Taxes

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.

The STAF introduces a special rate solution for companies that allows a special tax rate on profits from hidden reserves for five years. This rate is determined at the cantonal level and does not require deferred taxes on the balance sheet.

From 2020, the tax privileges for holding, domicile, and mixed companies will end, with transitional provisions such as the step-up to avoid over-taxation. The step-up allows the tax recognition of hidden reserves without commercial legal recording.

The AHV tax proposal eliminates the special tax status for holding and other companies from 2020 onwards. Due to this elimination, the treatment of hidden reserves and their tax-optimized depreciation until 2024 is a central point.