Taxes in Switzerland: how the system works for individuals and businesses

Federal, cantonal and municipal taxes

Swiss direct taxation operates at three levels: the Confederation, cantons and municipalities. Your canton and municipality therefore affect the tax burden alongside income, assets, family circumstances and permitted deductions.

VAT is federal and concerns consumption. It is not calculated like income or corporate profit tax.

To compare locations, use the same income or profit, family circumstances, tax year and scope of taxes. The FTA tax calculator provides an initial comparison; cross-border or complex asset situations need a fuller assessment.

Which taxes should you look at first?

Income tax, wealth tax and other individual taxes

Income tax

Salary is only one category. Pensions, self-employment profit, rental income and investment returns may also be taxable. Taxable income is calculated after permitted deductions; ordinary living expenses are not all deductible.

Rates depend on factors including income and family circumstances. Federal and cantonal deductions may differ. Collect evidence of earnings, pension payments and claimed expenses for the correct year. A deduction reduces the taxable base; it is not a cash refund of the same amount. See Geneva tax deductions.

Wealth tax

Individual wealth tax is cantonal and municipal, with no federal equivalent. It applies to taxable net wealth: assets are valued under the relevant rules, with admissible debts and allowances taken into account.

Bank accounts, securities, company shareholdings and real estate may be relevant. Rates and allowances vary by canton, so a bank balance alone does not show the tax base. Geneva’s tax-shield mechanism uses a specific calculation; it does not automatically cap every tax by reference to cash income actually received.

Inheritance, gifts and property

Inheritance and gift taxation depends notably on the canton and relationship between the parties. Owning or selling real estate can trigger specific taxes. A single maximum rate cannot describe all these situations.

Salary withholding and cross-border workers

Payroll withholding is a way of collecting income tax, not automatically an extra tax on top of ordinary income tax. For covered employees, the employer deducts tax from remuneration and remits it to the authority.

Coverage depends on factors including residence, nationality and permit status. Cross-border workers must also consider arrangements between their residence country and canton of work. Geneva’s treatment cannot simply be applied throughout Switzerland.

Subsequent ordinary assessment, called taxation ordinaire ultérieure or TOU in French, recalculates tax through a return. It may be mandatory or available on request. For a non-resident, quasi-resident status generally requires at least 90% of the relevant household’s worldwide gross income to be taxable in Switzerland; other specific situations exist.

In Geneva, the DRIS/TOU request deadline is 31 March following the withholding year. Check eligibility and the full consequences before applying voluntarily: assessment may result in more tax, not a refund. Tax already withheld is taken into account in the settlement. Read the Geneva salary withholding article for details.

Tax for sole proprietors and self-employed people

A sole proprietorship is not a separate legal taxpayer from its owner for income and wealth tax. Business profit joins the owner’s other personal income, while business assets are taken into account alongside private wealth under the relevant rules.

The calculation starts with profit, not turnover or cash transferred to a private account. Commercially justified expenses may be deductible. A private expense does not become deductible because a business bank account paid it.

• Separate business receipts and costs from private transactions.
• Keep evidence and document business use of mixed expenses.
• Update expected profit when budgeting tax instalments.
• Assess VAT and social contributions separately from income tax.

The choice between a sole proprietorship and a company also involves liability, social protection, remuneration and operating costs. One tax percentage is not enough.

Corporate tax for Swiss LLCs and corporations

Profit tax

A Sàrl/GmbH (LLC) or SA/AG (corporation) is taxed separately from its owners. Profit tax has federal, cantonal and municipal components. Taxable profit can differ from accounting profit, for example where expenses are not tax-deductible. Compare clearly defined combined rates for the same year and municipality.

Capital tax

Cantons and municipalities also levy capital tax under their rules. The base is not merely the share capital recorded in the commercial register: reserves and tax adjustments can matter. Some cantons credit profit tax against capital tax.

The company and its owner have separate tax positions

Company profit belongs to the company. Salary and dividends paid to an owner require separate analysis at recipient level. The company’s profit-tax rate therefore does not describe the owner’s entire tax burden. Group structures and participation relief have specific conditions; holding shares does not automatically exempt every profit.

For dividends, distinguish ordinary taxation from the 35% anticipatory withholding and possible refund.

Geneva: the municipal business tax (taxe professionnelle communale) was abolished with effect from 1 January 2024. It should not be included as an ongoing charge for later periods.

Where VAT fits into the picture

VAT obligations can apply to sole proprietors and companies. Registration depends on the activity and relevant turnover, with specific rules and exceptions. The current rates are 8.1% standard, 2.6% reduced and 3.8% for accommodation. The nature of the supply determines the rate; a business cannot freely choose the reduced rate.

Deducting input VAT depends on statutory conditions and the reporting method. Not every VAT amount paid is recoverable. Start with Swiss VAT registration, then compare the net tax rate and effective methods. Foreign purchases may also trigger acquisition tax.

Prepare a complete Swiss tax file

1. Identify the taxpayer and year. Clarify whether the matter concerns you, your self-employment or your company. Record canton, municipality and changes in residence or work.
2. Collect the relevant documents. Include salary certificates, bank tax statements, pension certificates and expense evidence. Businesses also need accounts, significant account details and previous assessments.
3. Estimate tax and track deadlines. Use the correct year’s rules. Separate return filing, instalments and special claims: an extension for one procedure does not extend every other deadline.

Disclose foreign income and assets. Their treatment depends on residence rules and tax treaties; do not omit them simply because they are outside Switzerland.

Define whether you need an answer to a specific question or preparation of a complete return or tax analysis. Karpeo can establish the scope and documents needed through its Geneva tax-return service or a tailored quotation.

Frequently asked questions