Corporate Tax Rate in Switzerland – Swiss Company Tax 2024

Navigating the intricate landscape of Switzerland’s corporate tax system can seem daunting, especially in light of the perpertual tax changes and the OECD’s minimum tax rate implications.

Entrepreneurs and multinational companies operating in Switzerland must stay informed about the federal Swiss corporate tax, cantonal and municipal tax rates, as well as the various Swiss tax allowances and deductions available.

Our accouting team of Swiss CPAs demystifies Swiss corporate taxation, offering a clear understanding of how these rates and regulations impact your business in a rapidly evolving fiscal environment.

Swiss tax system and corporate taxation

Federal, cantonal, and municipal taxation

In Switzerland, taxes on LLCs and Corporations are collected by three different entities:

• The confederation: the Confederation levies a direct federal tax (IFD) on company profits.
• The cantons: Swiss cantons impose a cantonal tax. This is calculated both on the profit and capital of companies and varies from canton to canton.
• The municipalities: municipalities levy a municipal tax, which also varies from one municipality to another.

Double economic taxation in the case of LLCs and corporations

Entrepreneurs who start their business in Switzerland often talk about double taxation in the case of an Limited Liability Company (LLC) or Corporation. Let’s look at this together.

LLCs and Corporations are legal entities subject to their own taxation. Thus, LLCs and Corporations are taxed on their profits as a business.

The shareholders of these companies also pay taxes based on their annual income (salaries and dividends, in particular).

This separation between the taxation of a legal entity and that of its shareholders leads to a double taxation of the company’s profits:

• The company pays taxes on profits.
• The shareholder pays an income tax on dividends distributed by the company, which have already been taxed previously with the company’s profit tax.

What taxes does a company pay in Switzerland?

Corporate profit tax

Like most OECD countries, Switzerland taxes LLCs and Corporations on the profits they make within its territory.

The profit tax is divided into two categories:

• Federal Profit Tax (IFD): this 8.5% tax is for the Confederation. It is the same in all Swiss cantons. It is collected by the cantons on behalf of the Confederation when the company files its annual tax return.
• Cantonal and Municipal Profit Tax (ICC): this tax is determined by each canton and municipality. It varies according to the cantons and municipalities. For example, in Geneva, the ICC rate on profits is 7.8%.

In Switzerland, taxes are a deductible expense for the company. This means that the profit tax rates apply to the net result. Switzerland also offers flexibility in accounting through hidden reserves which can help optimize taxation.

Therefore, to make a comparison with other European countries, one must use the gross profit tax rate. In Geneva, the gross profit tax rate is 14% which is the net profit tax rate.

Capital tax

The capital tax is levied only by the cantons. There is no federal levy on capital. This tax complements the cantonal and municipal profit tax. As this tax is levied at the cantonal level, its rate varies according to the cantons.

This tax is levied on all LLCs and Corporations. It is calculated based on their capital and the reserves built up over the years (capital contribution reserves, reserves from profit, carried forward profits).

Establishing a company in a tax attractive Canton

Below is a comparison of the profit tax rates by canton in Switzerland.

If you are looking for a location for your business, our fiduciary service offers business domiciliation in Lausanne as well as commercial addresses and domiciliation in Geneva. This allows you to choose in which French-speaking canton to set up your business to benefit from favorable taxation.

Learn more : Swiss salaries : minimum and average wage in Switzerland

Switzerland corporate tax rate by canton in Switzerland in 2024

Corporate tax rates in Switzerland

As of 2023, corporate tax rates in Switzerland have seen minimal reductions, with the average ordinary corporate tax rate slightly decreasing from 14.68% to 14.6%.

The cantons of Central Switzerland, along with Glarus and Appenzell Innerrhoden, offer the lowest rates, with Zug at 11.85%, Nidwalden at 11.97%, and Lucerne at 12.20%. The highest rate is in the Canton of Bern at 21.04%.

Let’s look at a comparison of the corporate profit tax rates in Switzerland, based on the fiscal residence cantons in 2024 (data from KPMG in 2022 – no major changes since this date).

We have ranked them from the most to the least advantageous:

Ranking: Company tax rates by Swiss canton

You will find here-below the ranking of Swiss canton by corporate tax rate :

1. Zug (ZG) -11.85%
2. Nidwald (NW) – 11.97%
3. Lucerne (LU) – 12.20%
4. Glarus (GL) – 12.31%
5. Uri (UR) – 12.63%
6. Appenzell Innerrhoden (AI) – 12.66%
7. Obwald (OW) – 12.74%
8. Appenzell Ausserrhoden (AR) – 13.04%
9. Basel-Stadt (BS) – 13.04%
10. Thurgau (TG) – 13.21%
11. Neuchâtel (NE) – 13.57%
12. Schaffhausen (SH) – 13.80%
13. Fribourg (FR) – 13.87%
14. Geneva (GE) – 14.00%
15. Vaud (VD) – 14.00%
16. Schwyz (SZ) – 14.06%
17. St. Gallen (SG) – 14.40%
18. Graubünden (GR) – 14.77%
19. Solothurn (SO) – 15.29%
20. Jura (JU) – 16.00%
21. Valais (VS) – 17.12%
22. Aargau (AG) – 17.42%
23. Basel-Landschaft (BL) – 17.97%
24. Ticino (TI) – 19.16%
25. Zurich (ZH) – 19.65%
26. Bern (BE) – 21.04%

 

Conclusion: Adapting to Swiss tax in 2024

As 2024 unfolds, businesses operating in Switzerland must adapt to the evolving tax landscape, marked by the integration of the OECD minimum tax rate and adjustments in Swiss corporate taxation.

Navigating the multi-layered Swiss tax system, with its federal, cantonal, and municipal dimensions, remains crucial. The strategic use of tax deductions and understanding of cantonal variations will be key for companies to maintain competitiveness.

In this changing environment, staying informed and agile is essential for leveraging the strengths of Switzerland as a resilient and advantageous business hub. Contact our team of Swiss CPAs for more information.