Tax
Three layers of tax — federal, cantonal and communal — and a low federal VAT
Tax is levied at three levels. The Confederation charges a direct federal tax on income (progressive to 11.5%) and on corporate profit (8.5% flat), but no federal wealth tax. Cantons and communes add their own income, wealth and profit taxes at rates that vary widely by location, and standard VAT is 8.1%.
Key rules
- Direct federal income tax is progressive up to 11.5%; corporate federal tax is a flat 8.5% on net profit.
- There is no federal wealth tax, but cantons and communes levy wealth tax on individuals and capital tax on companies.
- Married couples are taxed jointly, which can create a marriage penalty at the federal level.
- Standard VAT is 8.1%, with reduced rates for essentials and accommodation.
Governing law
- Federal Act on Direct Federal Taxation (DBG/LIFD)Income and corporate profit tax
- Federal Act on the Harmonisation of Direct Taxes (StHG/LHID)Framework for cantonal and communal taxes
- Value Added Tax Act (MWSTG/LTVA)VAT at 8.1%
Penalties and consequences
- Surcharges and interest for late or understated tax
- Criminal prosecution for tax fraud (as opposed to simple evasion)
In practice
Because cantonal and communal rates differ so much, the total tax burden depends heavily on where you live, and tax competition between cantons is a defining feature of the system. Foreign nationals without a settlement permit are usually taxed at source.