For members


EXPLAINED: How where you live in Switzerland impacts how much income tax you pay

Income tax in Switzerland is a complicated affair and how much you pay can depend on what you earn, your family status but also where you live. Here's an explanation of how it works.

A person does some important paperwork in front of their computer
Swiss tax can be complicated. Hopefully this clarifies a few of the more complex matters. Photo by on Unsplash

In Switzerland, tax is levied by the federal government as well as by cantonal and municipal authorities (subject to a few exceptions). 

Cantonal tax will usually make up a higher percentage of your tax burden than federal taxes, reflecting the independence of the cantons and the amount of services which remain the obligation of cantonal governments rather than the federal administration. 

The amount you pay, even for municipal taxes, is dependent on your income as well as your family status.

This can be difficult to understand at first, particularly for some foreigners who are used to municipal taxes being set at a uniform rate, or determined according to the type of property one owns or lives in. 

Please note this report only takes into account income tax rates. Further tax types are also subject to considerable variation depending on geographic and other factors. 

How varied can tax burdens be in different parts of Switzerland? 

Cantons and municipalities have the power to set their own income tax rates. 

This can lead to large differences in the effective rate depending on where you live. 

In some cases the difference in the tax rate is negligible, whereas in others it is so significant that it acts as an incentive to move – particularly for the uber-wealthy. 

In the vast majority of cases, the differences will be larger from canton to canton than from municipality to municipality within the same canton, although there can also be significant variation within cantons themselves. 

What are the differences from canton to canton? 

To highlight the differences between cantons we have just looked at the highest tax rates in each canton. While this may not be the rate paid by you, it provides an indication as to each canton’s tax rates. 

It’s important to note that as well as these figures being for the highest tax bracket they also incorporate the 11.5 percent federal tax rate. 

Generally speaking, the lowest cantonal tax rates in Switzerland can be found in the smaller, less urbanised, German-speaking cantons in the centre of the country. 

The canton of Zug, for instance, has one of the lowest income tax burdens at a cantonal level.

As a result, it has attracted wealthy individuals, with one in eight Zug residents having a net worth of over one million francs. 

READ MORE: Which Swiss canton has the most millionaires?

As noted by KPMG in relation to income tax rates in 2021, including federal taxes of 11.5 percent, Zug had a maximum income tax rate of 22.4 percent, which is followed by 24.1 in Appenzeller-Innerhoden and 24.3 percent in Obwalden.

This is lower than the Swiss average of 33.73 percent (for all federal, cantonal and communal income taxes). 

Income tax rates are much higher in urbanised cantons and those in the French-speaking parts of the country. 

Including federal taxes of 11.5 percent, Geneva has the highest tax rate in the country of 44.8 percent. This is followed by Basel Country (42.17%), Vaud (41.5%) and Bern (41%).

While this is clearly significantly higher than those in place in other parts of the country, KPMG points out they are still lower than the highest tax rates found in Sweden (57.3%), Denmark (56.3%) and Austria (55%).

What about at a municipal level? 

Within a canton, there can also be significant differences depending on the municipality. 

Municipal tax or communal tax refers to income tax charged at the municipal level.

This does not take into account other taxes that can be levied as a consequence of living in a particular municipality, like property taxes. 

A report from January 2022 showed that the difference in Zurich can be several thousands of francs per year depending on which municipality you live in. 

REVEALED: These parts of Zurich have the highest taxes

While the calculation of municipal taxes is complex (see below), in Zurich this could result in an effective income tax rate of as high as 46 percent or as low as 35 percent (including federal taxes), depending on which part of the canton you live in. 

How are municipal taxes calculated and levied? 

Somewhat confusingly, cantonal and municipal taxes are levied together and are often expressed in a single amount (although in some cantons this will be broken down into two line items: municipal and cantonal taxes). 

The way in which municipal taxes are levied can be complicated. 

Municipal taxes are levied at the municipal level according to the applicable municipal tax quota (German: Gemeindesteuerfuss, French: coefficient de l’impôt communal).

In most cantons the municipal tax quota is expressed as a two or three-digit percentage (or as a decimal). 

Reader question: Can I deduct working-from-home costs from my Swiss taxes?

For argument’s sake, consider that your municipal tax quota is 115 percent (or 1.15 in decimal form). 

Fortunately, this does not mean you need to pay 115 percent of your income to the municipality. 

Instead, it means in that municipality, you need to pay 115 percent of the cantonal tax. 

For argument’s sake, let’s say the cantonal tax is ten percent. With an annual salary of CHF50,000 you are liable for CHF5,000 per year to your canton on the basis of your income.

Note that this figure does not include federal tax, but only takes into account cantonal and communal taxes.

For municipalities with a 115 percent tax rate, you will need to pay CHF5750 in total (as both your cantonal and municipal tax) for the year. This will generally be itemised as one amount on your tax bill. 

This percentage can often be lower than 100, for instance 85 percent (or 0.85). 

In this case, you would need to pay CHF4250. 

What are the exceptions? 

Some municipalities do not charge tax at all, with the necessary money coming out of cantonal taxes. 

In the tiny canton of Basel City, for instance, no municipal taxes are charged and these are all worked into the cantonal tax. This of course makes sense in Basel City, which is a completely urban canton smaller than many Swiss municipalities. 

In effect though, this does not mean that the money paid as part of your cantonal tax in Basel City does not go to the municipality.

Instead, these taxes are paid to the canton, who then apportion part of it for municipal expenses. 

This report is intended as a guide only and should not take the place of financial advice from a qualified advisor. Got any questions? Get in touch at [email protected]

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For members


Meals, commuting and ‘home office’: What can you claim on tax in Zurich?

Working from home has been mandatory in Zurich for much of the past tax year. What can you claim on tax - and what costs do you have to bear yourself?

Meals, commuting and 'home office': What can you claim on tax in Zurich?

On Thursday, February 17th, the Swiss government rolled back the working from home recommendation, meaning that working from home was purely up to employers for the first time since the start of the pandemic. 

Technological advances and the enduring legacy of the pandemic will see working from home – known in German as ‘Home Office’ – become more common in several industries in the coming years, which has clear tax implications. 

These can be relatively complex, particularly as many of the tax rules are in place at a cantonal level. 

Here’s an overview of what you can claim in Zurich – and what you cannot – when it comes to working from home. 

For a general guide on tax rules in Switzerland when it comes to working from home, check out the following link.

Reader question: Can I deduct working-from-home costs from my Swiss taxes?

Don’t live in Zurich – or want to know what costs other than working from home you can deduct? Check out the following extensive guide. 

EXPLAINED: What can I deduct from my tax bill in Switzerland?

What tax deductions can I have working from home in Zurich? 

Along with Zug, Geneva and Basel (both City and Country), Zurich allows residents to claim professional expenses as they would in a normal year, i.e. despite the Covid pandemic.

This means that you can claim meal costs and transport to work, even if you worked from home during this time. 

You can claim up to CHF15 per day, or 3,200 francs per year in Zurich. 

If you employer offers subsidised meals, you can claim a maximum of CHF7.50 per day (or CHF1,600)

Regarding transport costs, you can deduct up to CHF3,000 per year for your commute. 

This includes public transport, bicycles and mopeds. 

If you travel by private car, you can only deduct this if it is difficult to take public transport.

This is deemed to be the case if both your home and workplace are more than a kilometre from the nearest public transport stop, or if more than one hour is saved by travelling by car (per day). 

If you are unable to travel by public transport due to an injury, then you are permitted to deduct your car expenses. 

What about rent, electricity and other working-from-home expenses? 

While several Swiss cantons allow you to claim expenses of working from home like rent, electricity etc, Zurich authorities have expressly ruled this out. 

As the above costs (transport and meal allowances) have been kept in place, this is seen as a form of compromise. 

Taxpayers in Zurich are also able to claim the flat-rate deduction for all professional costs associated with working from home that are not covered by the employer, although this is only in relatively narrow scenarios. 

“This solution is advantageous for most taxpayers” say Zurich cantonal authorities. 

As with all our tax reports, this is intended as a guide only and should not take the place of qualified tax advice. More Zurich-specific information is available at this link.