in particular, are almost all different in each canton, but on a nationwide level, there is an average tax of 14.4% on income, capital and property.
Canton of Zurich is ranked 22
In 2014, Zurich was named the 22nd best canton to invest in with regards to taxation and other legislation. This number shows it isn't anywhere near the best canton to invest with regards to taxation as the main focus, although there is a myriad of other benefits and opportunities to investing in Zurich. In comparison to Basel and Geneva, Zurich is a better option for larger businesses. From a global standpoint, Zurich is still one of the best cities in the world for business investment and establishment.
You can find more information on Swiss taxes on our website. Our agents are also available to consult with you for more information regarding business formation and legal advice.
Corporate tax system in Switzerland
Switzerland's corporate tax system is rather straightforward. Corporations and their shareholders are individually subject to tax, which then results in double taxation. Taxes implemented on individuals are based on profit and capital and do not include charity companies. Those who are also liable for taxes include company employees who have a Swiss-based income.
Currently, the Swiss corporate tax rate is implemented at 17.92%, although it has varied previously in 2006 and 2014 to 19.01% and 21.23%. This type of tax is collected depending on a company's net income when undertaking their normal business operations after one year.
Swiss federal corporate taxes are far lower at 8.5%, though this can be greatly increased once individual cantonal are added. This often boosts the rate to around 21.2%. This is still far lower than The Netherlands or Germany's duplicated federal and municipal tax rates of over 25% to 30%.
In Switzerland, two thirds of the countries taxes are levied by multinationals, so this means that they have greater control and independence when it comes to social security funding, business permits as well as construction regulator and residency conditions. This means that cantons are the main regulators of Swiss foreign investment.
Tax heaven, supported by the provisions on double taxation
The main deciding factor to name Switzerland a tax haven or a haven for investors is the double taxation limit imposed on corporate level taxes. This means that business with 20% share, or more, in a company are exempt from a number of imposed taxes, so the income from those shares is reduced based on the percentage of shares owned.
On top of this, cantonal regulations mean domicile privileges exist for companies who are based in Switzerland but operate overseas. These businesses are only taxed at 10% on all of their international profits.
We have more information on Swiss investments, tax and other information available on our website. For further information or assistance, feel free to contact one of our consultants.