Switzerland: Domestic Corporate Taxation
Corporation Tax Rates
Corporate income tax is levied at federal, cantonal and municipal levels.
The federal corporate income tax rate is 8.5% flat. Since income and capital taxes are deductible in determining taxable income, the effective tax rate that a company pays on its profits before deduction of tax is 7.83%.
Cantonal tax rates can be levied at rates of up to 20% and like the federal tax are progressive, using a scale based on the relationship of profits to net worth. The average cantonal tax rate in 2011 was approximately 21%.
Municipal tax on corporate income is calculated as a small proportion of cantonal tax.
The “Bonny Decree”, which provided for federal assistance in the form of a federal tax holiday for up to ten years for companies bringing economic value-adding activities to specific regions in Switzerland was replaced by the Federal Law on Regional Policy from 1 January 2008. The new law saw a reduction in the number of cantons qualifying for the incentive status. To ease the transition, the government allowed cantons no longer included in the list to continue to offer tax holidays of up to 10 years for a further three years after the new law came into force.
See Offshore Legal and Taxation Regimes for details of the taxation of Holding, Domiciliary, Auxiliary, Mixed and Service Companies.