Income tax Switzerland
Income tax in Switzerland is levied from natural persons and includes the whole of the income. In principle, all recurrent and single items of income are subject to income tax. It is a direct tax. Tax is levied gross. The regulations governing income tax are an important part of the tax law of Switzerland.
INCOME TAX ON THE BASIS OF INCOME
A distinction is made between four categories of income:
- income from gainful employment
- income from movable and immovable assets
- compensation income
- other income
As a result of special laws, components of income can be exempt from income tax or be subject to a special tax.
The tax rate is established on an independent basis by cantons and municipalities. It can vary considerably in different places. Normally, a progressive tax scale is applied. Married couples are usually taxed on a preferential basis. Cantonal and direct Federal taxes are levied. Direct Federal taxes are progressive and have a maximum tax rate of 11.5% from an income of CHF 843,000.00 for married couples.
More at: www.estv.admin.ch
The total tax rate (incl. capital) is between about 15% and 22%.
TAXATION ON THE BASIS OF EXPENDITURE (Flat-Rate Taxation)
Taxation on the basis of expenditure makes it possible to calculate the tax not on the basis of actually earned income, but on the basis of a flat estimate of living costs in Switzerland.
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This option is only available to inhabitants of Switzerland who are not gainfully employed in Switzerland. It is established in an implementing ordinance that the basis of assessment of the tax is based on "five times the rent or rental value of accommodation in one’s own house in the case of tax-payers who run their own household"
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The flat tax which is thus calculated must be at least as high as the tax with normal taxation of Swiss income. Income from abroad is not taken into consideration.
Income which is not earned in Switzerland is not relevant in the case of this kind of taxation.
More at: www.ag.ch
For these reasons, taxation is claimed on the basis of expenditure, particularly in the case of rich non-Swiss nationals who live in Switzerland, who are liable to pay tax and who do not essentially earn their income in Switzerland.
More about tax at:
- Glossary: Income tax (www.vernunft-schweiz.ch/glossar) in: Vernunft Schweiz (http://www.vernunft-schweiz.ch/).
- Federal law of 14 December 1990 regarding direct Federal tax (DBG) http://www.admin.ch
- Tax calculator of Swiss tax administration (www.estv.admin.ch)
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