Switzerland has a competitive tax system with federal, cantonal, and municipal levels. Understanding these basics is essential for entrepreneurs and startups.
Switzerland’s tax system is decentralized, with cantons having significant authority to set tax rates. Corporate taxes are paid at three levels: federal, cantonal, and municipal.
Effective corporate tax rates vary by canton, typically between 11% and 21%. Cantons such as Zug and Lucerne are known for their lower tax rates, making them attractive for businesses.
Switzerland has one of the lowest VAT rates in Europe:
Businesses can deduct operational expenses, salaries, social security contributions, and interest on debt. R&D expenses may also qualify for deductions in certain cantons.
A 35% withholding tax applies on dividends, interest, and royalties paid from Swiss entities. This can be reduced or eliminated under double taxation treaties.
Swiss taxes can be optimized with proper planning and canton selection. Consulting a tax expert is advisable for new entrepreneurs.
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