Glossary of taxes in Switzerland

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Alimony
Alimony is a legally regulated maintenance payment – either for children or divorced/separated spouses. For the recipient, it counts as taxable income. The paying person can deduct it in the tax return.

Allowable Deductions
General deductions reduce taxable income without being directly related to employment. These include, for example, medical expenses, donations, insurance premiums, or contributions to pillar 3a.

Asset-Based Taxation
Under asset-based taxation, tax is calculated based on annual living expenses rather than income. This model is intended for wealthy, non-working foreign nationals residing in Switzerland.

Automatic Exchange of Information
The automatic exchange of information requires financial institutions to report account data of foreign taxpayers to the tax authority in their country of residence. The goal is greater tax transparency and combating tax evasion.

Automobile Tax
The automobile tax amounts to 4% of the vehicle value and is levied on the import or production of passenger cars in Switzerland. Commercial vehicles and certain special vehicles are exempt.

Assessment Basis
The assessment basis is the starting value for calculating a tax. For income tax, this is, for example, taxable income. It determines the amount of tax owed.

Business Expenses
Business expenses are deductible costs incurred through employment – e.g., for travel, meals, clothing, or further education. In many cases, a flat-rate deduction with a maximum limit applies.

Capital Companies
Capital companies include AG, GmbH, and limited partnerships with shares. They are legally independent and taxable as separate entities.

Capital Gains Tax on Real Estate
When selling real estate, capital gains tax is levied on the net profit. Rates vary by canton and holding period and are usually borne by the seller.

Church Tax
Members of a recognized church pay this tax to finance church-related tasks and institutions.

Citizen’s Tax
A flat-rate tax that adult persons must pay regardless of income or assets. It is often levied by municipalities.

Child Deduction
Parents who primarily bear the costs for a minor or a child in education can claim a child deduction in the tax return.

Childcare Costs
‍Costs for daycare, after-school care, or day families are deductible under certain conditions – e.g., if both parents are employed.

Corporate Income Tax
Legal entities such as corporations, limited liability companies, or foundations pay corporate income tax on their annual profit – both at the cantonal and federal level. The basis is the taxable net profit.

Deductible Expenses
‍Includes items deductible from taxable income such as mortgage interest, donations, or social contributions.

Deduction for Dual Earners
If a married or registered couple both work, they can claim the dual-earner deduction. It reduces the tax burden under joint assessment and is regulated differently by canton.

Deduction for Support
If someone financially supports a dependent, disabled person, they can claim a deduction under certain conditions.

Direct Federal Tax
The direct federal tax is levied annually on the income of natural persons and the net profit of legal entities. It is uniform across Switzerland and is an important source of federal revenue.

Direct Tax
Direct taxes are levied directly on the taxpayer. The taxpayer is both the subject and the bearer of the tax. Examples include income, wealth, profit, inheritance, or withholding taxes.

Donation
Voluntary contributions to charitable organizations can be deducted from taxable income within legal limits.

Double Taxation Agreement
Double taxation relief prevents the same income or assets from being taxed multiple times – for example, in different countries or cantons.

Estate Tax
Inheritance tax is levied on the transfer of assets upon death. Rates vary by canton and degree of relationship. Close relatives are often exempt.

Estimated Assessment
If no tax return is filed, the tax office may estimate income and assets. This discretionary assessment usually disadvantages the taxpayer.

Expat / Non-Resident Taxation
Certain foreign nationals may be taxed on a limited basis or under special conditions due to residency status.

Federal Taxes
Federal taxes are levied by the federal government. These include, in particular, direct federal tax on income and corporate profits, complementing cantonal and municipal taxes.

Fiscal Taxes
Fiscal taxes are state levies without direct compensation. They finance public tasks and include, for example, income or VAT.

Fixed-Property Assets
Fixed-property assets include real estate and land. These are taxed separately from other assets.

Full Tax Liability
Anyone with tax residence and economic affiliation in Switzerland is fully liable – i.e., taxed on worldwide income and assets.

Imputed Rental Value
Owners of real estate who occupy their property must declare the imputed rental value as income. It corresponds to the rent that could be earned if rented out.

Income
‍Taxable income includes, for example, wages, pensions, alimony, capital income, and imputed rental value. It forms the basis for income tax.

Income Tax
Income tax is levied on the income of natural persons – at municipal, cantonal, and federal levels. Deductions and exemptions reduce the tax burden.

Juridical Person
Legally independent organizations such as corporations (PLC), limited liability companies (LLC), cooperatives, associations, or foundations are juridical persons. They have their own rights and obligations and are taxed separately – particularly on profit and capital.

Limited Tax Liability
A person is subject to limited taxation if they earn income in Switzerland but have no residence here. Taxation usually occurs at the source – e.g., for foreign artists’ performances.

Lottery Tax
Lottery tax is levied on winnings from lotteries, online casinos, and skill games. Rates may vary by canton depending on the size and source of the winnings.

Municipal Tax
Municipal tax is an annual tax levied by the place of residence. It is calculated by multiplying the state tax by the municipal tax rate, which varies by municipality.

Natural Person
A natural person is a private individual – i.e., any human being, as opposed to legal entities such as companies or associations.

Net Assets
‍Net assets are the amount obtained when all debts (e.g., mortgages, loans) are subtracted from a person’s total assets (e.g., bank accounts, securities, real estate). It forms the basis for wealth tax.

Payroll Certificate
The payroll certificate is an official employer document listing all payments such as salary, bonuses, or expenses. It serves as the basis for declaring income in the tax return.

Personal Tax
Also called head tax, it is a flat-rate tax paid annually by adult persons regardless of income or assets, typically collected by municipalities.

Possession Taxes
Possession taxes are levied on specific objects regardless of use, e.g., for dogs or motor vehicles. Tax liability arises from ownership alone.

Progressive Taxation
Tax progression ensures that as income increases, the tax rate also rises – higher incomes are taxed proportionally more.

Real Estate Capital Gain Tax
Tax levied on the profit realized from the sale of real estate.

Reassessment
Persons subject to withholding tax with annual income over CHF 120,000 are subject to subsequent ordinary assessment. They must file a full tax return in addition to withholding tax.

Secondary Tax Liability
Occurs if someone owns property or a business in another canton or state without residing there.

Social Deductions
Social deductions, e.g., child or support deductions, account for special family or social situations for tax purposes.

Source Tax
Source tax is a tax deducted directly from income – usually from salary – and remitted by the employer to the tax authority. Applicable mainly to employees without permanent residence or permit in Switzerland. Additional tax returns are only required for certain income thresholds or further income.

Tax Assessment
The tax assessment notice issued by the authority establishes the definitive tax factors and payable tax based on the submitted tax return.

Tax Base
Taxable income is the net income minus allowable social deductions.

Tax Object
The object of taxation – e.g., income, wealth, or gain from property sale.

Tax Period
The tax period is usually the calendar year for which income and assets are taxed. In the event of relocation or death, it can be shorter.

Tax Rate
The tax rate determines the percentage of the assessment base (e.g., income) owed as tax.

Tax Return
The tax return is the form through which natural or legal persons disclose their income and assets.

Tax Sovereignty
Tax sovereignty describes the right of the federal government, cantons, and municipalities to levy taxes.

Two-Earner Deduction
Can be claimed if both spouses or registered partners are employed. It reduces the tax burden arising from combining both incomes, with conditions regulated by canton.

Unrealized / Imputed Value
Certain imputed or theoretical values, such as imputed rent, are considered taxable income even if no cash is received.

Value Added Tax (VAT)
‍An indirect tax on the consumption of goods and services, collected by businesses but ultimately borne by the final consumer.

Voluntary Disclosure
‍A legal procedure allowing taxpayers to report previously undeclared income or assets without penalty under certain conditions.

VAT Refund
‍The repayment of value-added tax to foreign companies or individuals who have paid VAT in Switzerland under specific circumstances.

Vesting / Imputed Benefits
‍Certain theoretical or non-cash benefits that may be considered taxable income.

Withholdingtax
The withholding taxis 35% and levied, for example, on interest and dividends. It is deducted bythe bank and paid to the Swiss Federal Tax Administration. If fully declared inthe tax return, it is refunded.

WithholdingTax (source tax)
‍Withholding tax isa tax deducted directly from income – usually from salary – and remitted by theemployer to the tax authority. Applicable mainly to employees without permanentresidence or permit in Switzerland. Additional tax returns are only requiredfor certain income thresholds or further income.

Zero-Rated Supply
Goods or services that are taxable but at a 0% rate, often used in VAT systems for exports or essential goods.