What Is Switzerland`s Tax Rate

All income is taxed on the basis of the same tax return with generally the same tax rate (i.e., all sources of income are added together), and all applicable deductions are deducted from this total income. This results in an applicable tax rate that is levied on all taxable income. On the basis of the applicable double taxation agreements (DTAs), actual taxable income in Switzerland may deviate from the tax income rate. In addition, dividend income from large investments may be taxed at a lower tax rate depending on national federal and cantonal law. In an increasingly globalized economy, companies often expand beyond the borders of their home countries to reach customers around the world. As a result, countries need to define rules that determine how or if foreign-generated corporate income is taxed. International tax rules deal with the systems and regulations that countries apply to these business activities. Income taxes are levied at three different levels: at the federal level (which is the same throughout Switzerland), at the cantonal level (which is the same in a given canton and is based on cantonal tax law and tax rates) and at the communal level (municipalities follow cantonal tax law, but have the right to set their own municipal tax rate within certain parameters). Income tax rates are progressive at the federal level and in most cantons. Some cantons have recently introduced flat-rate taxation. The cantons levy a proportional tax (at different rates) on companies` own funds. [29] Low-capitalized companies are also taxed on liabilities that act as equity. This also means that debts paid on these liabilities cannot be deducted for income tax purposes and are subject to federal withholding tax.

[30] Not all cantons levy a property tax, but it is often levied in tourist resorts and areas with a large number of second homes. Property tax rates are generally between 0.1% and 0.15% of the assessed value of the property. Pensions, annuities and seniority allowances from Swiss pension funds are subject to income tax. The same applies to spousal and child support (with the possibility of deduction for the payer). Capital payments from pension funds are also subject to income tax, but usually at a lower rate. In Switzerland, income tax is levied both by the Confederation and by your canton. This means that your tax calculation in Switzerland is a combination of the rate set by the government and the rate set in your region. For taxable income above CHF 755,200, the total tax rate is 11.5%. Every Swiss citizen is required to perform military service (Art. 59 para.

1 Stst). Anyone who, for any reason (in whole or in part), does not personally comply with this obligation by performing military or civilian service must pay a tax exempting from military service. In addition, countries have social security contributions. These taxes, which are usually flat-rate, are levied in addition to a country`s general personal income tax on wage income. However, revenue from these taxes is usually used specifically for social security programs such as unemployment insurance, state retirement programs, and health insurance. Value added tax (VAT; VAT / Value Added Tax / Tassa sul valore aggiunto) is one of the main sources of federal funding. It is levied at a rate of 7.7% on most trade in goods and services. Some trade is subject to a reduced VAT of 2.5%: countries increase their tax revenues through a combination of personal income taxes, corporate taxes, social security taxes, taxes on goods and services and property taxes. The combination of tax policies can affect the distortion or neutrality of a tax system.

Income taxes can cause more economic damage than consumption and property taxes. However, the extent to which a single country depends on one of these taxes can vary greatly. High marginal income tax rates affect labour decisions and reduce the efficiency that governments can use to increase revenues from their individual tax systems. The tax rate applicable to a married couple or natural persons in a Swiss registered partnership is the rate applicable to 50% of their total income (so-called “splitting”). The tax rate for single, widowed, divorced or separated people living with a dependant (child or adult) is the rate applicable to 50% of income. VAT is levied only at the federal level, in principle on all goods and services. However, there is a list of exceptions, such as medical treatment, education, rental and rental of real estate, etc. The general VAT rate is 7.7% with a reduced rate of 2.5% on goods intended for basic needs. 3.7% on accommodation-related services. These tariffs have been in force since 1 January 2018.Property taxes are cantonal or communal taxes on land and buildings.

It is payable by natural and legal persons registered in the land register as owners or users (usufructuaries) of a property. In general, the tax is calculated on the total taxable value of the property, i.e. without taking into account the associated debts or mortgages. The property is taxed at its location, regardless of where the owner lives. Several cantons have decided not to levy this tax (e.B Zurich, Zug). The other cantons apply a variety of systems (tariffs are 1 to 3 ‰). On payments received for loans secured by a property located in Switzerland (without repayment amounts, e.B mainly mortgage interest), a withholding tax may be due if the creditor (natural or legal person) is domiciled abroad. The withholding tax must be withheld by the payer of the interest. The applicable DTAs may limit or abolish the applicable cantonal tax rates. These include social security or pension fund payments[16], income-generating expenses (such as labor expenses and real estate maintenance costs), and maintenance payments. [17] Gifts and inheritances are also exempt from income tax, but are subject to separate cantonal taxes.

[13] The above rates apply in principle to taxpayers who file a tax return […].

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