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Taxation in Switzerland

Switzerland person income Tax Individual income tax rates in Switzerland consist of Swiss federal, cantonal and communal taxes. While the maximum rate of federal tax rate is 11.5%, adding the cantonal and communal taxes the total tax burden on individuals change between 22.42% - 42.28% depending on canton.Other Taxes includes Income Taxes and property taxes.

Income Tax: Taxable income includes all funds accruing to a person from all sources, in principle without deduction of losses or expenses, and including the rental value of a house lived in by its owner. Non-working foreigners resident in Switzerland may choose to pay a "lump-sum tax" instead of the normal income tax. The tax, which is generally much lower than the normal income tax, is nominally levied on the taxpayer's living expenses, but in practice (which varies from canton to canton), it is common to use the quintuple of the rent paid by the taxpayer as a basis for the lump-sum taxation.^[18] This option contributes to Switzerland's status as a tax haven, and has induced many wealthy foreigners to live in Switzerland.

In 2011, the federal income tax varied from a bracket of 1% (for single tax payers) and 0.77% (for married taxpayers) to the maximum rate of 11.5%. Individuals earning below 13,600 and couples earning below 27,000 Swiss francs were exempt. On cantonal level, tax rates varies heavily,Obwalden adapted a 1.8% flat tax on all personal income following a cantonal referendum in 2007. In most cantons, the rate is proportional with a maximum rate of 6.5% in Bern, whereas in Zurich it was 13% and in Geneva 17.58-.76 %

Property Taxes: A proportional property tax of around 0.3 to 0.5 percents levied by the cantons on the net worth of natural persons. The tax is levied on the value of all assets (such as real estate, shares or funds) after the deduction of any debts

Profit Taxes: A proportional or progressive tax is levied by the Confederation (at a flat rate of 8.5%) and the cantons (at varying rates) on corporate profits. The tax is based on the net profit as accounted for in the corporate income statement, as adjusted for tax purposes. For instance, expenditures that have no business reason such as excessive depreciations, accruals or reserves, as well as disguised dividends are taxed as profits.

Capital Taxes: A proportional tax is levied by the cantons (at varying rates) on the ownership equity of companies. Thinly capitalised companies are taxed, moreover, on the liabilities that function as equity. This also means that debts paid on such liabilities cannot be deducted for purposes of the profit tax, and are subject to the federal withholding tax.