Who has to pay taxes? The tax subject of income tax.

Income tax can be levied in Switzerland by the federal government, the cantons, and the municipalities (Art. 128 para. 1 BV). This blog post provides an overview of who exactly is liable for tax - the question of the tax subject of income tax.

As tax subjects of the income tax, all natural persons are generally considered liable for tax, which means all people regardless of their age are subject to taxation. Legal entities (e.g., corporations) pay profit tax, meanwhile. It is important to note that sole proprietorships, partnerships, and limited partnerships are not taxable because they do not possess their own legal personality. The profit from these companies is taxed directly from the shareholder as income (Art. 10 DBG). A natural person is liable for taxation at a particular place if they have either a personal or economic relationship with it.

Personal attachment

At the place of personal attachment, the community (e.g., the municipality) may levy income tax from the natural person. Normally, this place is the residence (Art. 3 DBG). Personal attachment can also arise through tax residence. This is the case if the person stays in Switzerland for more than 30 days engaging in gainful activity or if they do not engage in any gainful activity but stay in Switzerland for more than 90 days. Example: A student from France, who has their residence in Paris and travels to Switzerland for three weeks without engaging in any gainful activity, does not become liable for tax.

Economic attachment

A natural person also becomes taxable if they establish an economic attachment to Switzerland based on economic relationships. A natural person is liable for taxation in Switzerland if they:

• Engage in gainful activity in Switzerland (Art. 5 DBG);
• Serve as a board member or executive in a Swiss company based in Switzerland;
• Are owners or partners of businesses in Switzerland (Art. 4 DBG).

Example: The student from France works in various restaurants during his journey through Switzerland and receives wages for it. He becomes liable for his wages due to economic attachment. What all counts as income – the question of the object of income tax – is answered in this blog post.

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