Clarity on
Swiss Taxes

Staying on course when the tide turns

Clarity in 100 seconds

Switzerland remains competitive

Although the rejection of the Corporate Tax Reform III is a setback, it’s not an unsurmountable one. Some cantons have already introduced immediate measures to safeguard their tax appeal. On a national scale, the Swiss government cannot and will not leave companies and investors stranded in uncertainty. A new package to maintain competitiveness without capsizing stability is surely on the horizon.

 

Peter Uebelhart

Partner, Head of Tax, Member of the Executive Committee of KPMG Switzerland

Peter Uebelhart studied Business Administration at the University of St. Gallen and is a Certified Tax Expert. He started with KPMG in 2001 and took on the role as Head of M&A Tax that same year – becoming Partner in 2002. In 2006, Peter headed the Corporate Tax practice and six years later, he became Head of Tax and a member of the Executive Committee. Prior to KPMG, Peter worked for six years in the tax practice of a large international accounting firm.


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Continuous drop in corporate income tax rates

Switzerland remains competitive on the international tax stage, especially in Europe. A cluster of cantons in central and eastern Switzerland retain their status as lower-tax locations. In line with the global trend, Swiss corporate income tax rates have dropped on average over the past decade and continue to creep down. It remains to be seen whether the cantons will honor the cuts they had announced in anticipation of CTR III.

 

19.44% 20.76% 18.70% 18.96% 18.06% 18.31% 17.90% 18.01% 17.80% 17.89% 2007 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -2.99% 17.77%
-2.99% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 19.44% 20.76% 18.70% 18.96% 18.06% 18.31% 17.90% 18.01% 17.80% 17.89% 17.77%

Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for GE, JU, NE, SG, TG and ZH for 2016. Source: KPMG Switzerland

Corporate income tax rates continue to drop slightly on average. A further reduction is to be expected among cantons with high taxation in the coming years. Cantons with lower tax rates will not forseeably undergo reductions since 12% seems to be the lowest possible limit needed to continue to finance state activities.

Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for GE, JU, NE, SG, TG and ZH for 2016. Source: KPMG Switzerland

Corporate income tax rates in the cantons in 2017
The infographic below shows the current corporate income taxation levels amongst cantons in both map and list form. The majority of cantons had announced their corporate income tax rates as of 2019 assuming CTR III was approved. Since this was not the case, it is questionable whether the cantons will stick to the announced rates. Move the toggle to see what the tax landscape would look like if cantons sticked to their announced rates.

 

 

20.7 Jura 19.9 Fribourg 21.7 Valais 21.6 Bern 21.5 Solothurn 22.1 Vaud 20.7 Baselland 18.6 Aargau 21.2 Zürich 22.2 Basel-Stadt 16.0 Schaffhausen 16.4 Thurgau 13.0 Appenzell A. 14.2 Appenzell I. 12.4 Luzern 12.7 Obwalden 12.7 Nidwalden 14.9 Uri 16.1 Graubünden 17.4 St. Gallen 15.7 Glarus 15.3 Schwyz 14.6 Zug 15.6 Neuchâtel 20.7 Ticino 24.2 Genève 22-23% 19-22% 17-19% 15-17% 12-15% Figures in percent 20.7 Jura 13.7 Fribourg 21.7 Valais 16.4 Bern 12.9 Solothurn 13.8 Vaud 14.0 Baselland 18.6 Aargau 18.2 Zürich 13.0 Basel-Stadt 12.5 Schaffhausen 13.4 Thurgau 13.0 Appenzell A. 14.2 Appenzell I. 12.3 Luzern 12.7 Obwalden 12.7 Nidwalden 14.9 Uri 16.1 Graubünden 15.0 St. Gallen 15.7 Glarus 15.3 Schwyz 12.0 Zug 15.6 Neuchâtel 16.2 Ticino 13.5 Genève 22-23% 19-22% 17-19% 15-17% 12-15% no announcement Figures in percent
Ø17.8 12.4 12.7 12.7 13.0 14.2 14.9 15.3 15.6 16.0 16.4 17.4 18.6 19.9 20.7 20.7 20.7 21.2 21.5 21.6 21.7 22.1 22.2 24.2 14.6 15.7 16.1 Luzern Nidwalden Obwalden Appenzell A. Appenzell I. Zug Uri Schwyz Neuchâtel Glarus Schaffhausen Thurgau St. Gallen Aargau Fribourg Jura Ticino Baselland Zürich Solothurn Bern Valais Vaud Basel-Stadt Genève Graubünden 22-23% 19-22% 17-19% 15-17% 12-15% Figures in percent Announced tax rate 22-23% 19-22% 17-19% 15-17% 12-15% Figures in percent Ø17.8 Ø14.1 12.4 12.7 12.7 13.0 14.2 14.9 15.3 15.6 16.0 16.4 17.4 18.6 19.9 20.7 20.7 20.7 21.2 21.5 21.6 21.7 22.1 22.2 24.2 14.6 15.7 16.1 12.5 13.7 13.7 17.5 14.0 18.2 16.4 13.8 13.0 13.5 12.0 12.3 -0.1 n/a n/a n/a n/a -2.6 n/a n/a 0 n/a -3.5 n/a -3.9 n/a -6.2 n/a -3.2 -6.7 -2.9 n/a -5.2 n/a -8.3 -9.2 -10.7 n/a Luzern Nidwalden Obwalden Appenzell A. Appenzell I. Zug Uri Schwyz Neuchâtel Glarus Schaffhausen Graubünden Thurgau St. Gallen Aargau Fribourg Jura Ticino Baselland Zürich Solothurn Bern Valais Vaud Basel-Stadt Genève

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Competitiveness of Switzerland on a global scale

Looking at the global picture, Switzerland remains a strong competitor. However, Ireland, UK, Dubai, Hong Kong and Singapore are regarded as particularly attractive tax locations. In addition, Hungary, following a tax rate fall to 9%, can now also be considered a potentially attractive alternative.

Japan India Bahamas Bermuda Cayman Islands Ireland Hong Kong Singapore Swiss average UK Portugal Sweden Denmark Canada Austria South Africa Australia Brazil France USA Dubai Hungary 12.5 | | 30.86 34.61 40.00 34.00 30.00 28.00 26.50 22.00 21.00 20.00 19.00 17.80 17.77 17.00 16.50 19.00 –10.00 9.00 22.00 25.00 33.33 0.00 0.00 0.00 0.00 –0.03 –1.00 2017 Down compared with 2016 Figures in percent

Maximum corporate income tax rates in CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Russia for 2016. Sources: KPMG Switzerland, KPMG international: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html

Individual income tax rates - Trend 2007-2017

The central Swiss cantons have been leading the individual tax ranking for over a decade. Apart from Uri, the other cantons have made no reductions or only minor reductions in income tax rates. Obwalden, Schaffhausen and Schwyz are the only cantons to have actually increased their tax rates. Little to no variation can be found in the cantons with traditionally higher individual income taxes.

2007 2017 Figures in percent 28.21 Schwyz 25.19 42.17 Baselland 42.55 44.75 Genève 44.76 41.50 Vaud 41.50 40.72 Ticino 41.02 41.27 Bern 41.28 40.46 Jura 43.54 39.76 Zürich 40.16 37.43 Basel-Stadt 38.91 36.50 Valais 37.00 39.33 Neuchâtel 39.34 34.18 Solothurn 36.47 36.02 Fribourg 36.33 34.05 Aargau 36.84 33.52 St. Gallen 36.16 32.48 Thurgau 35.63 32.29 Schaffhausen 25.20 32.18 Graubünden 32.95 31.74 Luzern 32.55 30.48 Appenzell A. 31.26 31.56 Glarus 34.49 25.55 Nidwalden 26.74 25.35 Uri 33.00 25.02 Appenzell I. 26.14 24.30 Obwalden 24.01 22.86 Zug 23.10

Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Income tax rates for AI and SG are for 2016. Source: KPMG Switzerland

 

33.99% 34.85% 34.25% 34.61% 33.84% 34.05% 33.77% 33.76% 33.98% 33.86% 2007 2008 2009 2010 2011 2012 2013 2014 2015 - 0.86% 2016 33.99% 2017
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -0.86% 34.61% 34.85% 34.05% 34.25% 33.76% 33.84% 33.86% 33.77% 33.99% 33.98% 33.99%

Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Income tax rates for AI and SG are for 2016. Source: KPMG Switzerland

Trend from 2007 to 2017
The average individual tax rate appears to be stagnating at a value of 33.99% over the past two years.

Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Income tax rates for AI and SG are for 2016. Source: KPMG Switzerland

What happens next?

For tax, there is an unprecedented amount of change. Fact is, the demand for greater transparency and compliance will not diminish. AEoI, BEPS and CbCR will not go away. For Switzerland in particular, there are various discussions on how a new corporate tax reform package could look like. However, we are fully convinced that Switzerland will maintain its attractiveness for businesses and ensure legal certainty.

 

Stefan Kuhn

Partner, Head of Corporate and M&A Tax at KPMG Switzerland

After working several years as a scientific assistant in tax law at the University of St. Gallen, Stefan Kuhn started his corporate career with one of the large international accounting firms beginning of 2000. He joined KPMG in October 2006 and became Partner in 2008. Stefan advises national and international companies across different industries.


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KPMG Switzerland

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Zurich

Peter Uebelhart

Partner, Head of Tax, Member of the Executive Committee

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Zurich

Stefan Kuhn

Partner, Head of Corporate and M&A Tax

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Zug

Frank Lampert

Partner, Tax / Head of International Private Client Services Switzerland

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Bern

Hans Jürg Steiner

Partner / Head of Tax Department Bern / Head of the Market Region Bern

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St. Gallen

Peter Michael

Partner, Tax / Head of the Market Region Eastern Switzerland

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Geneva

Vincent Thalmann

Partner, Head of Corporate and M&A Tax Western Switzerland

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Further Information

Press release

Stagnation in tax rates.

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Business location Switzerland

How can Switzerland continue to maintain its advantage as leading business location?

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CTR III

Switzerland voted no. Find the implications on this topic here.

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AEol

Who will be in scope of the AEoI? Look-through approach to foundations, trusts and domiciliary companies under the AEoI.

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