In 2018, Switzerland collected CHF 148 billion through taxes. CHF 70 billion went to the federal government, CHF 48 billion to the cantons and CHF 30 billion to the municipalities. These figures show how important the tax allowance is. It allows citizens and companies to have parts of their income tax-free.
This allows them to pay less income tax. This reduces the tax burden considerably. The tax-free allowance is a central part of the Swiss tax system. It ensures that individuals and companies pay less tax. This knowledge is very important for good tax advice.
Important findings
- Switzerland’s total fiscal revenue amounted to CHF 148 billion in 2018.
- The tax-free allowance is an essential component of Swiss tax law.
- Tax allowances help to reduce income tax for citizens and companies.
- A thorough understanding of these regulations is crucial for effective tax advice.
- The approval rate for the STAF corporate tax reform in 2019 was 66.4 %.
Introduction to the Swiss tax system
The tax system in Switzerland is determined by federalism. Each of the 26 cantons can set its own tax rules. Almost 2000 municipalities also have their own tax systems, which they derive from the cantons.
Basic features and special features
In 2018, the distribution of income looked like this:
| Government level | Revenue (in CHF) |
|---|---|
| Covenant | 70 billion |
| Cantons | 48 billion |
| Municipalities | 30 billion |
The figures show the importance of federalism in the tax system. The STAF tax reform, which started in 2020, is an important point. 66.4% voted in favor of renewing corporate tax law.
Cantons and their tax sovereignty
Each canton has the power to set taxes on income and assets. The tax rates for companies differ between the cantons and municipalities. This gives them financial leeway and emphasizes federalism.
The cantons use various rules to attract companies. They may also offer special tax regimes in order to be more attractive for companies and research. Special features such as the patent box are examples of this.
Cantonal autonomy is also evident when it comes to federal tax. Since a reform, the federal government has given 21.2% of its revenue from this to the cantons. This helps the cantons with their financial planning.
Tax allowance in Switzerland
A tax-free allowance is a portion of income that remains tax-free. In Switzerland, these allowances help to save taxes. It is important to know them in order to pay less tax.
Definition and meaning
In Switzerland, people can keep certain income tax-free. This allows them to pay less tax. For example, income of up to CHF 13,600 is tax-free for direct federal tax purposes.
Types of tax allowances
There are many different tax allowances in Switzerland. This includes deductions for professional expenses and personal allowances. Firefighters, for example, can earn up to 5,000 francs tax-free.
Examples and use cases
Zurich, Basel-Stadt and Bern have different tax allowances:
| Region | Tax allowance |
|---|---|
| Zurich | 6,200 CHF |
| Basel-Stadt | 11,000 CHF |
| Berne | No minimum limit |
These allowances help to optimize taxes. Winnings from Swiss casinos and certain online games are tax-free up to CHF 1 million.
Save taxes in Switzerland
The Swiss tax system is known for offering many savings options. By acting wisely, you can pay less tax without breaking the rules. This helps to save money and do everything right at the same time.
Tips for tax optimization
Employees can pay up to CHF 6826 into the third pillar to save tax. Savings measures also include donations to organizations, which can be deducted up to 20 percent of income. You should donate at least CHF 100 per year.
Expenses for further professional training can be deducted from tax up to an amount of CHF 12,000. However, this only applies if you bear the costs yourself.
Relevant deductions and allowances
- Single persons have a maximum deduction of CHF 1700 for direct federal tax, married persons CHF 3500.
- Moving to a more tax-efficient municipality can save a lot of money.
- In Zurich, you can deduct up to 5,000 francs for public transportation. The figure for direct federal tax is CHF 3,200.
- The maximum amounts for insurance premiums vary from canton to canton. In Zurich, they range between CHF 2600 and 3900 for individuals and CHF 5200 to 7800 for married couples.
You should always bear these deductions in mind when preparing your tax return. This ensures that nothing is overlooked.
Avoid common mistakes
Tax return errors can be expensive. You should avoid overlooking deductions or filling in forms incorrectly. Find out about deduction options such as the transport deduction.
If you plan ahead and know your options, you can save a lot. Take the opportunity to pay less tax. Take a look at all the ways you can save money on your tax return in Switzerland. Visit this page, for example.
Swiss tax law: important aspects
Swiss tax law is strongly influenced by the Federal Constitution. Each canton can set its own taxes. As a result, taxes vary greatly between the cantons.
Federal constitution and fiscal federalism
The cantons and municipalities have a great deal of freedom of choice when it comes to taxes. Corporate income taxes vary between 12.43% and 24.16%.
Holding companies enjoy major tax advantages in Switzerland. They usually pay only 7.83% tax on their profits, except on real estate income.
Current tax legislation
The latest tax legislation changes frequently. A supplementary tax to the OECD minimum tax will be introduced by 2024. Under certain conditions, groups can restructure on a tax-neutral basis.
Income tax rates vary, from 22.2% in Zug to 45% in Geneva. The wealth tax also varies, from 0.13% in Nidwalden to 0.68% in Neuchâtel. The normal VAT rate is 7.7%, with a reduced rate for some goods and services of 2.5%. These rules show how complex the tax system is.