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Switzerland: Personal Taxation


This page was last updated on 9 April 2021.

Due to the federal structure of Switzerland there is no centralized tax system. Some taxes are levied exclusively by federal authorities whereas others are levied by the cantons, the communes and the federal authorities concurrently. Even among the cantons there are significant differences in both the taxes levied and the rates payable though there is current legislation that aims to reduce these differences.

In addition to the taxes described below, there is capital gains tax on real estate transactions averaging 18%, and a capital transfer tax on real estate transactions averaging 4% - however there are wide variations between cantons.

In February 2009, amid growing concerns over the effects of the global economic crisis, voters in the Swiss Canton Zurich elected to abolish the highly controversial flat rate tax or Pauschalbesteuerung applicable to wealthy foreigners from 2010. The canton of Schaffhausen followed suit in 2011, as did Appenzell-Ausserhoden in March 2012. Both government and parliament had previously rejected the bill but in June 2011, government put forward a proposal to retain lump-sum taxation but to increase the calculation base from five times to seven times annual rental expenditure with a minimum federal calculation base of CHF400,000.

Some cantons have since voted to retain lump-sum taxation but to increase the calculation base to CHF600,000 and seven times annual rental expenditure.

Under current law, income or wealth tax may be replaced by a lump sum tax, provided that an individual is in possession of a residence permit, not gainfully employed in Switzerland, and has not worked in the country for at least ten years.

Critics have argued, however, that the system is unfair, that it violates the law to tax individuals according to their means, and that it serves to encourage tax evasion, whilst also contributing to rising property prices in affluent areas. Originally intended to benefit retired individuals choosing to spend their twilight years in Switzerland, many believe the system is currently open to abuse.

A fear persists, however, that abolition of the lump sum tax will lead to an exodus of super-rich foreigners, either to other cantons in Switzerland or abroad, to the UK, the Benelux countries, Austria or Liechtenstein where similar tax breaks for foreigners still apply.

Whilst modifying cantonal and local tax law, however, direct federal tax remains unaffected by the decision.



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