Taxation

Do educational institutions need to register for VAT in Switzerland and what is the process?

Anonymous — Tue, 23 Mar 2021 11:41:39 +0000

Do educational institutions need to register for VAT in Switzerland and what is the process? Anonymous Tue, 03/23/2021 - 12:41

All countries in the EU and Switzerland, are part of the VAT legislation requirements. And many other countries around the world have similar VAT systems. According to Swiss legislation, foreign companies need to be registered for VAT, but some companies can be part of an exception in case of services that they provide. As a great example of VAT exemption procedure, can be mentioned one of our client’s company which is legally exempted from VAT. The main company’s activity is to provide academic advice, support through external collaborators to students wishing to study medicine, dentistry or physiotherapy at some of the best universities in Europe. Partner universities of the company are exclusively those abroad, none in Switzerland. In this case, the company falls under VAT registration exemption since the services in the field of teaching and education or similar services, are deemed to be rendered at the place where these activities are carried out. To understand more how the process of VAT exemption works in Switzerland. Here is a detailed description of cases in which educational institutions can be excluded from VAT. According to the VAT Act - the following services in the field of education are exempt from tax: a. The services in the field of teaching, education, training and professional retraining, including the teaching provided by private teachers or at private schools; b. Courses, lectures and other events of a scientific or educational nature; lecturing activities are exempt from tax, regardless of whether the fee is paid to the person teaching or to his employer; c. Examinations conducted in the field of education. Education is the provision of knowledge and skills in specific areas defined by the requirements of a professional profile. It includes, for example, vocational training and any taster apprenticeships and preliminary courses preceding it, university and technical college studies and other studies at public and private schools. Other events of a scientific or educational nature are occasions that do not fall under any of the above categories of educational services, such as symposia, congresses, workshops, etc. Such services are educational if the primary objective pursued is the transfer or new development of knowledge to the participants or with the participants. A service is considered to be scientific if its primary purpose is to acquire new knowledge in a specific field with a specialized audience and to evaluate it. Services are considered educational only in the case of the above-listed elements and if the scientific or educational element is included in the business activity.
What is the difference between educational and consulting services? A taxable consulting service exists if the three conditions listed below are cumulatively fulfilled: If the service (contract) - is individually tailored to the client; If it's based on a prior analysis of the relevant situation at the client (company); If it's capable of implementing concrete proposals for solving the problem; Consulting services are considered to be provided at the place where the recipient has the registered office of its economic activity. Often, a service includes both elements of training and elements of consulting; The assessment of whether such a service qualifies as educational or consulting is made based on the concluded contract. If the primary objective pursued by the contracting parties is consulting, the total consideration is taxable. If the primary objective pursued by the contracting parties is an educational service, then the total remuneration is exempt from VAT. VAT exemption also depends on the factor, whether service is provided, the personal conversation, as well as the direct exchange between the service provider and the service recipient, is of central importance. Such consulting services are generally taxable. The place of performance is determined by the place of the performance principle. If the service provider (M-AG) is domiciled in Switzerland, these consulting services are subject to VAT. Important note: Vocational and academic counselling for young people under the age of 18 is exempt from VAT; if the student/client is demonstrably resident abroad, the fee is not subject to VAT. Online preparation course Here is an example: 1. Company advises students so that they can choose the European University that best suits their needs. Academic and career counselling does not fall under the tax exemption - thus, the counselling service is generally subject to VAT. However, if the student/client is demonstrably resident abroad, the fee is not subject to VAT. 2. Company’s professors prepare students in such a way that they can successfully pass the entrance exams. To consider online courses educational services for VAT purposes, the course must have a certain level of interactivity. Despite the physical distance, there must be an exchange between the teachers or the teaching institution and the learner. This exchange can take place on an ongoing basis or a limited basis, such as once at the beginning of the course. Also, the primary objective of the course must be the transfer of knowledge. Such interactive educational services are deemed to be provided at the place of activity of the educational institution and thus in Switzerland. If an educational service is provided here - i.e. the course is primarily dedicated to consolidating and refreshing knowledge of the examination material, and the course is designed interactively - this is an educational service exempt from VAT. 3. Company organizes the entrance examination in cooperation with the partner universities. The tax exemption only covers the provision of educational examinations. This includes the following activities: - Activity of examination experts (taking oral examinations and correcting written examinations); - Supervision of examinations; - Development of examination tasks in connection with the activity as an examination expert or the supervision of examinations. The sole preparation of examination papers is subject to tax at the standard rate (VAT 7.7%), as is the preparation of courses. The place of supply of services is determined by the principle of the place of the recipient - i.e. the recipient is liable to VAT. If these services are provided exclusively at foreign universities, no VAT is due either. 4. Enrollment at the university, recognition of credits and tests, required translations, legalizations and much more. In the case of such consultations and support services, there is no educational service. They are taxable services, the place of which is determined by the principle of the place of receipt. Thus, if the service is provided exclusively to students residing abroad, the corresponding fee is not subject to VAT. 5. Assistance in finding private accommodation or a campus abroad, orientation and accompaniment at the university, assistance in getting to the city, assistance in setting up a bank account and health insurance, as well as all other needs associated with a stay in a foreign city. If only assistance is provided here and not an agency relationship is arranged, the fee is not subject to VAT as in point 4 above. 6. Through the tutors of the Company, as well as the online platform and individual or group lessons with teachers on-site. These are probably both non-taxable services (educational services) and taxable consulting or organizational services. The same applies as under point 4 - provided that all services are provided abroad to foreign recipients, these services are not subject to VAT. Conclusion To sum up, all the information listed above, if the services described below are all provided abroad to foreign customers, they are not subject to VAT in Switzerland.

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Russian Federation and the Grand Duchy of Luxembourg have changed the double taxation rules

Anonymous — Thu, 19 Nov 2020 23:46:52 +0000

Russian Federation and the Grand Duchy of Luxembourg have changed the double taxation rules Anonymous Fri, 11/20/2020 - 00:46

Recently Russian Federation and the Grand Duchy of Luxembourg have signed a protocol regarding the amendments in the double taxation rules. This Protocol was negotiated following a request from the Russian Federation due to a change in its conventional policy regarding withholding taxes on dividends and interest.

The two states primarily focused on avoiding double taxation between the two countries. The minimum withholding tax rate on dividends under the Russia–Luxembourg DTTs could be raised from 5% to 15%. The minimum withholding tax rate on interest under the same treaty may be increased from 0% to 15%.

The two countries already signed the document on the 6th of November 2020. On behalf of the Russian Federation, the signee was the State Secretary and Deputy Minister of the Ministry of Finance, Alexei Sazanov. On behalf of the Luxembourg State, the signee was Mr. Georges Faber, the Ambassador of the Grand Duchy of Luxembourg in the Russian Federation. The ratification of the protocol is supposed to be finished respectively at the end of the year, so the provision of the document mentioned above will enter into force until the 1st January 2021.

An analogical document was signed earlier between Russia and Malta to amend the agreement on avoiding double taxation to increase the tax to 15% at the income source in dividends and interest. The Russian Ministry of Finance also mentioned that negotiations on amendments to the tax agreement with the Netherlands are ongoing.

The importance of the protocol is that it will define the exceptions on which income in the form of dividends and interests can be used at a preferential rate of 5%. It is mostly foreseen for institutional investments and public companies with at least 15% of whose shares are in free float. These companies may also be holding at least 15% of the company's capital. It's important to note that none of these changes will affect interest income paid on Eurobonds, bond issues of Russian companies, and loans from foreign banks.

Also, Mr. Sazanov pointed out the importance of concentrating financial resources in the country to implement measures that support its population and economy in the current situation of the COVID-19 pandemic. Luxembourg is the right place with its stable banking system and sustainable economy. This kind of negotiation strengthens the two countries' economic relations.

Sources and Articles

https://home.kpmg/lu/en/home/insights/2020/05/russia-to-amend-tax-treaty...
https://moscou.mae.lu/en/News/Signature-of-the-Protocol-amending-the-Agr...
https://iz.ru/1083578/2020-11-06/rossiia-i-liuksemburg-podpisali-protoko...
https://tass.ru/ekonomika/9930685/amp

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The Russia-Malta double taxation treaty was amended. What's new?

Anonymous — Wed, 07 Oct 2020 15:16:03 +0000

The Russia-Malta double taxation treaty was amended. What's new? Anonymous Wed, 10/07/2020 - 17:16

In March 2020, Vladimir Putin, the president of the Russian Federation, addressed the nation to announce the main measures being taken to tackle coronavirus. As part of that, Vladimir Putin instructed the government to quickly initiate negotiations with foreign jurisdictions to amend Russia’s current DTTs to set the minimum withholding tax rate on dividends and interest paid from Russia at 15%.

Putin pointed out that companies take advantage of the DTTs to pay lower personal income tax rates. Following this event, several countries revised their double tax treaties with Russia. On the 1st of October 2020, the new agreement was signed to amend the double taxation treaty between Russia and Malta, thereby increasing tax at source to 15% on dividend and interest income. The ratification of the protocol should take place before the end of this year, so that its provisions can be applied from 1 January 2021. On the Russian side, the document was signed by State Secretary and Deputy Minister of Finance, Alexei Sazanov. From Malta’s end, was Malta’s ambassador to Russia Pierre Clive Agius.

Like the previously signed Protocol with other countries like Cyprus, this document set out a list of exemptions that will apply preferential treatment to dividend and interest income. The exemptions apply to institutional investments as well as public companies with at least 15% of the free float and holding at least 15% of the capital of the company paying the dividend and interest income during the year. The tax rate for such income is set at 5%.

The changes will not affect interest income paid on Eurobonds, bond issued by Russian companies and loans from foreign banks.

"Today we have taken another step in our struggle for the Russian tax base. I would like to thank my colleagues from Malta for their high level of cooperation and constructive dialogue. We are now working on amendments to tax agreements with other jurisdictions. The next signing of a similar agreement is planned with Luxembourg. Negotiations are continuing with the Netherlands," said Alexei Sazanov.

The need to amend the agreements is dictated by the economic situation both in Russia and in the world, which requires the concentration of financial resources to support the population and economy in the context of the pandemic.

Malta is a popular business centre for Russian investors with one of the lowest income tax rates in the European Union. It is also a hub for IT professionals in gaming and other online applications and has a Russian Cultural Centre situated in the Maltese capital, Valletta.

It’s also worth mentioning that Russia’s Ministry of Finance recently submitted a draft law with amendments to the Tax Code, allowing Russians who own stakes in foreign companies to avoid additional reporting in the event of a flat tax of 5 million rubles.

The details of the Double Taxation Treaty between Malta and Russia will be updated shortly on Malta’s official government website:
https://legislation.mt/eli/sl/123.146/eng/pdf

Sources:

https://tass.com/economy/1207493
https://aif.ru/money/rossiya_i_malta_vnesli_izmeneniya_v_soglashenie_o_dvoynom_nalogooblozhenii
https://www.forbes.ru/newsroom/biznes/410299-rossiya-i-malta-podpisali-protokol-o-povyshenii-naloga-na-dividendy
https://mundo.sputniknews.com/economia/202010011092972064-rusia-y-malta-firman-un-protocolo-que-modifica-el-convenio-para-evitar-la-doble-imposicion/

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Tax deductions in Switzerland

Anonymous — Sat, 23 Nov 2019 02:06:44 +0000

Tax deductions in Switzerland Anonymous Sat, 11/23/2019 - 03:06

The calculation of the tax rates in Switzerland is based on the net income of the taxpayer. Like in most other European countries, there are several tax deductions that can be made when a tax declaration is filed in Switzerland. These will reduce the taxable income and consequently the value of tax that needs to be paid diminishes significantly.

Direct federal tax levy charge is charged at the same rate throughout Switzerland, regardless of the canton. However, deductions on cantonal and communal levels are regulated differently depending on the requirements of each canton. The variations in local tax rates in cantons is something that should be taken into consideration when deciding where to open a company in Switzerland. You can easily find all the information about each canton’s tax rates on their respective websites.

In order to claim any of the available tax deductions, the necessary supporting paperwork must be submitted together with the tax return. Here are some of the most frequently used legal tax deductions that comply with the existing tax regulatory laws.

Work related expenses
Employees are allowed to deduct work related expenditure costs, such as the cost of commuting to work. Bus and train passes (up to a certain limit) are included under commuting expenses. Bicycles, mopeds and scooters have a flat amount. In certain cases, the kilometers driven to and from the workplace can be deducted when a private vehicle is used, however, there are limits set for minimum and maximum distances which qualify for this category.

Other expenses include the cost of meals during the workday. Provided that the employee is not able to go home for lunch, these expenses may be deducted from the income of the employee. The amount deducted varies from canton to canton. Additional deductions are possible for night shifts.

Other work related expenses, which include, however not limited to the cost of specific clothing, tools or other professional requirements, have been allocated a flat rate deduction. If the costs are higher than the flat rate deduction and these costs can be proven, the taxpayer may also deduct them. In this case, it is recommended to attach receipts to the tax declaration.

Interest payments
Interest rates charged, such as mortgages or interest on loans, may be deducted from the income of the employee. This deduction applies only to interest, and is not applicable for repayment of principal amount used to reduce a loan (for example, amortization of a mortgage). Leasing costs on cars may be deducted only if the taxpayer is classified as self employed.

Withholding taxes
Interest rate values credited to bank or savings accounts can not exceed 65% of the acrued value in an account. In most cases, the banks automatically transfer 35% of the interest to the tax authorities. If the taxpayer provides the account numbers on the tax declaration, then withholding tax is reimbursed. The withholding tax is applied only to accounts for which the amount of interest is higher than 200 CHF.

In addition to interest acrued from accounts, interest from other sources such as bonds, lottery winnings starting at 50 CHF and dividend payments are subject to the withholding tax, but they can often be adjusted to the individual’s marginal tax rate.

Other tax deductions
Donations to non – profit organizations are also subject to tax deductions. The same applies to charitable donations, the charity is liable for tax deduction if it is registered in Switzerland and its minimum donation is 200 CHF. In some cases, the value of deductions applied to charitable donations can be up to 20% of the total amount donated.

Deductions for taxes paid in advance
The tax authorities pay interest on tax payments made in advance. The interest rate is generally higher than the interest rates associated with banks. Even if a partial sum is paid from the full – year taxes, it is possible to benefit from significant tax deductions.

Keep in mind that this information does not replace a solid tax planning strategy that can significantly help any company or entrepreneur doing business in Switzerland benefit from tax deductions.

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2019 Corporate tax rates in Swiss cantons

Anonymous — Sun, 17 Nov 2019 18:17:34 +0000

2019 Corporate tax rates in Swiss cantons Anonymous Sun, 11/17/2019 - 19:17

The Swiss government has gone the extra mile in leveraging low corporate tax rates as a competitive advantage. In Switzerland, corporate tax rates vary depending on the canton where you are operating your business.

Cantons are administrative units with a high level of autonomy compared to the central government—they competitively offer low tax regimes in order to attract large multinational companies. Between the Swiss cantons is a continuous "fiscal struggle" for the lure of big investors

For a long time, the winner of this inter-cantonal battle has been the canton of Zug, which managed to attract so many corporations that it began to have problems with "accommodation space." The canton is home to the general or regional headquarters of big corporations like Johnson & Johnson, Burger King Holdings Inc, and Siemens AG among many others.

At present, both established and new businesses can enjoy the lowest corporate tax rates in Switzerland in the canton of Lucerne(11.3%)

The tax regime in light of the reform
Two years ago, the Swiss rejected a similar idea to reform corporate tax. However, they have recently largely accepted new tax provisions in order to achieve international acceptance. The key objective of the tax reform is to eliminate the preferential tax regimes for holdings, domicile and mixed companies within the cantons.

Switzerland is home to over 24,000 international companies. This is a result of the low tax rates provided by its 26 cantons with their own competitive rates, in addition to the federal income tax rate of approximately 8%. In Zug, alone, the canton of Zurich, there are approximately 1,800 multinational companies, including global commodity traders, pharmaceutical giants and a group of blockchain and cryptocurrency firms.
Switzerland has an average effective tax rate of less than 20% when federal and cantonal taxes are combined. In the case of large companies, the negotiations made with the cantons can even reduce up to 9%.

Regarding legal security and investor confidence, the tax reform pursues three objectives:

To protect the tax appeal of Switzerland as a business location
Promote the acceptance of international corporate tax law
Ensure sufficient tax revenues to finance public activities.

Notwithstanding, attractive tax rates will remain a natural strength in Switzerland.
The Swiss tax system aims to comply with the minimum international standards, and yet remain an attractive location for multinational companies.

Corporate tax rate reductions
Following the abolition of the preferential tax regimes, the multinationals are subject to taxation at the usual corporate rates for cantonal and communal taxation purposes. Currently, effective tax rates range from 12% to 24%. But the cantons announced a reduction in the corporate tax rates for all companies, considering that the reform could lead to a substantially higher tax burden.
Thus, the canton of Lucerne proposed effective tax rates between 11.27% and 14%, and the three major cantons, Zurich, Bern, and Aargau, between 16 and 20%. Also, the corporate taxation in the canton of Zug across all levels drops to 11.91% (so far 14.35%). Our consultants can provide you with all the information you need regarding the measures planned in the other cantons.

Tax measures at cantonal level
As of January 1, 2020, the cantons must implement some mandatory tax provisions, in addition to the elimination of preferential tax regimes. For companies that lose their preferential tax status, a special low tax rate should be implemented for a step-up in the tax base. This serves as a smooth transitional measure. Furthermore, the patent box must be introduced, as well as a neutral step-up tax of hidden reserves upon migration to Switzerland.

The cantons may also opt for several voluntary tax measures, such as a super deduction for research and development costs. Also, a notional interest deduction can be implemented for cantons that have an effective tax of more than 18%, such as the canton of Zurich. Another voluntary measure that can be introduced is a reduced annual capital tax on net equity related to investments, patents and comparable rights as well as intra-group loans. Furthermore, it may be of interest to multinationals that, now, a Swiss permanent establishment of a non-Swiss company could apply for a tax credit of the residual non-Swiss withholding taxes.

It should be specified that the reduction of the cantonal tax rates on profit and the voluntary measures of taxation will be subject to a public vote or must be approved by the relevant cantonal council.

The cantonal governments have launched official announcements and it’s anticipated that most Swiss cantons will provide attractive tax rates for all companies: 12% -14% applicable to pre-tax income (including federal income tax).

Thus, Switzerland will remain a low-tax centre for big companies. The referendum on approving the overhaul of corporate income taxes will not change this.

In terms of Swiss competitiveness worldwide, the country retains its position in the first third, Hong Kong and Singapore, plus the traditional offshore domiciles remain the clear leaders in terms of fiscal appeal outside of Europe.

This year, Switzerland had a lower average tax rate overall, mainly due to cuts in the cantons Basel-Stadt and Vaud. These cantons have brought some movement in the situation of the corporate tax rate for companies. Moreover, they could be the first signs of a trend that could lead to fundamental changes in the Swiss corporate tax landscape shortly.

Lightly fiscal policy is Switzerland's most important asset, but the developed university environment, the public sector efficiency and the highly appreciated legislation in the field of intellectual property rights are also worth considering. Our company closely follows the process of fiscal reform, both from a political and economic perspective. Thus, our experts can provide periodic and comprehensive information on current discussions and may examine your company's tax planning in the context of tax reform.

For more details and assistance regarding taxes in Switzerland, you can reach out to our expert consultants. Our highly experienced and well-informed team is ready to answer all your questions and give you all the help you might need.

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2019 Federal Act on Tax Reform and AHV Financing—What’s New?

Anonymous — Wed, 02 Oct 2019 19:13:21 +0000

2019 Federal Act on Tax Reform and AHV Financing—What’s New? Anonymous Wed, 10/02/2019 - 21:13

On the 19th of May 2019, Swiss voters voted in favour of the Federal Act on Tax Reform and AHV Financing (TRAF)—confirming the corporate taxation reform. The main purpose of the reform is to bring tax legislation in line with international standards and to remove Switzerland from the EU “Grey List”, which it has been in since December 2017. This list includes states that are under EU control and have agreed to cooperate to improve the tax system.

The new reform allows Switzerland to both comply with international standards of corporate tax and still remain an attractive investment destination for foreign investors. To add on to its allure, Switzerland also introduced low-income tax rates, a patent box and an additional tax deduction for research and development businesses.

The Federal Act on Tax Reform and AHV Financing is expected to enter into full force on January 1, 2020, as decided by the federal Council. If a canton fails to implement the mandatory provisions of the TRAF by this date, the federal law will apply directly.

Important points to note

Preferential tax regimes are canceled

According to the new reform, preferential tax treatments for holdings, domicile and “mixed” companies at the cantonal level are canceled. The profit allocation rules for principal companies and Swiss finance branches no longer apply at the federal level. As a result, next year, from the 1st of January 2020, all holdings, domicile and “mixed” organizations will be transferred to standard tax rates.
However, in the course of the transition period, businesses have the opportunity to disclose hidden reserves in tax reporting without incurring additional tax consequences. Furthermore, they can then apply depreciation deductions for these assets, thereby further reducing the tax base for corporate income tax. Nonetheless, this provision is not compulsory for implementation at the cantonal level.
Profit from the use of "hidden" reserves (which existed on the date of entry into force of the amendments to the legislation) will be taxed at a lower tax rate, which was applied when using the preferential tax treatment by the company. This transitional provision is mandatory for introduction at the cantonal level.

Reduction of corporate income tax rates

For organizations, transitioning from preferential treatment to standard taxation, rates will increase the tax burden. The same applies to companies migrating to other countries.
In efforts to keep Switzerland as an attractive tax haven, some cantons are reducing the income tax rate. A typical example is the canton of Zug which is planning to reduce its cantonal effective tax rate for ordinary taxed companies from currently 14.6% to 11.91% (municipality of Zug).

For more insights on the legislation changes at the cantonal level, please see Tax Reform in cantons.

Patent box regime and Research & Development

The patent box regime provisions a comparatively lower tax rate at the cantonal level for research and development organizations. As a general rule, the cantons, however, must tax at least 10% of these profits.
Before the patent box can be applied for the first time, the corresponding tax deducted from research and development (R&D) expenditures must be recollected and taxed. Cantons may allow R&D costs incurred in Switzerland to be deducted for up to 150% of the actual costs incurred. This is based on R&D personnel expenses incurred by the taxpayer plus a 35% markup for other R&D costs, and 80% of the R&D costs charged by third party providers in Switzerland.
The patent box, R&D super deduction and NID (Notional Interest Deduction), as well as possible depreciations from the early shift(from privileged taxation to normal taxation), are subject to total tax relief of 70% (mandatory at the cantonal level).
More information about patent boxes you can find here.

Disclosure of hidden reserves

Organizations that relocate their headquarters to Switzerland can benefit from additional depreciation in the first few years. If companies relocate their headquarters abroad, an exit tax will be due, as is already the case at present.

Deduction for self-financing

Some Swiss cantons may allow a deduction of interest on equity assets if the effective profit tax burden imposed by the Confederation, canton and commune is at least 18.03%.

Increased dividend taxation

Inclusion of dividends for individuals with corporate equity interests of at least 10% will rise to 70% at the federal level and at least 50% at the cantonal level (in some cases, cantons may further increase the inclusion ratio).

Transference adjustments

The profit from the sale of shares will generally remain tax-free. However, the new rules will abolish this exemption entirely if a person sells shares to a company they already control.

Conclusion
Overally, the new tax reform keeps everyone happy—Switzerland complies with international corporate tax standards, foreign investors are still confident to invest in Switzerland and the majority of the Swiss people find the reform beneficial. Smart companies have already started evaluating how the reform will affect their organizations. Get in touch with our expert specialists to get a better understanding of the new reform and set yourself up for success.

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Gift Taxation in Switzerland

Anonymous — Thu, 12 Sep 2019 08:44:31 +0000

Gift Taxation in Switzerland Anonymous Thu, 09/12/2019 - 10:44

Gift tax is a specific kind of taxation existing in Switzerland. This kind of taxes usually levy on gifts received by the swiss residents and can vary from each Cantone. Luckily, not all gifts are taxable in Switzerland. Gift taxes were imposed by the government in order for heirs to stop avoiding taxation, in case they receive an immovable property or great amount as an inheritance. The gift tax almost applies to every Canton except for Schwyz and Lucerne, these Cantons are tax exempted under the swiss legislation. But many locals believe that a gift tax is unfair and as for many countries such a definition is don’t even exist.
How to identify which gifts are taxable and which not?
Main features:
● Under the swiss legislation, gift taxation is a tax on transfers of money or property to other people while the person who provides the gift gets nothing in return;
● The gift tax must be paid by the receiver. For instance, if someone gives a property free of charge, the receiver pays a tax according to the tax rate of the Canton in which the donor domicile;
● The gift tax can vary between Cantons and the minimum rate varies from 2% to 36% depending on the amount and property which was gifted. There are 26 Cantons in Switzerland, which means there are 26 tax laws that applies;
● In the Canton Graubunden gifts to parents are taxed at 10 %, while they are tax-free in many other cantons;
-Only amounts that exceed the value of the tax-free allowance are taxed.
Please note: not all subjects are taxable under the swiss legislation.
Below you can find cases where tax gift exemption may or may not apply:
》 Gifts of personal and household objects are not taxed;
》 Gifts from spouses to each other and presents to people in registered partnership, children, grandchildren, step-children and foster children are tax exempt;
》 There is no gift tax in the cantons of Lucerne and Obwalden;
》 In the canton of Aargau, inheritances and gifts from children to parents, step-parents and foster parents are exempt from gift tax;
》 Tuition or medical expenses you pay for someone (the educational and medical exclusions) are excluded from gift definition and therefore from taxes;
》 The gift of an immovable property located abroad is exempt from Swiss gift tax.
And other good news, that Gift tax is in general levied for Swiss residents, except for residents in the cantons Schwyz and Lucerne. As a foreigner, receiving a gift from the swiss side, you shouldn’t be worry regarding tax payment in Switzerland. But foreigners who reside in Switzerland can be subject to gift tax on worldwide assets in most cantons in Switzerland. Double taxation can be prevented if there is a tax treaty between the countries.
How can SigTax help you?
With the help of our tax specialists, we will provide a tax consultation and we will calculate the amount which needs to be paid on your gift. Especially, if you want to get a gift and want to be sure that the recipients of the gift won’t need to pay taxes on it.

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10 Cantons with the lowest tax in Switzerland

Anonymous — Sat, 06 May 2017 18:00:00 +0000

10 Cantons with the lowest tax in Switzerland Anonymous Sat, 05/06/2017 - 20:00

10 Cantons with the lowest tax in Switzerland

In order to understand the Swiss tax system, it is important to understand that due to its federal structure (26 cantons and approximately 2,300 municipalities) there is no uniform taxation system. Depending on the tax type, some are levied exclusively at a federal level such Value Added Tax (VAT), and some at both levels: federal and cantonal such as income tax.
Here is a list with 10 Swiss cantons with the lowest taxes in Switzerland and also around the world.
1.       Luzern
The canton of Luzern has the smallest corporate tax, imposed at the rate of 12, 32%. The corporate tax rate of a management companies lies between 10% and 11.5% (incl. 8.5% federal tax). Luzern has lowered tax burdens over recent years and will be continuing to lower the taxes further in the future in its intent to keep pace with the Swiss average for corporate tax relief. Currently, Luzern has taken the lead with the new tax rules for holdings companies. For average-income individuals, the tax burden is a bit higher than the corporate, due to the extensive services that Lucerne is required to render as a center.
2.       Nidwalden
Nidwalden is another canton with a small corporate tax rate of 12, 66%. Nidwalden also ranks among the best cantons and takes the lead in income and wealth tax for individuals as well as for corporates. In the heart of Switzerland, Nidwalden is easily accessible from any direction, the canton being an exclusive location for private individuals as well as for companies.
3.       Obwalden

In Obwalden, the rate is imposed at 12, 89% on the company’s income. The maximum tax on dividends from investments in private assets does not exceed 13.3 percent. The wealth rate is less than 1.4 per thousand. These rates include municipal, cantonal and direct federal tax (excluding church tax). In Obwalden, the tax laws are modern and innovative. The canton of Obwalden was the first one to introduce a flat income tax rate.

4.       Appenzell Ausserrhoden

The forth smallest corporate taxes is applied in the Appenzell Ausserrhoden canton, where the rate is imposed at 13,04%. In the case of legal persons, Appenzell Ausserrhoden levies tax on profits and capital. At national level (federal tax), only profit tax is levied. For natural persons, Appenzell Ausserrhoden levies tax on income and wealth. At federal level, only income tax is levied. In Appenzell Ausserrhoden 52,6% of the total local workforce is mainly employed in the canton’s main economic sector – the services sector.

5.       Appenzell Appenzell Inner Rhodes
The canton of Appenzell Appenzell Inner Rhodes applies an income tax of 14,16%.
6.       Zug
With corporate tax rate of 14, 6%, Zug is viewed as a successful canton. Due to its low tax regime, established location and business friendly environment, Zug is the most chosen canton for establishing a Holding Company in Swiss with 1 in 4 of every Holding Company being incorporated in Switzerland.
Zug economy benefits from the population and jobs increase. One of Zug's main competitive advantages is its low corporate taxes. Zug's two economic regions are also highly placed in the ranking list of Switzerland's 110 economic regions: The Lorzenebene/Ennetsee region is positioned in second place behind the city of Zurich, while the Zug region of Berggemeinden lies ninth. The tax burden on individuals and companies is low. Another advantage is represented by the skilled and highly qualified personnel that are easily available. In addition, thanks to short journey times, the access to the metropolitan areas of Zurich and Lucerne is well above average
7.       Uri

The canton of Uri has applied a corporate flat rate tax. Also Uri is another canton which is continuously decreasing the tax rates, now the corporate tax rate being of 15, 11%. Uri has eliminated economic double taxation through a generous relief of 60%. Private individuals living in the canton benefit from the partial-income procedure, whereby dividend payments are subject to only 40% income tax.

8.       Schwyz
In canton of Schwyz, there is an applicable rate of 15, 27%. Here, legal entities benefit of a minimum tax, based on the company’s equity and is charged as a minimum amount. The effective tax burden for companies based in Schwyz is more attractive than in many well-known places such as Zurich, Dublin, London, New York and Singapore. The only federal tax is corporate income tax.
9.       Neuchatel

In Neuchatel, the tax is at a rate of 15,61%. With a rate of 0.005‰, the capital tax deducted in Neuchatel is the lowest in Switzerland for holding companies and domiciled companies. Also, the companies based in canton Neuchâtel can offset their profit income taxes from the capital tax, which is not the case for all cantons.

10.   Glarus

With a corporate tax rate of 15,71%, the canton of Glarus is the tenth with the lowest taxes in Switzerland. In 2010, the income tax burden was lowered in Glarus for everyone by an average of ten percent, which made the canton to attract numerous local and foreign companies, large part of them being involved in manufacturing field