Switzerland is a landlocked country located in Central Europe, known for its stunning landscapes, including the Swiss Alps and numerous lakes. The country is renowned for its political stability, strong economy, and high standard of living.
Switzerland is bordered by France, Germany, Austria, Liechtenstein, and Italy. Despite its relatively small size, Switzerland’s diverse geography includes the Swiss Alps, Jura Mountains, numerous lakes, and fertile valleys.
Size and population:
Switzerland covers an area of approximately 41,290 square kilometers (15,940 square miles) and had an estimated population of around 8.6 million people. The population is diverse, with four official languages spoken: German, French, Italian, and Romansh
Switzerland is renowned for its banking and financial services sector. Swiss banks are known for their stability and wealth management services. The country is also a hub for international finance, investment, and insurance, with a strong emphasis on research and innovation. Switzerland invests heavily in research and development, fostering a culture of technological advancement and scientific discovery. It engages in extensive international trade, benefitting from its strategic location in the heart of Europe and a network of free trade agreements that facilitate trade relationships with various countries and regions.
Switzerland follows a civil law legal system, based on written laws and statutes, with the Swiss Constitution serving as the supreme law of the land. The country is known for its strong adherence to the rule of law and a well-functioning judiciary.
Switzerland is famous for its banking sector, characterized by a high level of privacy and confidentiality. Swiss banks have historically been known for their discretion and security in managing clients’ financial affairs. The country has a robust financial infrastructure and offers a wide range of banking services, including private banking, wealth management, investment banking, and retail banking. Switzerland’s banking industry is regulated by the Swiss Financial Market Supervisory Authority (FINMA), ensuring banks adhere to financial regulations and maintain the stability of the financial system.
Individuals and businesses in Switzerland enjoy some of the lowest tax rates in Europe. The direct taxes levied on individuals are calculated based on an annual tax return and are payable in installments in the following tax year. The Swiss tax system reflects the country’s federal structure. Businesses and individuals are liable to pay taxes at the federal, cantonal, and communal levels. The Federal Treasury collects approximately 30% of the total tax revenue, the cantons 40%, and the communes the remaining 30%.
Individuals and businesses pay direct taxes, which make up roughly 70% of the total tax revenue. These direct taxes include income tax at progressive rates, corporate tax on profits at rates ranging from 11.7% to 21.6%, and personal wealth tax, which is also charged at progressive rates in the majority of cantons.
A proportional tax is levied by the cantons at varying rates on the ownership equity of companies.
Stamp duties are a group of federal taxes levied on the issuance of certain securities, such as shares or bonds.
Indirect taxes account for roughly 30% of all tax revenue in Switzerland. The primary indirect tax is the value-added tax (VAT), which is levied at the federal level. VAT is currently payable at a rate of 7.7% of the total transaction cost, the lowest rate in Europe. A reduced rate of 3.7% applies to accommodation services, while a 2.5% VAT rate applies to basic necessities and other everyday items. Medical and educational services are exempt from VAT.
Taxation of Real Estate:
Transfer of Ownership Tax: This tax or fee is levied when a property changes hands and typically amounts to around 1% to 3% of the purchase price.
If you own residential property, you must also pay a property tax in more than half of the cantons. The tax amount is typically around 0.01% to 0.03% of the estimated value of the property.
Real Estate as an Asset:
If you own an apartment, a house, or a plot of land, you must declare this in your tax return and pay tax on the value as an asset.
Real Estate Capital Gains Tax
A capital gain on real estate sold by an individual is not subject to federal tax, unless the real estate belongs to the business assets. However, on the cantonal and
communal levels, real estate capital gains are subject to tax.
The tax rates are progressive, with surcharges for short holding periods and discounts for long holding periods. Thus, high profits achieved over a short holding period could be taxed at a rate higher than 50%. No tax is levied if the sales price is reinvested, but this exemption applies only if the real estate is the main residency of the taxpayer.
The standard VAT rate is 7.7%. There is a special rate of 3.7% for accommodation services, as well as a reduced rate of 2.5% for food, medicine, and books (including newspapers). Health services, education, culture, and rent on property are exempt from VAT.
The federal government levies withholding tax on income from financial investments, such as interest and dividends paid to investors. The withholding tax rate is 35%, and it is paid to the Federal Tax Administration.
Social tax contributions are divided between employers and employees, with employers required to withhold and remit the employees’ share. Employer rates for social taxes range from 13.8% to 41.5%, while employee rates range from 14.375% to 28.375%.
Most cantons levy a gift tax, which is applied to gifts of various types, including money above a certain value, real estate, valuables like artwork, and insurance benefits.
Individual tax rates
Income tax rates are progressive at the federal level and in most cantons. In 2023, federal income tax varies from 0.77% (for single taxpayers) and 1% (for married taxpayers) to a maximum rate of 11.5%. There is no federal tax for individuals with a taxable income below CHF 14,800 and couples with a
taxable income below CHF 28,800. On the cantonal level, tax rates vary significantly, with a maximum rate in Zurich of approximately 41.1%, compared to 22.7% in Zug, 31.7% in Lucerne, 41.5% in Lausanne, and 48.0% in Geneva (all rates including federal income tax). The most favorable individual tax rates can be found in Canton Zug and Schwyz.
Foreign nationals moving to Switzerland can be taxed on a lump-sum basis if they are not gainfully employed in Switzerland.
This taxation is based on the taxpayer’s actual annual living expenses, calculated as the total annual cost of living expenses for the taxpayer in Switzerland and abroad, including dependents.
Currently, at the federal level and in most cantons, these expenses must amount to at least seven times the rental value of the taxpayer’s home or the rent paid, or a minimum of CHF 421,700. Certain cantons may have higher minimums, and there might be different rules for non-EU/EFTA citizens.
Lump-sum taxation is often the preferred method for non-EU/EFTA citizens, especially high-net-worth individuals (HNWI), to obtain residency permits in Switzerland.
Note: Lump-sum taxation has been abolished in various cantons through referendums, including Zurich, Schaffhausen, Appenzell Ausserrhoden, Basel Landschaft, and Basel Stadt).
1) Banking Setup
A private banking account in Switzerland has a longstanding tradition of being associated with the security of funds for current and future generations, as well as the preservation of family wealth and inheritance. It is also a crucial step in pursuing personal development opportunities within Switzerland and abroad, whether it involves real estate investments, off-bank investments, or a partial relocation from one's current residence. Due to the political and economic stability of this jurisdiction, Switzerland is the ideal location for managing regulatory and economic international changes with the least possible impact on its clients.
Types of accounts we can offer:
-Operational (no AUM requirement),
-Private Banking (min. AUM of 300k USD).
Locations: Switzerland, Lichtenstein, Middle East, Hong Kong, Mainland China.
Our service includes:
– Selection of a bank based on the client's case profile
– Client KYC (Know Your Customer) profile in accordance with Swiss banking standards
– Introduction of the client to the bank
– Correspondence with the bank throughout the account opening process
– Maintenance of the banking relationship
2) Business Setup and Management In Switzerland
Operating an international business often entails establishing stable global partnerships and, in many cases, necessitates having a presence overseas. It is strategically crucial to consider relocating your business for economic, tax, or reputational advantages. Switzerland emerges as the ideal choice, given its status as one of the most stable, well-organized jurisdictions with numerous financial benefits.
We provide comprehensive assistance with the establishment of a company in Switzerland, as well as restructuring or relocating an existing company to Switzerland. Our approach involves presenting all relevant information concerning expenses, taxes, and project benefits to help clients select the most
suitable solution aligned with their goals. We maintain a network of trusted Swiss and international partners, including tax, accounting, and legal experts, offering clients full support across various domains.
Our services include:
- Collaboratively defining the corporate goals with the client
- Selecting the appropriate corporate structure, location, and corporate roles
- Assuming mandatory functions, such as a Swiss Director or Board of Directors member, in either a newly established or existing Swiss company
- Overseeing ongoing company operations and development
Cantons: Schwyz, Zug.