Capital tax

Capital tax is one of Switzerland’s most important taxes, levied by both the cantons and the Confederation. It is a direct tax on the wealth of taxpayers, and applies to both individuals and corporate entities. It is calculated on the basis of the net value of the taxpayer’s assets, including real estate, investments and financial assets. Capital tax rates vary from canton to canton, and may also differ depending on whether the taxpayer is an individual or a legal entity. In principle, individuals are subject to capital tax in the canton where they are domiciled, while companies are subject to capital tax in the canton where their registered office is located.

Tax liability of limited companies

Corporations are legally independent companies with their own assets and legal personality. They may be public limited companies (AGs), limited liability companies (GmbHs), partnerships limited by shares (SCAs) or general partnerships (GPs). Corporations are subject to capital tax in Switzerland. In general, capital tax is calculated on the basis of the company’s net worth, which is determined by subtracting debts from the total value of assets. The capital tax rate varies from canton to canton and depends on the amount of the company’s net worth. In addition to capital tax, joint-stock companies are also subject to income tax. Profit tax is a direct tax on corporate income, calculated on the basis of profits made during the fiscal year.

Liability of associations, foundations and other legal entities

Associations, foundations and other legal entities are also subject to capital tax in Switzerland. These entities may be subject to capital tax, depending on their legal form and activity. They are generally subject to capital tax in the canton in which they are domiciled. As a general rule, associations, foundations and other legal entities are subject to capital tax if their share capital or net assets exceed a certain threshold, which varies from canton to canton. Share capital is defined as the entity’s equity capital, i.e. the difference between its assets and liabilities. Net assets, on the other hand, correspond to the total value of assets minus the total value of liabilities. The threshold at which associations, foundations and other legal entities are subject to capital tax is generally higher than that applicable to companies. Capital tax rates for legal entities can therefore vary from canton to canton, and may also depend on the purpose and nature of the entity. Associations and foundations are also subject to income tax in Switzerland. However, income tax rates for these entities are generally lower than for corporations. It should be noted that certain associations, foundations and other legal entities may benefit from tax exemptions, depending on their corporate purpose. However, some of these entities may benefit from tax exemptions depending on their corporate purpose and activity. It is therefore important to find out the tax rules applicable to each entity.

Calculating corporate capital tax in Switzerland

The calculation of corporate capital tax in Switzerland depends on the canton in which the company is based. In general, capital tax is calculated on the basis of the tax value of the company’s capital, determined according to the company’s assets and liabilities. The tax value is often lower than the actual value of the company’s assets, which can be advantageous for companies. Capital tax rates also vary from canton to canton. Some cantons apply a flat rate, while others use a progressive rate based on capital value. In some cases, cantons may also apply different rates for foreign and domestic companies. Companies can also benefit from tax breaks such as deductions for capital losses or investments in intangible assets such as patents and trademarks. Companies can also benefit from reduced tax rates on profits reinvested in the business.

Special capital tax regimes for Swiss companies

In Switzerland, special tax regimes for companies establishing their headquarters or research and development activities encourage investment and innovation. High-tech and innovative companies can benefit from special tax regimes in certain cities and cantons offering reduced tax rates for profits reinvested in the company, as well as tax breaks for R&D investments. These tax regimes are designed to stimulate the local economy and improve Switzerland’s competitiveness by encouraging new business start-ups and innovation. Companies establishing their headquarters or R&D activities in Switzerland can thus benefit from advantageous tax conditions to foster their long-term growth and success.