Taxes

The Federal Tax Administration requires sole proprietors residing abroad to provide VAT security of CHF 5,000 in a blocked account. This measure ensures the payment of the value-added tax.

Flat and lump-sum tax rates simplify tax accounting in Switzerland by eliminating the need to determine input taxes separately. Conditions are an annual turnover below 5.02 million CHF and a tax burden below 109,000 CHF.

The input tax deduction allows entrepreneurs to deduct the VAT paid on purchases from the VAT owed on sales. This reduces the tax burden on the actual added value of the products sold.

As of 01/01/2013, new ESTV interest rates apply to advances/loans in foreign currencies. Non-interest-bearing or poorly interest-bearing monetary benefits are subject to a 35% withholding tax.

The ESTV has set new interest rates for loans/advances in CHF as of 01.01.2013, including minimum rates of 1.50% and maximum rates up to 3.75%. Withholding tax applies to non-interest-bearing or inadequately interest-bearing monetary benefits.

According to Art. 18 para. 2 lit. J MWSTG, board of directors' fees are exempt from value-added tax. They are considered equivalent to a salary payment for tax purposes.

Companies are generally liable for VAT, but can be exempt from the obligation with revenues under CHF 100,000. VAT registration can still make sense, e.g., for input tax deductions or if many customers are also VAT liable.

Lucerne has significantly reduced corporate taxes to improve its location, remains financially stable, and attracts new companies despite challenges. Tax policy adjustments make Lucerne competitive and attractive, although large companies are hard to win over.

All companies are generally liable for VAT, but they may be exempt from this obligation if their annual turnover is below CHF 100,000. A voluntary VAT registration can be beneficial, for example, for exporters or in the case of initial investments with high input tax.