Wealth tax

Wealth tax is a cantonal tax in Switzerland, designed to ensure a fair distribution of wealth in society.
All Swiss cantons apply a progressive tax rate to the total value of an individual’s wealth.
This means that the higher an individual’s wealth, the higher the tax rate.

Wealth tax liability

In Switzerland, liability to wealth tax depends on the value of the taxpayer’s net assets.
If an individual’s net worth exceeds a certain threshold, he or she is subject to wealth tax.
This threshold varies from canton to canton, and may also vary according to the taxpayer’s family situation.
According to article 3 paragraph 1 of the Federal Law on Direct Federal Taxation (LHID), natural persons are subject to wealth tax if they are domiciled in the canton, or if they stay in the canton for at least 30 days and are gainfully employed, or for at least 90 days if they are not gainfully employed.
This is known as “personal connection”.
The definition of domicile is given in article 3 paragraph 2 of the LHID.
A natural person is domiciled in the canton if he or she lives there with the intention of settling there permanently.

However, individuals who are neither domiciled nor resident in the canton are subject to wealth tax if they operate a business or permanent establishment in the canton, own or enjoy real estate there, or trade in real estate.
This is known as “economic connection” taxation.

Calculating wealth tax in Switzerland

All net assets are subject to wealth tax in Switzerland, according to article 13 paragraph 1 of the LHID.
Wealth tax is calculated on a progressive scale, which varies from canton to canton.
In general, the higher a taxpayer’s net worth, the higher the tax rate.
The calculation of wealth tax also takes into account certain items of wealth that may be deducted or considered non-taxable.
Details of these items will be discussed in points D and E below.
Wealth tax is generally levied annually in Switzerland.
Taxpayers must therefore declare the value of their wealth each year to the tax authorities in their canton of residence.

It’s important to note that the notion of wealth encompasses all a person’s assets and property rights, including real estate, stocks, bonds, bank accounts, vehicles and valuables.
In other words, all the components of an individual’s wealth are taken into account when calculating wealth tax.
Finally, it should be mentioned that wealth is usually estimated at market value, although yield value may be taken into account as appropriate (article 14 of the LHID).

Assets not taxable in Switzerland

In Switzerland, certain assets are expressly excluded from the calculation of wealth tax, either because they are considered non-taxable under tax law, or because they are tax-exempt under an international tax treaty.
This means that the value of these assets will not be taken into account when calculating wealth tax.
Examples of assets that are not taxable in Switzerland include:

Movable and immovable assets located abroad: although these assets are taken into account when calculating income tax in Switzerland, they are not subject to wealth tax, unless there is an agreement to the contrary with the foreign country.

Current assets: current assets, such as furniture, clothing, jewelry and works of art, are not taken into account when calculating wealth tax in Switzerland.

Pension benefits: pension benefits, such as life annuities, pensions and social security benefits, are not subject to wealth tax in Switzerland.

It should be stressed, however, that tax rules are complex and each case must be examined individually.
It is therefore strongly recommended to consult a Swiss tax lawyer for personalized advice on tax optimization and wealth management.

Possible deductions when calculating wealth tax in Switzerland

In addition to non-taxable items, certain amounts may be deducted from a taxpayer’s total assets when calculating wealth tax.
Among the deductions available are debts.
Debts can be deducted from a taxpayer’s net worth.
Debts must be actual debts and must have been incurred to acquire or maintain items of wealth.
Family expenses such as alimony, childcare and school fees can also be deducted from a taxpayer’s net worth.
Finally, donations to non-profit organizations can be deducted from a taxpayer’s net worth.
However, the rules governing deductible donations vary from canton to canton.
It is therefore important to consult the specific rules of your canton to find out whether donations are deductible and to what extent.

It’s important to note that the deductions available when calculating wealth tax vary from canton to canton in Switzerland.
It is therefore essential to understand the specific rules of your canton of residence in order to know what deductions are possible when calculating wealth tax.
Swiss tax lawyers can help taxpayers understand the specific rules of their canton and optimize their tax situation.

In conclusion, wealth tax in Switzerland is a cantonal tax levied on the total value of an individual’s wealth.
Tax rules and rates vary from canton to canton, but all Swiss cantons apply a progressive tax rate.
Certain items of wealth are not taxable in Switzerland, while certain deductions are possible when calculating wealth tax.
It is therefore important to understand the specific rules of your canton in order to optimize your tax situation.
Swiss tax lawyers can help taxpayers understand the specific rules of their canton and optimize their tax situation.