Company taxation

Switzerland is renowned for having one of the most competitive and attractive tax systems in the world.
However, corporate taxation in Switzerland is a complex and delicate subject.
Legal entities, including corporations, cooperatives, associations and foundations, are tax subjects in their own right, with a tax capacity distinct from that of their members.
They are generally taxed on their profits and capital.
The Confederation levies a tax on the profits of legal entities, in accordance with the Federal Act on Direct Federal Taxation (LIFD).
The cantons also levy corporate income and capital taxes, in accordance with the Federal Act on the Harmonization of Direct Taxation of the Cantons and Municipalities (LHID), as well as specific cantonal laws.
Swiss tax legislation is highly detailed, with numerous specific provisions, application rules and procedural rules.
As a result, company taxation in Switzerland is a complex subject that requires a thorough understanding of the tax legislation in force.

Income tax

Profit tax is a key element of corporate taxation in Switzerland.
The tax is generally calculated on the basis of taxable profit and is applicable to all forms of company, including limited liability companies, corporations and limited partnerships.
Companies in Switzerland are subject to a series of rules and procedures for declaring and paying income tax to avoid tax penalties and sanctions.
Federal corporate income tax is calculated on the company’s total profits and is divided between the canton and the Confederation.
The federal corporate income tax rate is set at 8.5%.
There are deductions, including for depreciation of assets, investment costs and interest paid on loans.
Cantonal tax is calculated on taxable profit and is generally based on the company’s location.
Tax rates can vary from 0 to 24%.
Some companies may benefit from favorable tax arrangements, such as reduced tax rates or tax exemptions.
Swiss companies are also subject to a communal tax calculated on their taxable profits, which is divided between the canton and communes and can be as high as 5%.

Capital tax

Unlike the Swiss Confederation, the cantons levy a tax on company capital, in addition to the tax on profits.
This tax includes share capital and declared reserves.
It is calculated on the basis of the company’s equity capital.
However, the amount of taxable capital is not identical for all legal entities.
This type of direct tax is applicable to all forms of company, whatever their structure.
These include public limited companies (SA), partnerships limited by shares (SCA) and limited liability companies (Sàrl).

The tax rate is calculated according to the market value of the company’s capital, which is determined on the basis of taxable net profits and dividends paid.
Tax rates can vary greatly depending on the legal form of the company, but also on the canton in which it is located.
Thus, the exact amount will be calculated according to the location of the company’s headquarters, its administration or its economic connection.
Corporate capital tax is an important tax that affects companies’ net income and their ability to generate profits and dividends.
Companies that pay dividends to shareholders are subject to corporate capital tax, but dividends are generally subject to a reduced rate.
In addition, Switzerland’s corporate tax system is designed to encourage long-term investment and export activities.
Companies investing for the long term and exporting their products are exempt from capital tax, thereby stimulating economic growth and encouraging innovation and investment.

Capital taxes are generally proportional.
However, in the cantons of Graubünden and Valais, the scale is slightly progressive (double rate system).
Finally, income tax can be offset against capital tax (art. 30 para. 2 LHID), so that the taxpayer pays only the higher of the two taxes.

It is therefore essential that companies understand the different forms of corporate taxation in Switzerland, to ensure that they are properly taxed, and to take the necessary steps to meet their tax obligations.