Since 1 January 2020, the Federal Act on Tax Reform and AHV Financing (TRAF) has implemented tax measures compatible with international standards but attractive to companies.
Tax on net profits
While private individuals pay income tax, corporations and limited liability companies pay a tax on yield. The Confederation, cantons and communes all apply a tax on profits. Tax is payable from the date the company is registered in the trade register.
In most cantons, ecclesiastical taxes are also levied—for national churches (Reformed, Roman Catholic, and often the Christian Catholic Church; in BS, FR and SG, this tax also extends to the Jewish community). In the Vaud canton, this ecclesiastical tax is included in the cantonal taxes. In Valais, only some communes apply this system; in the cantons of GE, NE and TI, the payment is optional. Unlike private individuals, who are free to leave the church to avoid this tax obligation, companies cannot avoid the tax.
How is tax on profits calculated?
- the Confederation
- the cantons of ZH, LU, UR, SZ, OW, NW, GL, ZG, FR, SO, BS, BL (from 2023), SH, AR, AI, SG, GR, TG, TI, VD, NE, GE et JU
- the communes of BL
use a proportional tax rate. It is a simple tax levied as a percentage of profits. For example, a fixed rate of 8.5% is applied by the Confederation.
A few cantons apply a mixed system that considers the intensity of the yield. This concept of yield intensity is based, firstly, on the ratio of capital to reserves and, secondly, on the net profits obtained. This is the case (according to the June 2020 "Taxation of legal persons (PDF, 610 kB, 04.03.2022)" guide [only in French]) for:
- BL (until end 2022), VS, AG, which use a two-tier tariff
- BE, which uses a three-tier tariff.
Nationwide, the average ordinary income tax rate is 14.7% (according to the Swiss Tax Report 2022). The most tax advantageous canton is ZG. The highest income taxes are levied in the cantons of BE, VS, TI and ZH.
Important: the tax on profits is not only payable on declared net profits (i.e. revenue minus expenses), but also on commercially unsubstantiated expenses (such as unjustified depreciation or provisions, concealed distribution of profits, etc.). However, the amounts paid to the tax administration are deductible. Private individuals, whose taxes form part of the cost of living, cannot apply the deduction.
Taxation of share capital
The cantons (but not the Confederation) also levy a tax on share capital (proportional and expressed as a thousandth of the taxable capital), according to the June 2020 "Taxation of legal persons (PDF, 610 kB, 04.03.2022)" guide (only in French). Differences exist in UR (where the municipalities levy the tax), as well as in BE, SZ, FR, SO, AI, SG, AG, TG, TI, VD, NE and GE (waiver of all or part of the capital tax up to the amount of tax due on the profit).
In most of the cantons, the tax on capital includes the share capital, or equity, as well as the declared reserves.
