Income tax

In Switzerland, income tax is a direct tax levied on the income of individuals.
It is levied by the cantons and municipalities, and is one of the main sources of funding for public authorities.
However, this complex subject deserves special attention.
Here’s what you need to know about income tax in Switzerland.

Income tax liability

Individuals are subject to Swiss income tax if they have a domicile or habitual residence in Switzerland.
Persons working in Switzerland but domiciled abroad are also subject to Swiss income tax, provided their Swiss income exceeds a certain threshold.

Taxable income includes income from gainful employment, such as salaries, self-employed income, pensions and annuities, as well as income from movable and immovable property, such as interest, dividends, rents and capital gains.

For people who work in Switzerland but live abroad, the question of double taxation may arise.
Nevertheless, to avoid double taxation, Switzerland has signed tax treaties with many countries.

Individuals who are not domiciled in Switzerland but are gainfully employed there are also subject to Swiss income tax.
This also applies to cross-border commuters.
In this case, taxable income is calculated on the basis of the number of days worked in Switzerland.

Tax calculation

Swiss income tax is calculated on a progressive scale.
The tax rate increases with the amount of taxable income.
The cantons have their own tax scales, so the tax rate varies from canton to canton.
Communes may also levy an income tax, the rate of which depends on the canton and commune.

In addition, the tax calculation takes into account deductions that reduce the amount of taxable income.
Deductions are discussed in greater detail in the chapter below.

The calculation of income tax in Switzerland varies according to each individual case.
It can be complex, especially for people with multiple sources of income or complex tax situations.
It may therefore be useful to consult a lawyer, in order to optimize your tax situation and avoid tax errors.

Non-taxable income

Certain types of income are not taxable in Switzerland, such as unemployment benefits, family allowances, disability or accident insurance benefits, and social benefits such as housing assistance.
It is important to note that such income is not subject to income tax in Switzerland, but may be taken into account when calculating certain social benefits.

For example, people with disabilities or chronic illnesses can benefit from partial or total tax exemption.
Similarly, people with dependent children can benefit from a tax exemption for their children.

Capital gains are not taxable in Switzerland, unless they are realized in the course of a business or professional activity.
Capital gains on shares, bonds or other financial instruments may be tax-exempt if held for more than one year.

Possible deductions

In Switzerland, tax deductions can be used to reduce the amount of taxable income.
The most common deductions include health and accident insurance contributions, pension fund contributions and childcare costs.
However, it should be noted that these deductions can vary from canton to canton.
For this reason, it is important to take into account all available tax deductions to optimize your tax situation and reduce your income tax bill.

In conclusion, personal income tax in Switzerland is a direct tax based on a progressive scale.
It is levied by the cantons and municipalities, and the tax rate varies from canton to canton.
Tax allowances and deductions reduce the amount of taxable income in Switzerland.
It is important to understand the rules applicable to Swiss income tax, so as to optimize your tax situation.
We recommend that you consult a lawyer for advice tailored to your individual situation.