Income tax

Corporate income tax is one of the most important taxes levied in Switzerland.
It is levied on the profits of companies, associations, foundations and other legal entities.

Each canton is responsible for the administration of income tax and may determine its own tax legislation.
Companies with taxable profits are required to declare and pay income tax to the relevant tax authorities.

Tax liability of joint-stock companies

In Switzerland, corporations are legal entities subject to corporate income tax.
They include public limited companies (AGs), limited liability companies (GmbHs), limited partnerships with shares (LPs) and cooperatives.
Corporations are considered to be legal entities separate from their owners.
This means they are responsible for their own taxes.
Public limited companies and limited liability companies are taxed on their net profit, while limited partnerships are taxed on their gross profit.

Corporate income tax liability depends on the location of the company’s registered office in Switzerland.
If the company has its registered office in Switzerland, it is subject to Swiss income tax.

If the company is not headquartered in Switzerland, but carries on business there, it is taxed on profits generated in the country in question.
Income tax rates vary from canton to canton, and are subject to change each year.
For more information on income tax rates, please visit our dedicated page.

Tax liability associations, foundations and other legal entities

In Switzerland, associations, foundations and other legal entities are also subject to corporate income tax.

However, their tax liability depends on the nature of their activities and how they are financed.
First of all, whether or not associations and foundations are subject to income tax depends on their non-profit nature.
Non-profit-making associations and foundations that use their profits for public-interest purposes are not subject to income tax.
On the other hand, if an association or foundation makes profits for profit-making purposes, it is considered a business and is subject to income tax.
In addition, they can benefit from certain tax deductions.
For example, donations and contributions made to an association or foundation are tax-deductible.
Associations and foundations with charitable or public-interest activities may also benefit from partial or total tax exemption.
Other legal entities, such as cooperatives and general partnerships, are also subject to income tax in Switzerland.
However, the way in which the tax is calculated depends on the legal form of the legal entity.
For example, an association or partnership is taxed on the basis of its actual profit, i.e. the net profit after deduction of costs and expenses.

A foundation, on the other hand, is taxed on the basis of its gross profit, i.e. the total amount of income generated by the foundation, without deduction of costs and expenses.
The tax rate on profits for associations, foundations and other legal entities is also determined by the canton in which they are located.
However, in many cases, these entities benefit from lower tax rates than corporations, due to their non-profit status.

Calculating corporate income tax in Switzerland

Corporate income tax in Switzerland is calculated on the basis of net profit for the fiscal year.
It depends on a number of factors, including the type of company, the tax rate and the tax deductions to which it is entitled.
Net profit is calculated by deducting operating expenses, financial expenses and tax expenses from the company’s operating income.

Operating income includes sales of products and services, capital gains, rental income and investment income.
The tax rate on profits is set by the canton in which the company is located.
It therefore varies from canton to canton, and may also vary according to the size of the company and its legal form.
Smaller companies tend to benefit from a lower tax rate than larger ones.
For more information on corporate income tax rates, please visit our dedicated page.

Special tax regimes for companies in Switzerland

In Switzerland, there are special tax regimes for companies that meet certain conditions.
These regimes have been set up to encourage the establishment of companies in Switzerland and stimulate economic activity.
One of Switzerland’s best-known special tax regimes is that for holding companies.