Taxes

In Switzerland, the exemption method with progression proviso avoids intercantonal double taxation by having each canton tax only the tax base that belongs to it. The main tax domicile is determined by the place of residence or statutory seat, and secondary tax domiciles at locations of real estate, place of business, and operational site.

In Switzerland, intercantonal double taxation is prohibited to spare taxpayers from double tax burdens. The regulation is mainly guided by case law and supported by the Tax Harmonization Act.

Outbounds are Swiss people who work abroad and are considered unlimited or limited taxpayers depending on their residence. They are usually subject to the ordinary tax process, sometimes to the withholding tax procedure.

In Switzerland, the standard VAT rate is reduced from 8% to 7.7%, while the special rate for the hotel industry is reduced to 3.7%. The time of service provision determines the applicable tax rate, not the invoice date.

Swiss tax law differentiates between unlimited and limited tax liability for individuals who originate from abroad and work in Switzerland (Inbounds). Depending on their income and residency status, Inbounds can be taxed differently, either through withholding tax or through the ordinary procedure.

In Switzerland, tax assessment is often carried out through self-assessment, but foreigners and certain Swiss are subject to withholding tax, which is deducted directly from their salary. Withholding tax also applies to individuals without tax residence in Switzerland who earn income there.

Employee participations, such as options and rights to shares, are typically subject to tax, with the timing of taxation varying. Gains from the sale of these participations are tax-free in private assets.

Employee shares are often locked and may not be sold or encumbered; however, taxes are due immediately. The lock-up period allows for tax discounts of up to 44.161% for a maximum of 10 years.

Employee shares are taxed at the market value; taxable income results from the difference between the market value and payment. The tax-relevant value is based on the market value on the day of offer acceptance.