Various taxes in Switzerland

Withholding tax

The withholding tax is levied by the federal government at the source on various forms of capital income (notably interest and dividends), cash winnings from Swiss lotteries, and certain insurance benefits. This tax primarily serves as a fiscal tool to combat tax evasion, encouraging taxpayers to declare their income subject to withholding tax and the wealth from which it originates. It is refundable under certain conditions (either credited against cantonal and communal taxes or refunded in cash). Therefore, withholding tax is not a permanent burden for Swiss residents who comply with their tax obligations.

Value Added Tax (VAT)

Value Added Tax (VAT) is a general consumption tax levied by the federal government and is one of the main sources of state revenue. VAT primarily taxes consumption and, secondarily, economic transactions. Its purpose is to tax non-business final consumption within Switzerland, including the consumption of goods and services. Since January 1, 2018, the standard VAT rate is 7.7% for all taxable supplies of goods and services. A reduced rate of 3.7% applies to accommodation services. Certain essential goods and services (such as food, beverages, and books) are taxed at a reduced rate of 2.5%. Our tax attorneys can provide expert advice on VAT matters.

Stamp duty

Switzerland imposes stamp duty on the issuance and trading of securities. This includes issuance stamp duty, securities transfer stamp duty, and insurance premium stamp duty.

• Issuance Stamp Duty: Applied to the issuance and increase in nominal value of Swiss participation rights. This duty is levied on:

  • Shares of Swiss joint-stock companies and partnerships limited by shares
  • Social shares of Swiss limited liability companies
  • Social shares of Swiss cooperatives
  • Participation certificates of Swiss companies or cooperatives
  • Participation certificates of Swiss public law enterprises

• Securities Transfer Stamp Duty: Levied on the purchase and sale of Swiss and foreign securities by Swiss securities dealers. The rates are:

  • 1.5‰ for Swiss securities
  • 3.0‰ for foreign securities

Securities lending transactions, which solely involve the lending of securities, and repurchase agreements, primarily financing operations, are exempt from stamp duty due to the lack of transfer for consideration.

• Insurance Premium Stamp Duty: Imposed on premium payments for liability, fire, multi-risk, and household insurance. It generally amounts to 5% of the insurance premium. Single-premium life insurance policies and policies eligible for surrender are taxed at 2.5%. The obligation typically falls on the Swiss insurance institution. Exemptions include periodic premium life insurance, health insurance, accident insurance, disability insurance, and unemployment insurance.

Our tax attorneys are equipped to advise you on stamp duty matters.