Understanding the Swiss tax system

The Swiss tax system applies to all residents including foreigners, although there are various categories that will be able to claim exemptions.

To take advantage of the exemptions you may be eligible for as a foreigner, you will have to make the claims whilst filling your tax returns.

Each Canton has the ability to levy taxes, making the entire taxation system quite complicated to say the least.  

Furthermore, there are different rules that apply to residents and foreigners, with different tax brackets depending on your income and where you live.

Tax system obligations

Residents in Switzerland, whether temporary or permanent, have the same obligations as citizens when it comes to mandated tax payments.

The tax obligations are different for people and companies that are not based here, but carry out business that involves the country, thereby only being liable for the funds that are generated there. 

The concept of residence in these cases is made simpler by the explanation that even people who come to the country for small periods of time, but their stay exceeds a three-month period will be considered residents, even if they are not employed during this time.

Owing to recent pressure from other governments due to the tendency of individuals to place their money in the country to evade taxes, the government is in the process of signing agreements with several states, pertaining to the sharing of tax data.

Application of the tax system

The first category of taxes in the country applies to personal income, including remuneration and assets.

The second category applies to the purchase of items and services, through value added tax.

The application of taxes differs in relation to the sale or property across the many localities, mostly creating exemptions for gift and inheritance tax for immediate family members.

Contact your local branch

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Expat tax advice in Switzerland