Indirect taxes and other federal taxes
Indirect taxes in Switzerland
Value added tax
As in many other countries, Switzerland also has a value added tax, which every consumer has to pay. Switzerland and Liechtenstein have a common VAT area, so that import/export or the procurement and provision of services in this community of states is treated as if it were a common country. In this article we explain which tax rates apply to which goods or services in Switzerland and Liechtenstein.
In Switzerland, there are three different tax rates for different product categories.
Standard rate: 7.7%
The standard rate is 7.7% and is due on the purchase of the following goods:
- Use of services
Reduced rate: 3.7%
A special rate of 3.7% applies exclusively to hotel accommodation including breakfast.
Reduced rate: 2.5%
The reduced VAT rate is applied to the following goods:
- Food and soft drinks
- Other goods for daily use
VAT on goods and services from abroad
Services and goods purchased from abroad are also subject to VAT in Switzerland. Imported goods are taxed upon importation. Services are to be declared and taxed by the recipient of these services. Individuals living in Switzerland who purchase services from a company that is not registered for VAT in Switzerland/Liechtenstein have an exemption limit of CHF 10,000 per calendar year. If the total price for the services received in one year exceeds this amount, they must be declared by February 28 of the following year at the latest.
Examples of foreign services:
Legal fees Costs for tax experts Transport costs for goods Construction, cleaning and management of a property in Switzerland by a foreign service provider
If the service is provided abroad, it does not have to be declared in Switzerland, as it is assumed that the VAT is paid in the country where the service is provided. This includes, for example, medical treatment or therapies abroad.
Indirect taxes incurred when moving
Importation of personal belongings
When moving to Switzerland, collections of art/valuables, animals or vehicles can be imported duty-free. The prerequisite is that the goods have already been in the possession of the person moving for at least six months prior to the date of the move and will continue to be in his possession. Additional household goods may be imported for up to two years after the move, provided the above requirements are met. All items must be declared to customs upon importation. Anyone moving to Switzerland from an EU/EFTA state can prove their change of residence either with a Swiss employment contract or a deregistration from their previous state of residence. Third-country nationals must present a Swiss residence permit to customs.
What should be considered when importing pets?
If dogs, cats or rodents are imported, they must be chipped. In addition, a passport for animals is necessary, as well as a vaccination against rabies. Depending on the country the animal comes from, other regulations may apply. For dog owners it is obligatory to register the dog with the municipality, which charges a dog tax of 100-200 CHF depending on the canton.
Tax exemption limit when entering Switzerland
Personal items, travel catering and the fuel in the tank are considered duty and tax free when crossing the border into Switzerland. Import tax is levied on all other items, depending on their value and quantity. Per person and per day, goods to the value of CHF 300 may be imported without VAT becoming due. If the total value of the goods exceeds this amount, the tax rate of 7.7% or 2.5% is due according to their classification. Special limits apply if a high quantity of the same product is imported and the allowance of CHF 300 is exceeded:
- from 1kg meat/meat products: CHF 17/kg
- from 1kg/1l butter/cream: CHF 16/kg, CHF 16/l
- 5kg/5l oil, fat, margarine (for consumption): CHF 2/kg, CHF 2/l
- 5l alcoholic beverages with up to 18% vol. and 1l alcoholic beverages with more than 18% vol.: CHF 2/l
- 250 pieces/250g cigarettes, cigars and other tobacco products: CHF 0.25/piece/g
Other federal taxes
In addition to VAT, there are other federal taxes in Switzerland that should not go unmentioned here, because we want to give you as broad an overview as possible of the Swiss tax system.
Stamp duty is a turnover tax payable on the purchase and sale of shares, bonds, funds and other securities. It is also called transaction tax and is withheld by the bank or broker and paid to the state. It is based on the turnover of the security. A distinction is made between domestic and foreign securities:
Anticipatory tax is due on income from investments (e.g. dividend payments or returns with a total value of more than CHF 200 per year). This amounts to 35% and is withheld by the Swiss broker (bank or investment partner) and paid to the state. The anticipatory tax is refunded in full if the tax return includes all income from investment income completely and correctly. If the investment income is not declared, incompletely declared or incorrectly declared, the anticipatory tax will be withheld. It serves to prevent tax evasion. Anticipatory tax is paid both by taxpayers in Switzerland and by foreign investors. The latter are only or partially refunded the withholding tax if this is regulated within a double tax treaty with the investor’s country of residence.
EU Savings Directive
Within the countries of the EU, the EU Savings Directive applies, which provides for automatic exchange of information (AEOI) on financial accounts between individual member states. This directive facilitates exchanges between banks for tracking interest payments to individuals living in another EU state. A similar agreement exists between Switzerland and the EU. This states that interest payments from Switzerland to an individual in the EU are taxed at the EU withholding tax rate of 35%. All interest payments subject to Swiss withholding tax are exempt from EU withholding tax. This means that a person living in the EU who receives interest payments from a Swiss bank does not have to pay EU withholding tax if the bank is instructed to declare the payment to the Swiss tax authorities and withholds the withholding tax.