In Switzerland, tax is levied on the federal, cantonal and communal level. The federal  tax is levied on your income, whereas the 26 cantons and approximately 2400 communes levy tax both on income and property. As is typical for Switzerland’s federalist structure, tax rates in the various cantons and communes are different from place to place. Therefore, how much tax you pay depends on where you live. For instance, the tax rate in Zurich is considered „moderate“ both within Switzerland and in comparison to other countries.

Communes with the lowest tax rates are marked in green.
Communes with the lowest tax rates are marked in green.

Withholding tax for foreigners

Foreigners who are in Switzerland on a C permit (long-term residency) fill out a tax declaration once a year and pay their taxes according to what they have declared. However, all foreigners without a C permit (generally on L and B permits), must pay withholding tax. This is the same as the payroll tax that many countries have put in place; the employer takes the amount due off the salary and pays it directly to the tax office. This does not mean that you pay more. In fact, it simplifies matters and you do not have to worry about learning a new taxation system.

The amount of the withholding tax is set by the canton that you live in. Those of you who have been in Switzerland longer and no longer pay withholding tax, must fill out tax declarations and pay your taxes in the same way Swiss citizens do. This means that you also pay tax to the commune you live in and this may influence where you choose to live; communes and cantons set their own tax rates, so it can be advantageous to move to a low tax commune.

In Switzerland, tax is levied on the federal, cantonal and communal level.
In Switzerland, tax is levied on the federal, cantonal and communal level.

Property tax

A proportional property tax of around 0.3 to 0.5 percent is levied on your net worth. Depending on the canton, a certain amount may be tax exempt according to your civil status and number of children. You can find out the exact percentage levied from the pertinent cantonal tax office.

Capital gains tax

There is no capital gains tax as such. However, there is a preventive measure designed to prevent tax fraud. All Swiss banks are obligated to declare 35% of all capital gains (profits from currency exchanges, dividends, interest, etc.) for the federal withholding tax. This can be deducted from your tax declaration and its refund requested.

Taxation in Switzerland Income Tax
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