Taxes

The Swiss Department of Finance publishes a draft that changes the VAT option for real estate services, including new rules for private use. Changes take effect from 1.1.2014 and affect the taxation and deductibility of various real estate services.

In Switzerland, salary deductions for social insurances are borne equally by employees and employers, with a total burden of 12.5% of the salary for employees. Self-employed individuals pay up to 9.7% of their earnings on their own, depending on their income.

The simplified accounting procedure allows for annual settlement of social insurance and withholding tax contributions, with only one contact point, the compensation office. Conditions include, among others, an annual salary below CHF 21,060 per employee and compliance with all regulations.

Corporations and limited liability companies, as legal entities, are subject to multiple taxation, in which both the company and the shareholders are taxed. They pay federal, cantonal, municipal, and sometimes church taxes on profits and capital.

The Swiss tax system emphasizes federalism, where the Confederation, cantons, and municipalities levy taxes, and the federal constitution regulates the competencies. For the purpose of standardization, the Tax Harmonization Law exists.

The taxation of a sole proprietorship avoids economic double taxation, unlike in the case of corporations. Disadvantages arise from the tax treatment in the event of business cessation or sale.

The distinction between private and business expenses is essential for correct taxation in the case of self-employed individuals and partnerships, where only business costs are deductible. Specific evidence is necessary to prove the business nature of expenses such as travel, vehicle use, or work clothing.

In Switzerland, sole proprietorships and partnerships are not taxed directly, but the tax burden falls on the individual partners. Taxes are levied on the income and partly on the assets of the partners at the federal, cantonal, and municipal levels.

Business owners must make an adjustment for input tax when using their own products privately, for which input tax has been claimed. This serves the correct allocation and tax treatment of such transactions.