Swiss wealth tax is not a federal tax like the income tax, for example, but is regulated on a cantonal basis – which doesn’t necessarily make it easier to get an overview. That’s why we explain everything you need to know about Swiss wealth tax in this article.
Swiss Wealth Tax: Basic Facts
Independent of Income Tax: Wealth tax is independent of income, and thus not linked to income tax. It therefore only assesses the taxpayer’s assets.
Tax Rate Varies Locally: The 26 cantons and the municipalities each have their own tax rate for wealth tax. So, depending on where you reside, the tax rate can vary, and ranges from 0.13% to 1.1%. The taxation can be progressive, i.e. as the wealth increases, so does the tax rate or proportional, i.e. regardless of the wealth the same tax rate applies.
Different Exemption Limits: The cantons and municipalities also have different exemption limits for wealth tax. If the net asset value is below this limit, no wealth tax has to be paid.
Wealth Tax Liability: Both Swiss citizens and taxable individual persons living in Switzerland are subject to wealth tax. Taxpayers are those who are resident or domiciled in Switzerland for tax purposes.
Debts: Taxable is the net wealth. This means that all sorts of liabilities (e.g. mortgages, credit card debts, loans received) are deducted from gross wealth. Since you have to declare your worldwide wealth you can also deduct your worldwide debts (especially mortgages of foreign real estate!).
What All Falls Under the Taxable Assets and What Not?
All assets of the taxpayer – both domestic and foreign assets – are subject to wealth tax. Therefore, all assets must be declared in the tax return. No distinction is made between movable and immovable property. In the following list you will find some examples of what is taxable under the wealth tax, and what not:
In certain cases, it is at the discretion of the respective tax official which items are attributed to property and thus subject to property tax.
Special Case: Real Estate Abroad
If you own real estate or land abroad, you must declare it in your tax return. Although they are not added to your taxable assets, they do influence the tax rate. They are therefore considered for the tax progression. This is also the case if Switzerland has a double taxation agreement with the state in which the property is located. Here you can find a detailed article about the taxation of real estate abroad.
As mentioned above, also any mortgages are wealth tax deductible. In case of foreign real estate, the tax authority will make an international tax allocation to determine the share of net wealth taxable in Switzerland. Debts are divided up proportionally between Swiss and non-Swiss assets.
How Is the Value of the Assets Determined?
The valuation of objects of a monetary nature is simple, because the market value is known. It is more difficult with the valuation of tangible assets. Here, the market or sales value is often used (e.g. for sports cars or classic cars).
Lump-Sum Taxation in Some Cantons
In order to keep the effort of the asset valuation low, some cantons and municipalities have a lump-sum taxation under certain conditions, which is more favourable for the taxpayer.
The taxpayer must meet the following requirements in this regard:
- No Swiss citizenship
- unlimited tax liability (either for the first time or again after at least 10 years)
- No gainful employment in the country
Important to know: If you live in an unseparated marriage, your spouse must meet the same requirements for you to be eligible for lump-sum taxation.
Persons Abroad Subject to Wealth Tax in Switzerland
In some cases, people who are resident abroad are liable for wealth tax in Switzerland – even if they have never lived in Switzerland. This is the case if they operate a business (sole proprietorship or partnership), own or trade in real estate or own property in Switzerland. Also, if persons receive benefits such as pensions or payments from occupational or restricted pension plans, their assets are subject to wealth tax.
Although these persons are subject to wealth tax in Switzerland, they are only subject to limited taxation. This means that only the assets that are in Switzerland or are drawn from Switzerland are subject to wealth tax. However, the worldwide assets are used as the basis for determining the tax rate.
« If the taxpayer has to provide maintenance for children, some cantons also offer deductions in this case, which vary from canton to canton. Likewise, some cantons offer tax relief for single people, single parents or married couples. »
Concessions and Reliefs to Reduce the Property Tax Burden
Social deductions and benefits in special cases
In some cantons, there are social deductions in addition to the tax allowances, which are intended to relieve the burden on pensioners in particular. If the taxpayer has to provide maintenance for children, some cantons also offer deductions in this case, which vary from canton to canton. Likewise, some cantons offer tax relief for single people, single parents or married couples.
In some cantons, there is an exemption limit in addition to the social deductions and tax allowances. If the total assets are below this limit, they do not have to be taxed.
Burden ceiling of the wealth tax
A so-called burden ceiling, where the total tax burden may not exceed a maximum value, also exists in some cantons. The regulations vary here. In principle, however, the taxpayer can demand a reduction of his tax burden if it would be above the limit.
Tips for Keeping Property Taxes as Low as Possible
In this section we do not want to encourage you to evade taxes. If you plan to conceal some of your assets from the tax authorities, this is not a good idea. The authorities are very well connected with other institutions and sooner or later they will find out what you have withheld from them.
This applies not only in Switzerland, but worldwide, because by means of the Automatic Exchange of Information (AEOI) system, the tax authorities and credit institutions in numerous countries around the world are networked with each other. But there are also perfectly legal ways to keep property taxes to a minimum.
Compare the Tax Rates in Cantons and Municipalities With Each Other
Every canton or municipality wants a piece of the tax pie, so they compete with each other for particularly wealthy individuals. As a result, some areas attract people with particularly attractive tax rates.
Especially if you are flexible and not tied to a particular location, it may be worth your while to move to a canton that is attractive from a tax perspective. Find some examples below, tax amounts in 2023 (cantonal and municipal taxes) for married persons without children. The different cantonal tax allowances have been taken into account. Figures in Swiss francs.
|Canton||Municipality||1 Mio.||3 Mio.||5 Mio.||10 Mio.||25 Mio.|
Do not only consider the respective tax rates, but also look at what additional benefits, such as social deductions and exemption limits, the respective canton or municipality offers you. Perhaps you also meet the criteria for lump-sum taxation.
It’s a good idea to do the math up front (or have a tax expert do the math for you) to estimate where you can expect to save the most money.
Do you seek a quick idea of the cost of our tax return service? If we have sparked your interest, you can send it to us without reservations, as it is a non-binding request. We will contact you promptly to discuss your situation with you.