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TAX SYSTEM

The Tax System in Switzerland

All people living in Switzerland are taxable on all their fortune and income.

Points with special interest:

  • The taxation on income for a natural person is done at the same time by the Confederation, the Canton and the Municipality in which the natural person has chosen residence.
  • Property taxation, inheritance tax and donation tax are deducted by the Canton and the Municipality.

It is possible to make a standard assessment on foreign citizens who do not practise a profession, instead of them being subject to ordinary taxation. A natural person who wishes to settle down in the country for the first time or who lives there during longer periods without practising a profession can, in principle, be offered this kind of taxation.

Calculation regarding standard assessment

The standard assessment is a simplified taxation procedure where the tax authorities base their information on certain facts (costs for housing and rent).

The standard assessment is based on a person’s yearly costs relevant to the taxable period, the costs having occurred through the person’s way of living – including all people living on his or her expense in Switzerland. The amount regarded is the total sum of all expenses the person has had in Switzerland or abroad.

Expenses being considered:

Costs

  • for food and clothing
  • for housing as well as for any related costs to housing, such as heating, cleaning, refuse collection…
  • for maintenance of costly domestic animals such as horses for example
  • having to do with maintenance and usage of cars, motorboats, yachts, aeroplanes
  • having to do with cost of living, including direct taxes

Total costs

  • for any personnel employed by the tax payer

Expenses

  • for education, culture, spare time, sport
  • for trips, vacation, various treatments at doctors etc.

In most cases, the amount of the standard assessment is worked out according to the taxable person’s expenses. However it might occur that the authorities decide to consider the gross amount on some parts of the income (in Switzerland or abroad), should this be higher than the expenses. In the canton Valais, it is possible to negotiate a minimum level of 150,000 Swiss francs for the taxation (to be compared with 250,000 in the canton Vaud or 400,000 in the canton Geneva).

For further information about the tax system in Switzerland, see www.estv.admin.ch/e/index.php and www.switzerland-4you.com/tax_system.htm.

Source: www.business-valais.ch/

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