Switzerland

Details

  • Type: Press release
  • Date: 4/2/2014

Switzerland still under pressure as a tax location 

The trend toward declining top tax rates for companies has abated significantly not only in OECD and EU countries but in Swiss cantons, as well. Top tax rates for individuals saw another slight increase compared to the previous year. Those are some of the findings presented in KPMG's current Swiss Tax Report 2014, which compares corporate and income tax rates in 130 countries and in all 26 Swiss cantons.
According to KPMG's Swiss Tax Report 2014, the downward trend among top corporate tax rates has slowed down considerably: While the maximum average corporate tax rate for businesses in Switzerland dropped by 4.07% over the past 9 years, this figure is just 0.09% lower today than one year ago.  In terms of top tax rates for individuals, a year-on-year comparison reveals a slight 0.09% increase in the average income tax rates paid in Swiss cantons.

Corporate taxes: Cantons in Central Switzerland still top the rankings

In a national comparison of corporate tax rates in cantonal capitals, the Canton of Lucerne tops the list again this year - despite a slight 0.12% increase in the corporate tax rate - with a maximum effective pre-tax rate of 12.32%, followed closely by Appenzell-Ausserrhoden, Nidwalden and Obwalden with 12.66%. Not only Lucerne but Glarus, as well, notched its cantonal corporate tax rate up slightly by 0.13%. Zug, on the other hand, was once again able to reduce its regular corporate tax rate from 14.88% in the previous year to 14.60%. The largest reductions can be found in the cantons Neuenburg and Waadt which were down by 1.31% and 0.69%, respectively. As in 2013, the regular corporate tax rates of Western Switzerland, the Mittelland region and the city cantons are considerably lower than those in the cantons of Central and Eastern Switzerland. The highest business taxes are levied again this year in the cantonal capitals of Geneva and Lausanne.

 

The cantons of Central and Eastern Switzerland remained competitive in a European comparison with corporate tax rates only lower in the Channel Islands and some counties in (Southern) Europe. In Europe, Ireland still represents the biggest competition in terms of business taxes. The Canton of Lucerne is the only canton that can compete with Ireland's regular corporate tax rate of 12.50%. Internationally, even the strong financial centers of Hong Kong and Singapore, at 16.50% and 17.00% respectively, fall below the Swiss average. One important aspect to keep in mind when considering this comparison is that international competition not only plays out through ordinary tax rates but that special tax policies play a major role, as well.

  

Recent political developments at EU, OECD and G20 level have significantly increased pressure on Switzerland. Consequently, Switzerland is being forced, within the scope of the Corporate Tax Reform III (CTR III), to find a solution that is acceptable in terms of both foreign and domestic policy, which safeguards Switzerland's attractiveness as a tax location. In particular, the CTR III must offer a solution that works for trading companies, as well, something especially challenging in the Canton of Geneva, which has relatively high regular tax rates. Also important is the fact that the solution needs to be worked out as quickly as possible so that both Swiss and international companies once again have the legal and planning certainty they need.

Individual taxes: Another slight rise in tax rates for high income groups

Despite the enormous differences that still exist between the individual cantons, there was another slight increase, similar to 2013, in the average cantonal tax rate for high income groups. Individual taxes, like business taxes, are highest in the cantons of Central Switzerland. Among the cantonal capitals, the Canton of Zug tops the list at a rate of 22.86% followed by the cantons of Schwyz (23.73%), Obwalden (24.12%), Nidwalden (25.55%) and Uri (25.63%).

 

In a European comparison, the income tax rates of Swiss cantons are only higher than those in East European countries such as Bulgaria (10%), Lithuania (15%), Hungary (16%) and the Channel Islands of Guernsey and Isle of Man (20%). A look beyond the continent's borders reveals no big surprises: The zero taxation policies of Caribbean offshore domiciles and some Arabian countries have put these in the lead in terms of income taxes, followed by Asian nations such as Hong Kong (15%), Singapore (20%) and Malaysia (26%). All in all, Switzerland ranks in the midfield with an average maximum income tax rate of 33.86%.

Swiss Tax Report 2014

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Comparison of corporate and income tax rates in all 26 Swiss cantons on a interactive Swiss map.

About the study

The Swiss Tax Report is published on an annual basis by KPMG Switzerland. The current study reflects 130 countries and all 26 Swiss cantons. It compares the maximum effective corporate tax rates for companies (at the federal government, cantonal and municipal level) as well as the maximum income tax rates for individuals (at the federal government, cantonal and municipal level; no children, no religious denominations) for 2014 in the relevant national or cantonal capitals.

 

Simone Glarner

Simone Glarner

Head of Media Relations

+41 58 249 55 71

KPMG's Swiss Tax Report 2014

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The current KPMG's Swiss Tax Report 2014 compares corporate and income tax rates in 130 countries and in all 26 Swiss cantons.

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