Fiscal headwind for the Canton of Zurich | KPMG | CH

The Canton of Zurich is experiencing a fiscal headwind

Fiscal headwind for the Canton of Zurich

The difficult economic environment is boosting the importance of tax attractiveness. As shown by the “Zurich Tax Monitor 2015” published by KPMG and the Zurich Chamber of Commerce, however, the Canton of Zurich is trailing behind the other cantons in terms of corporate taxation and the taxation of very high-income individuals.


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Zurich is a robust business location on the whole. This is attributable to several vital location factors important to both businesses and individuals alike. However, in light of the franc's sustained strength, uncertainties in the European and Asian economic zones, and as a result of the increasing importance of compliance with international regulations, greater priority is being given to location factors that are (still) largely at the discretion of the Canton of Zurich. One of these factors is tax policy. Yet in terms of its tax attractiveness, the Canton of Zurich is trailing behind other cantons with regard to both its corporate taxation as well as the taxation of very high-income individuals. This was one of the findings of the “Zurich Tax Monitor 2015” prepared by KPMG and the Zurich Chamber of Commerce.

Corporate taxes at a sustained high level

An analysis of the canton's tax attractiveness for companies reveals the following:

  • Tax rates for businesses in the Canton of Zurich, both for profit earned as well as capital, are relatively high compared to the other cantons.
  • The Canton of Zurich did not join the general tax-cutting trend seen over the past few years.
  • The relative importance of the canton's tax income from privileged companies is comparably low in the Canton of Zurich.

Based on the Swiss-wide analysis, which revealed a disproportionately high number of privileged companies, particularly with regard to high tax amounts, it is fair to conclude that a few isolated relocations of privileged companies could indeed have a major impact.

Extremely high top tax rates for individuals

The analysis of the Canton's tax attractiveness for individuals was not very flattering, either:

  • Top tax rates for individuals in the Canton of Zurich are high compared to surrounding cantons.
  • The tax burden for low and mid-range incomes is moderate, yet high for high incomes.
  • Wealth taxes follow a similar principle: Wealth tax rates for low to medium amounts are moderate, yet quite substantial for amounts in the upper range.
  • In the Canton of Zurich, an above-average share of tax income (71%) is generated through just a few high-income individuals; just under 3.5% of taxpayers with incomes of over CHF 200,000 contributed nearly 40% of the canton's income tax revenue.
  • In fact, wealth tax from around 3% of taxpayers accounts for over 75% of the canton's revenues.

The flaws in its tax policy are making it particularly challenging for the Canton of Zurich to preserve and cultivate its attractiveness as a location and its innovative capacity in times of sustained economic uncertainties and ongoing legislative reforms (e.g. Corporate Tax Reform III).

The “Zurich Tax Monitor”

The “Zurich Tax Monitor” published by KPMG and the Zurich Chamber of Commerce is a systematic, intercantonal comparison of the tax competitiveness of the Canton of Zurich, particularly with regard to neighboring cantons. It analyzes the canton's attractiveness in terms of corporate taxation, individual taxation, location quality and revenue structure.

© 2017 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

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