Taxes at your fingertips: elaborating on the Swiss tax system is a lengthy and difficult task. But, Swiss News attempts at explaining it all in a simple and concise way.

Author:Grether, Gabrielle
Position:Expat Advice

There are two things that are inevitable in life: death and taxes. This well-worn quote shows our attitude toward taxes--we try to avoid them like the plague, at the same time acknowledge that no state can function without income.

Switzerland is no exception to the rule. The most recent figures from the Federal Department of Statistics show that in 2001 Switzerland had a total income of CHF131 billion, of which 72 per cent or CHF94 billion came from taxes. The last figure includes the direct income and asset taxes (CHF62 billion) as well as indirect taxes such as car taxes and VAT.

Of this total of CHF62 billion of direct taxes, CHF43.4 billion come from income and asset tax paid by private individuals resident in Switzerland. On average, in 2001 every person in Switzerland spent a total of CHF5,987 on personal income and asset taxes! Compared to an average income per person of CHF46,000, this means that we spend 13 per cent of our income on taxes. This is one of the lowest average tax rates in Western Europe.

One Country--26 Tax Systems

A low average is one thing but not everybody has the same tax rate in Switzerland.

The general rule is that the taxation is based on the amount of income and assets the taxable individual owns and on their potential to create an income. The rich pay more than the poor. Bringing up children--the future taxpayers--is rewarded over being able to spend all one's income on oneself.

However, much opposed to many other western countries Switzerland has a unique system of having 26 tax systems in one country. Each canton has its own tax rates. The potential deductions and allowances also van from canton to canton. And to take the inequality even further, the tax rate is different from village to village within a canton. Each community can thus determine the tax rate ms to its own needs.

Small urban cantons such as Basel-Stadt with a huge infrastructure, including a university, hospitals, a theatre, public transport, etc. are in need of a much higher income than a rural canton such as the canton Schwyz or Appenzell.

A canton is influenced by its number of residents and also the wealth of the companies and individuals that live in it. The most famous example is that of the canton of Zug. Due to its proximity to Zurich and its urban infrastructure and the international airport as well as the lake, the scenery, and the Alps nearby, the canton of Zug has traditionally attracted wealthy companies and individuals. The...

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