Taxes

To simplify the complex individual valuation of inventories, there are methods such as FIFO, LIFO, and the average cost method, which yield different financial results. FIFO values based on the oldest costs, LIFO on the most recent costs, and the average method based on an average of the acquisition costs.

The indirect partial liquidation is the prohibited sale of a company with non-operational assets for tax base reduction. It is treated as taxable capital income, not as tax-free capital gain.

Art. 127 BV sets the basic principles of taxation, including tax design and collection principles. It also prevents inter-cantonal double taxation and clearly regulates tax obligations.

Although associations in Switzerland do pay taxes, they receive various facilitations, including tax exemptions under certain conditions. They benefit from special association tax rates and are partially exempt from value-added tax.

Legal entities are tax obligated at their registered office, and in case of multiple locations, the place of actual management determines the main tax domicile. Conflicts between the canton of the registered office and the place of management often require judicial clarification to avoid double taxation.

The Swiss Parliament is planning the abolition of the imputed rental value for primary residences, while deductions such as maintenance costs are to be eliminated. The change must still be dealt with in parliament and could come into force at the earliest in 2022/2023.

The marriage penalty results in married couples being at a tax disadvantage, which led to a narrowly rejected popular initiative in 2016. In 2019, the Federal Court declared the vote invalid due to significant information errors.

In 2018, the revenues from the direct federal tax in Switzerland rose to 22.58 billion CHF, an increase of 7.2% compared to the previous year. More than half of this came from natural persons.

Switzerland promotes through the three-pillar system with subsidized private saving measure (Pillar 3a) an income-adjusted tax reduction. Self-employed individuals can deduct up to 20% of their income, max CHF 34,128, to minimize tax burden.