Residents subject to Cantonal and Federal Tax on their worldwide income.
Corporate Income Tax Rate:
No centralized taxation system and tax is imposed at both the Federal and Cantonal level.
The Federal rate is 8.5% on net income. Since income and capital taxes are deductible in determining taxable income the effective rate is 7.8%.
Taking into account both the Federal and Cantonal Tax the combined effective income tax rate is between 12% and 22% for companies subject to ordinary taxation.
The Canton with the lowest rate of Corporate Taxation is Zug.
Holding Company Regime:
The Holding Company tax privilege is granted to companies whose primary purpose is the holding of participations, when at least 2/3 of the total assets consist of investments in subsidiaries, or when 2/3 of income consists of dividends and must have no active trade in Switzerland.
A Holding Company is fully exempt from Cantonal taxes
The effective Federal tax rate on non-dividend income is 7.8%
Incentives:
A Mixed Company Tax Privilege is granted to companies with predominantly foreign business activities.
A business activity is deemed to be performed outside Switzerland if at least 80% of the total gross income is derived from foreign sources and 80% of expenses are incurred abroad.
Foreign source income of a mixed company is taxed at a combined effective rate of between 9-11% (including Federal Tax)
Swiss source income is taxed at ordinary Canton and Federal Tax Rates.
Capital Gains Tax Rate:
No specific capital gains tax levied at the federal level.
Capital gains on the sale of assets are treated as ordinary income regardless of how long the assets have been held
Capital gains derived from the sale of a participation in at least 10% in a resident or non-resident company benefit from participation relief if the participation has been held for more than 1 year.
Withholding Tax:
Dividends:
Subject to 35% tax rate.
Under the Switzerland-EU Savings Agreement, which provides Switzerland access to benefits similar to those in the EU parent-subsidiary directive withholding tax is 0% on cross boarder payments of dividends between related companies residing in EU member states and Switzerland where capital participation is 25% or more and certain other criteria are met.
Many tax treaties provide for a 0% or 5% residual withholding tax rate for qualifying investments.
The repayment of nominal share capital and capital surplus is exempt from withholding tax.
Interest:
35% but only in specific cases
No withholding tax is levied on interest. Exceptions apply to interest derived from deposits with Swiss banks and bonds which are subject to 35% in withholding tax at the Federal level.
Interest paid to a non-resident or on receivables secured by Swiss real estate is subject to tax at source.
The 35% withholding tax and tax at source can be reduced to 0% or 10% under a tax treaty with most investor countries.
Royalties:
0%
Losses:
Losses may be carried forward for 7 fiscal years and may be used against any capital gains or income
Losses may not be carried back
VAT
8%
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