Subject to tax for individuals
Subject to tax refers to the situation where a person is obligated by law or administrative regulation to make a financial contribution to a public fund.
It represents the first step in examining the tax situation and can be limited or unlimited. When a person resides in Switzerland, they are subject to unlimited taxation. Unlimited subject to tax can also result from staying in Switzerland for at least 30 days while engaging in a gainful activity or for 90 days without such an activity.
Our tax attorney can advise you on how subject to tax can influence your taxation and examine the different possibilities.
Income tax for individuals
Income tax for individuals refers to taxes levied on the net income (gross income reduced by authorized tax deductions) and capital gains of individuals. This tax is a significant fiscal source for the State.
It can result from limited or unlimited tax subject as well as the wealth tax for individuals.
The Confederation, all cantons, and municipalities levy a general income tax. It is, in principle, calculated on the sum of all the income of the taxpayer, regardless of its source. It takes into account the taxpayer’s economic capacity by considering elements like the amount of income, expenses necessary to acquire it, family burdens, the taxpayer’s standard of living, general and social deductions, etc.
Municipal income taxes are determined based on cantonal tax laws which are carried out through the taxation valid for the cantonal tax.
There are incomes that are exempt from tax at the federal and cantonal levels. Some of these incomes, however, may be subject to another tax, notably the transfer of wealth following a succession or donation, which may be subject to inheritance and donation tax.
Swiss tax laws provide and grant various types of deductions. These can be subdivided into expenses, general deductions, and social deductions. These deductions apply at all levels and can vary from one canton to another. They are subtracted from income and help to reduce the annual tax burden.
Our tax attorney can examine your situation at this level and advise you, especially concerning the authorized tax deductions.
Wealth tax for individuals
Since 1959, the Confederation no longer levies a wealth tax on individuals because its cumulation with cantonal and communal taxes also hitting wealth would have led to an excessive tax burden.
Therefore, it is a cantonal tax. Thus, there are 26 different legislations; our tax attorney can guide you among them.
The some 2,200 Swiss municipalities have what is called “delegated” tax sovereignty and also levy taxes. Municipal taxes cover the same objects as cantonal taxes, including wealth tax. Most of the time, municipalities do so based on the same legal bases as their canton but with different rates, sometimes based on their own tariffs, but most often through multiples in relation to cantonal scales or to the cantonal tax due.
These municipal taxes are often as high or higher than the cantonal tax.
However, there is harmonization at the cantonal level concerning the setting of scales, rates, and exempt amounts. The cantons retain competence.
Certain elements of wealth are exempt and do not enter into the calculation of the tax.
Like the income tax for individuals, the wealth tax can result from a limited or unlimited subject to tax.
Swiss tax laws provide and grant various types of deductions. These can generally be subdivided into debt deductions and social deductions. The wealth tax concerns the taxpayer’s net wealth, not the gross.
Our tax attorney can help you navigate among them.