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Tax Payments and Other Taxes in Switzerland |
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Tax payments in Switzerland charged by federal authorities are based on profits gained in previous years based on the company’s financial year; and not on current income profit. On the cantonal and communal levels, taxes are levied on profits gained in the company’s calendar year. In general, cantonal and communal taxes are assessed based on profits accumulated two years prior to current date.
There are 27 tax regulations in Switzerland that are applicable on different levels: 1 by the federal authorities and 26 by the 26 different cantons in Switzerland. For instance, a company’s net worth is taxed on the basis of its assets – the value of its assets, that is. This is taxed by both the federal government and the cantons. Federal levy on net worth is imposed at 0.8% on an annual basis while cantonal net worth taxes are levied from 0.3% to 1%; an approximation covering all 26 cantons. These rates imposed vary depending on which canton your company is established.
Withholding taxes on the one hand are exclusively charged by the federal government. A standard 35% is imposed on payments of corporate dividends, bonds and interest on bank loans paid by both resident and non-resident entities. An 8% withholding tax is levied on insurance claims and benefits; and 15% on pension funds. Royalties, and profits remitted abroad to the foreign parent company of a Swiss subsidiary are not imposed with withholding taxes even with the presence of a double tax treaty. Double tax treaties entered into by Switzerland with about 70 other countries provide credit and exemptions to decrease tax burdens.
Taxation in Switzerland may seem intricate but with careful study and consideration, this may not seem so impossible to achieve. After all, there are various means by which one can benefit from tax regulations in Switzerland and as there are tax levies; there are also tax exemptions to create balance.
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