Legal | Tax | Compliance
Legal | Tax | Compliance
Swiss income taxes are in general regulated by federal tax law (FTL) and 26 cantonal tax laws.
Following legislative amendments, several changes will apply that require particular attention from taxpayers and employers. The key changes are outlined below.
Taxation of teleworking: Due to an amendment of the statutory rules on limited tax liability, individuals living abroad are now subject to Swiss taxation, if they perform teleworking or other work for a Swiss employer in a neighbouring country and the applicable double tax treaty allocates the taxing right to Switzerland. Such income is subject to Swiss wage withholding tax, and the employer must issue the required confirmations.
Retroactive contributions to Pillar 3a: Retroactive pillar 3a contributions will be permitted for the first time starting in 2026. Missed contributions can be made up within ten years, but only for gaps arising from 2025 onward. Eligibility requires AHV‑liable income in the relevant year and full payment of the current year’s ordinary maximum. Retroactive payments are limited to the small maximum contribution (CHF 7'258 in 2026). All contributions made in a given year may be deducted for tax purposes.
Taxation of life annuity payments: For the taxation of life annuity payments, an income component of 40% of the annual payouts was assumed. The remaining 60% were treated as a tax-free return of capital. As of 2025, the taxable portion of annuities governed by the Insurance Contract Act (Versicherungsvertragsgesetz) is determined based on an interest rate set by FINMA. Surplus payments exceeding the guaranteed annuity are taxed at 70 percent. For annuities under the Swiss Code of Obligations, as well as for foreign life annuities, the taxable income portion is calculated on the basis of the average yield of ten-year Swiss federal bonds.
The taxable income portion is subject to Swiss withholding tax and must be reported annually by insurance companies to the Federal Tax Administration, which forwards the information to the cantonal tax authorities for control purposes.
Abolition of the imputed rental value: As of 1 January 2029, the taxation of the imputed rental value for owner-occupied residential properties will be abolished. Until 31 December 2028, the existing rules continue to apply in full.
As a counterpart to this change, the deduction of value-preserving maintenance expenses for owner-occupied properties will in general no longer be permitted.
In addition, the deduction of private debt and interest on debt will be significantly restricted. Such deductions will only remain available for rented or leased properties and, for first-time purchasers of an owner-occupied property.
Cantons may, at their discretion, introduce a special property tax on self-occupied secondary residences.
Swiss income taxes are in general regulated by federal tax law (FTL) and 26 cantonal tax laws. However, all cantonal tax laws are required to comply with the general principles as stated in the Federal Tax Harmonization Law (THL), but the amount of deductions and the tax rates are at the discretion of the cantons. Additionally, in most cantons communal taxes are levied as a percentage of cantonal taxes, and each commune independently determines its own quota. Consequently, the tax burden widely varies depending on the canton and commune of residence. Thus, please see our sample calculation for Zurich, Zug, Lucerne, Lausanne and Geneva below (cp. Paragraph 11) as well as the respective examples in the following explanations.
From an administrative point of view, the cantonal/communal authorities are responsible for enforcing federal, cantonal and communal income taxes for individuals.
All individuals resident in Switzerland are taxed on their worldwide income and wealth (unlimited tax liability), excluding income from business activities carried out abroad, foreign permanent establishments and real estate situated abroad. Individuals are also liable to tax in Switzerland, if
Non-residents are taxed only on Swiss-sourced income and wealth (limited tax liability), if among others
In principle, the worldwide income is subject to Swiss income tax. The tax is based on a family basis, meaning that the income of the spouse and dependent children is all consolidated in a single tax return and assessment. The taxable income in Switzerland includes, among others, the following components: employment and self-employment income, income from movable assets (e.g. interest and dividend income), income from immovable property (e.g. rental income), income from pension schemes and the like as well as all other income not especially excluded by cantonal or federal law (see below).
Any kind of remuneration is subject to tax at the time received or once an irrevocable entitlement to it has been acquired, irrespective of whether the income originates from a Swiss or foreign employer. Exemptions for foreign earned income may apply according to a double-tax-treaty (DTT), if applicable. The employment income includes equity-based compensation schemes which are (depending on facts and circumstances) taxed at grant or at sale/exercise. Blocking periods on shares may justify a discount on the taxable income.
The owners of individual enterprises and partners of general and limited partnerships are treated as self-employed. The taxable income corresponds to the net business profit. The determination of the profit in principle follows Swiss accounting rules.
Income from movable assets such as dividends, interests and royalties are generally taxed together with the other income. For income derived from qualified participations (minimum 10% shareholding in the capital of a corporation), a partial taxation applies, meaning that only a portion of the dividend is included in the tax base. At the federal level, 70% of the dividend income is taxable, while cantonal rules typically apply inclusion rates between 50% and 70%.
In principle, income from movable assets does not include capital gains, as such gains are generally exempt from taxation in Switzerland. This exemption does not apply to business assets.
Rental income from real estate in Switzerland is subject to ordinary income taxation together with the taxpayer’s other income.
Where the property is owner-occupied, an imputed rental value is added to the taxable income.
Maintenance costs incurred to preserve the value of the property are deductible from taxable income. If no actual expenses have been incurred, taxpayers may claim a lump-sum deduction usually equal to 20 percent of the rental income.
In September 2025, Swiss voters approved the abolition of the imputed rental value. However, the corresponding legislative amendments are not expected to enter into force before 2028.
Annuities, pensions and seniority allowances from Swiss social security institutions (pillar 1) and pension funds (pillar 2) are subject to income tax.
Capital withdrawals from pension funds and pillar 3a arrangements are subject to a separate income taxation procedure at a lower tax rate.
The term “other income” mainly includes all income that replaces employment income (e.g. payments from the unemployment insurance and the like), various kinds of compensations, etc.
Spousal and child support alimonies are also taxable, with a corresponding deduction available to the paying party.
Certain categories of income are exempt from taxation at both federal and cantonal level, including in particular:
For purposes of correct taxation, the income must be qualified in detail.
A Swiss resident individual is generally taxed on worldwide income. However, the tax liability does not extend to income from foreign businesses, foreign permanent establishments or foreign real estate. Although exempt from taxation, such income must nevertheless be taken into account for the purpose of determining the applicable (progressive) tax rate and is therefore to be declared in the tax return.
Furthermore, private capital gains on movable assets (including crypto assets) are in general tax exempt provided the respective individual’s activity does not qualify as a commercial activity. In contrast, capital gains from Swiss real estate are subject to cantonal real estate capital gains tax (see below).
If an employee is subject to the Swiss social security system, the (mandatory) periodic social security contributions are remitted directly by the employer to the respective social security or pension institutions. The contributions are calculated on the employee’s gross income and deducted accordingly. As a result, only the employee’s net income is subject to income taxation. On the other hand, the employer’s share of the social security contributions, including payments to the mandatory occupational pension plan, is not included in the gross income and therefore does not constitute taxable income.
Contributions to foreign social security institutions as well as voluntary contributions to Swiss social security institutions may also be deductible.
Voluntary buy‑ins to the occupational pension plan are only permitted if a recognized pension gap exists. Where such a gap is established, buy‑ins are generally fully tax‑deductible without quantitative limitation. An exception applies to individuals who move to Switzerland, where buy‑ins may be restricted during the first five years of Swiss tax residence. In all cases, such buy-ins should be carefully planned.
Contributions to a recognized Pillar 3a arrangement are tax-deductible up to the statutory annual maximum and for eventual gaps arising from 2025 onward. For the 2025 and 2026 tax year, the applicable limits are CHF 7’258 for individuals who are affiliated with an occupational pension plan and CHF 36’288 (but no more than 20 percent of net earned income) for individuals without such coverage.
For further information on the Swiss social security system, we refer to the separate MME publication.
Generally, expenses relating to the earning of income (e.g. professional expenses) are deductible from gross income. These include for example commuting costs (generally limited), additional costs for meals at the place of work (lump-sum), general business related expenses (actual or lump-sum).
Additional professional deductions may apply to expatriates (expats). Expats are defined as executives or specialists who are temporarily assigned to Switzerland for a maximum period of five years. The deduction is not available if the employee is on a permanent contract or if the employer directly covers the additional costs. Consequently, the special treatment ceases as soon as the temporary assignment is converted into a permanent employment contract or after five years of residence in Switzerland, whichever occurs first.
Expat deductions may include:
In principal, all commercially justified costs and expenses relating to the business may be deducted and can include:
Cost of goods sold
Losses can be offset against other income and be carried forward, subject to applicable limitations.
A general deduction is available for costs related to further education. Actual costs may be deducted up to the applicable maximum amounts.[1]
If both spouses are gainfully employed, a deduction for dual-earner households may apply. The deductions can be claimed at federal level and are individually governed on cantonal level, i.e. the types of deductions as well as the maximum amount differ significantly.
The following deductions can be claimed:
[1] CHF 13’000 for federal tax; deduction for cantonal and communal taxes according to cantonal regulations.
Social deductions are granted based on the individual’s circumstances, e.g. deductions for married couples, for single parent families, for children, for persons in need etc. Conditions and limitations are defined by federal law as well as by cantonal law and may therefore vary substantially.
Switzerland has a broad network of income (and wealth) tax treaties to avoid double taxation.
Switzerland generally applies the ‘exemption with progression’ method for qualified foreign sourced income rather than a tax credit method. However, when investment income derives from a country with which Switzerland has concluded a tax treaty, a tax credit is available for the non-refundable part of foreign withholding taxes on dividends, interest and royalties.
This also applies to the so-called "Additional US Withholding Tax". Swiss paying agents with "qualified intermediary" status are, under certain conditions, required to withhold tax on dividends and interest received on behalf of US clients domiciled in Switzerland. This additional withholding tax amounts to 15% or 25% on dividends and 30% on interest, which is excluded from national US withholding tax. This additional US withholding tax will be either refunded or credited against the Swiss tax.
Under Swiss tax law, a lump-sum taxation regime may be available to foreign nationals taking up residence in Switzerland and who do not in engage in any gainful employment in Switzerland. The procedure is implemented differently in every canton and has entirely been abolished in various cantons (e.g. Zurich, Schaffhausen, Appenzell Ausserrhoden, Basel Landschaft and Basel Stadt). In contrast to the ordinary taxation regime, this simplified assessment procedure is based on the expenditures of the individual and it's dependents rather than the worldwide income and wealth.
At present, on federal level and in most cantons, such expenses must amount to at least seven times the rental value of the taxpayer’s home or the rent paid or to a minimum of CHF 435’000. Certain cantons apply higher minimum amounts and different thresholds may apply to non-EU/EFTA citizens. The law also provides for an additional minimum calculation, according to which the tax may not be lower than the tax on specified gross elements of income and wealth according to the regular tax in Switzerland. It includes all income from Swiss sources as well as income for which the taxpayer claims relief from foreign taxation in accordance with a double taxation agreement concluded by Switzerland.
Income tax rates are progressive at the federal level and in most of the cantons. In 2026, the federal income tax varies from a bracket of 0.77% (for single taxpayers) and 1% (for married taxpayers) to the maximum rate of 11.5%. For individuals with a taxable income below CHF 18’500 and couples with a taxable income below CHF 33’000 no federal tax is levied. On cantonal level, tax rates vary greatly with a maximum rate in Zurich of approximately 41 %, compared to 22.8% in Zug or 30.6% in Lucerne, 41.5% in Lausanne and to 46.1% in Geneva (all rates including federal income tax).
In Switzerland, the tax year corresponds to the calendar year.
The tax returns generally must be filed in the canton where the taxpayer is resident at the end of the relevant tax period. Tax returns and enclosures can be filed electronically in most cantons. The official filing dates vary in each canton and extensions are normally granted upon request.[2]
Foreign employees with a temporary residence permit (B permit) but without a permanent residence permit (C permit) are subject to wage withholding tax regime. However, employees with an annual gross salary exceeding CHF 120’000, with other income not subject to wage withholding tax, or with net assets above a certain threshold are subject to a (mandatory) subsequent ordinary taxation and therefore have to file a Swiss tax return.[3]
Taxpayers who do not meet the thresholds may request a (voluntary) subsequent ordinary taxation and file a Swiss tax return. This enables the claiming of deductions that are not reflected in the wage withholding tax rate, such as additional contributions to a Swiss pension scheme, and the reclaim of Swiss withholding tax (Verrechnungssteuer).”
Different rules apply for taxpayers not resident in Switzerland. A subsequent ordinary taxation may be requested if a minimum of 90% of the worldwide income is taxable in Switzerland, if their circumstances can be compared with a Swiss resident or to claim deductions that must be considered in Switzerland according to a double tax treaty.
In all cases, the person subject to withholding tax is required to request the issuance of a tax return from the competent tax office until 31 March of the year following the tax period.
Resident individuals who are not subject to the wage withholding tax regime are paying their taxes based on the in the tax return filed. Cantonal and communal taxes are usually paid on a provisional basis based on prior-year figures throughout the respective tax period whereas the federal taxes are to be paid by 31 March of the year following the relevant tax period.
Upon receipt of a tax return the competent cantonal tax authority starts a formal tax assessment procedure. The tax authority may ask for additional information or documentation where necessary. A formal tax assessment will be issued to the taxpayer, setting out the relevant taxable factors. The tax assessment comes into legal force if no objection is filed within 30 days of receipt of the tax assessment. Based on the final assessment, the final tax invoices will be issued.
In general, the right to issue a tax assessment expires after 5 years of each tax period. This period may be extended by the tax authorities to up to 15 years.
The tax authorities may reopen a final assessment within ten years of the respective tax period if new facts or evidence become available that were not known to them at the time the original assessment was issued.
[2] E.g. Zurich March 31; Zug 30 April; Vaud 15 March of the following calendar year.
[3] The thresholds may differ depending on the applicable cantonal provisions.
Swiss withholding tax of 35% is levied on interest and dividend income from Swiss sources, on prizes from Swiss lotteries and on certain insurance payments. The withholding tax must be deducted by the debtor from the amount due to the recipient.
In case the recipient is the beneficial owner of the income and a Swiss resident, the withholding tax will be refunded, provided that the relevant income is duly reported in the income tax return. The purpose of the withholding tax is to encourage domestic taxpayers to declare their investment income. For non-resident taxpayers, no refund is generally available and the withholding tax constitutes a final tax burden. However, a partial or full refund may be granted based on a double tax treaty concluded between Switzerland and the recipient’s country of residence.
VAT is levied exclusively at the federal level and generally applies to all supplies of goods and services. Certain supplies are exempt from VAT, including medical treatment, education, rent and lease of real estate, etc. The standard VAT rate is 8.1%. Reduced rates may apply to specific categories of goods and services, including essential goods (such as food, medicine) taxed at 2.6% and accommodation services taxed at 3.8%. These rates are applicable since January 1, 2024.
Wealth tax is levied by all cantons and municipalities comprising the taxpayer’s worldwide assets and rights that have a monetary value. These assets and rights are usually assessed at market value. Taxable assets include, in particular, real estate, movable capital assets including crypto currencies, redeemable life and annuity insurances, business assets and other and other assets of significant value (e.g. motor vehicles, boats, art collections). Ordinary household effects are exempt from tax. The tax base is the net wealth, meaning gross wealth reduced by the taxpayer’s documented debts. In addition, social deductions can be made from net wealth. Both the available deductions and the applicable wealth tax rates differ across cantons, and the rates are generally progressive.
The exemplary wealth tax burden of married individuals without children and net assets in the amount of CHF 5m is as follows (2026):
| ZH, Zurich | approx. 4.6‰ |
| ZG, Zug | approx. 2.0‰ |
| LU, Lucerne | approx. 2.2‰ |
| GE, Geneva | approx. 7.6‰ |
| TI, Bellinzona | approx. 4.8‰ |
The cantons of Berne, Lucerne, Basel-Stadt, Aargau, Vaud, Valais and Geneva provide for limitations on the maximum tax burden in their cantonal tax legislation. In these cantons, the burden on assets or the total tax burden arising from income and wealth tax may not exceed a specific threshold. The calculation above does not take such limitations into account.
Inheritance and gift tax is levied at cantonal and communal level in almost all cantons. Only the cantons of Schwyz and Obwalden levy neither inheritance nor gift taxes and in the canton Lucerne no gift tax is imposed.
Cantons levy inheritance and gift tax if the deceased or the donor was resident of the respective canton, or if real estate located in that canton is transferred. Inheritance tax is generally levied on the deceased’s worldwide, subject to limited exemptions.
In all cantons, spouses are exempt from inheritance and gift taxes, and most cantons also exempt direct descendants from such taxes. The tax burden varies between cantons and depends on both the amount transferred as well as the degree of kinship between the deceased and the heir. Inheritance and gift taxes must be paid by the heir or the recipient of the gift. In addition to the inheritance tax, the canton of Solothurn levies an estate duty with rates ranging between 0.8% and 1.2%.
A capital gain realised on the sale of real estate by an individual is not subject to tax on federal level, unless the real estate forms part of the individual’s business assets.
At the cantonal and communal levels, capital gains are subject to a separate real estate capital gains tax. The tax rates are progressive and surcharges apply for short holding periods, while discounts apply for long holding periods. Thus, high profits realised over a short holding period may be taxed at a rate exceeding 50%. No tax is levied if the sales price is reinvested provided that both the real estate sold and the real estate acquired are the taxpayer’s principal residence.
Real estate transfer tax is levied in Switzerland at the cantonal and/or the communal levels and is generally payable by the buyer of a property. Real estate transfer tax is payable in the canton or commune concerned whenever a property changes ownership. The tax base is either the purchase price or the fair market value.
The exemplary transfer tax rates in relation to the property value are as follows (please note that reliefs may be available for restructurings, transactions between relatives etc.):
| Zurich | None*) |
| Zug | None*) |
| Lucerne | 1.5% |
| Grisons | 2% |
| Geneva | 3% |
*) cantons without real estate transfer taxes often levy higher charges for the land register office
Property taxes are cantonal or communal taxes on land and buildings. They are payable by individuals and legal entities who are registered in the land register as the owners or users (usufructuaries) of a property.
Generally, the tax is calculated on the full taxable value of the property, i.e. without taking account any related debts or mortgages. The property is taxed at its location irrespective of the owner’s residence.
Several cantons have abolished this tax (e.g. Zurich, Zug). The remaining cantons apply a variety of systems, with rates generally ranging from 1 to 3‰.
Approximately half of the cantons levy a per-capita personal tax ranging between CH 10 and CHF 70.
The following is based on the tax laws of the canton of Zurich, Zug, Lucerne, Vaud, and Geneva as well as the FTL.
A single taxpayer resident in the canton and city of Zurich, without children, no religious denomination and a gross salary income of CHF 150’000 would pay the following income taxes:
| Amounts in CHF | Federal Tax 2026 | CCT Zurich 2026 |
| Employment Income (gross) | 150'000 | 150'000 |
| Yield on assets | - | - |
| Other income | - | - |
| Total income | 150'000 | 150'000 |
| Social Security Premiums | ||
| AHV/IV/EO premium(1) | 7'950 | 7'950 |
| ALV premium(2) | 1'630 | 1'630 |
| Non work related accident insurance(3) | 2'223 | 2'223 |
| Pension fund contributions(4) | 9'320 | 9'320 |
| Income (net) | 128'877 | 128'877 |
| Further deductions | ||
| Insurance deduction (lump sum) | 1'800 | 2'900 |
| Pillar 3a | 7'258 | 7'258 |
| Work-related expenses (lump sum)(5) | 3'866 | 3'866 |
| Travel allowance (lump sum) | 700 | 700 |
| Additional expenses for meals (lump sum) | 3'200 | 3'200 |
| Debt interest | - | - |
| Property maintenance cost | - | - |
| Second earner deduction | - | - |
| Child deduction | - | - |
| Personal deduction | - | - |
| Taxable income (rounded) | 112'053 | 110'953 |
| Total tax liability | ||
| Direct federal tax | 3'545 | - |
| Cantonal and communal tax | - | 15'229 |
| Total income and wealth tax | 18'773 | |
(1) AHV/IV/EO employee portion of 5.3% of the gross income. The pension belongs to the so-called first pillar, i.e. it is mandatory.
(2) Swiss unemployment insurance employee’s portion of 1.1% of the gross income up to CHF 148'200.
(3) Non-work related accident insurance usually is between 1% and 2%, we have calculated with an average of 1.5% of the gross income and we have applied a ceiling of CHF 148''200.
(4) Average employee’s portion of 7.5% of the gross income calculated in % of the insured gross income (no premiums on the first CHF 26’040; max. insured income CHF 907’200). The respective amounts are calculated by the competent pension fund. The contribution calculated is above the mandatory minimum and also covers the risks of death and disability.
(5) 3% of net income min. CHF 2'000 p.a., max. CHF 4'000 p.a.,
Based on the same net income, the following income tax liabilities would result:
| Canton/Community | FT | CCT | Total |
| ZG, Zug | CHF 3'545 | CHF 6'961 | CHF 10'505 |
| LU, Luzern | CHF 3'545 | CHF 13'742 | CHF 17'286 |
| GE, Geneva | CHF 3'545 | CHF 17'879 | CHF 21'424 |
| TI, Bellinzona | CHF 3'545 | CHF 19'245 | CHF 22'789 |
A married taxpayer resident in the canton and city of Zurich, with two minor children, no religious denomination and a gross salary income of CHF 150’000 would pay the following income taxes in the canton of Zurich in the city of Zurich (gross to net sample calculation):
| Amounts in CHF | Federal Tax 2021 | CCT Zurich 2021 |
| Employment Income | 150'000 | 150'000 |
| Yield on assets | - | - |
| Other income | - | - |
| Total income | 150'000 | 150'000 |
| Social Security Premiums | ||
| AHV/IV/EO premium(1) | 7'950 | 7'950 |
| ALV premium(2) | 1'630 | 1'630 |
| Non work related accident insurance(3) | 2'223 | 2'223 |
| Pension fund contributions(4) | 9'320 | 9'320 |
| Income (net) | 128'877 | 128'877 |
| Further deductions | ||
| Insurance deduction (lump sum) | 5'100 | 8'400 |
| Pillar 3a | 7'256 | 7'256 |
| Work-related expenses (lump sum)(5) | 3'866 | 3'866 |
| Travel allowance (lump sum) | 700 | 700 |
| Additional expenses for meals (lump sum) | 3'200 | 3'200 |
| Debt interest | - | - |
| Property maintenance cost | - | - |
| Second earner deduction | - | - |
| Child deduction | 13'600 | 18'800 |
| Personal deduction | 2'800 | - |
| Taxable income | 92'353 | 86'153 |
| Total tax liability | ||
| Direct federal tax | 931 | - |
| Cantonal and communal tax | - | 8'034 |
| Total income and wealth tax | 8'966 | |
(1) AHV/IV/EO employee portion of 5.3% of the gross income. The pension belongs to the so-called first pillar, i.e. it is mandatory.
(2) Swiss unemployment insurance employee’s portion of 1.1% of the gross income up to CHF 148'200.
(3) Non-work related accident insurance usually is between 1% and 2%, we have calculated with an average of 1.5% of the gross income and we have applied a ceiling of CHF 148'200.
(4) Average employee’s portion of 7.5% of the gross income calculated in % of the insured gross income (no premiums on the first CHF 26’460; max. amount insurable is CHF 907’200). The respective amounts are calculated by the competent pension fund. The contribution calculated is above the mandatory minimum and also covers the risks of death and disability
(5) 3% of net income min. CHF 2'000 p.a., max. CHF 4'000 p.a.
Based on the same net income, the following income tax liabilities would result:
| Canton/Community | FT | CCT | Total |
| ZG, Zug | CHF 931 | CHF 850 | CHF 1'781 |
| LU, Lucerne | CHF 931 | CHF 7'961 | CHF 8'892 |
| GE, Geneva | CHF 931 | CHF 1'010 | CHF 1'942 |
| TI, Bellinzona | CHF 931 | CHF 7'340 | CHF 8'271 |
Last updated: May 2026
