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Clarity on Swiss Taxes
Securing Switzerland’s attractiveness as a business location
Switzerland as a business location
How competitive is Switzerland in terms of corporate tax rates and other location factors beyond Europe and in a global comparison? And how are the latest international efforts affecting Swiss tax practices? Stefan Kuhn, Head of Tax & Legal at KPMG, answers various key questions about Switzerland as a business location.
Swiss competitiveness worldwide
The traditional offshore domiciles are still clearly leading the way in terms of tax attractiveness. Beyond Europe, Switzerland is improving its position in the top third, climbing above Hong Kong and Singapore. This year’s improvement – with a lower average tax rate overall – is mainly due to the cuts resulting from the tax reform.
* with exceptions
Note: max. corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Source: KPMG Switzerland, KPMG International
In terms of fiscal policy, we should prepare for fundamental changes in the international landscape.Peter Uebelhart – Partner, Corporate Tax
Location Radar Switzerland
The Location Radar illustrates the four dimensions of location attractiveness and shows where Swiss quality is already plain to see, and where the country could improve as a business location. The closer a point to the center of the radar, the better Switzerland is positioned and recognized in that area.
KPMG’s mapping provides a snapshot of Switzerland as a business location today. However, the tax landscape and location competition factors are constantly shifting, most recently in light of COVID-19. For example, digital services and online trade have grown in importance. This, in turn, has driven interest within the community of states in regulations governing the taxation of the digital economy. In addition, stability and crisis-resistant infrastructure will become increasingly important location factors.
Realize opportunities
Nurture strengths
Innovation & Know-how
- Readiness to innovate
- Non-academic specialist training
- Productivity growth
- Attractiveness to foreign talents
- Academic education
- Internationalization of business
Resilience & Stability
- Resilience towards global challenges
- Efficient governmental crisis management
- Quality of infrastructure
- Domestic political stability
- International relations
- Budgetary stability
Competitiveness & Business-friendly Society
- Business freedom
- Openness of markets
- Free and democratic system
- Rule of law
Agility & Adaptability
- Degree of diversification of economy
- Competitive tax system
- Efficient law making processes
- Independent monetary policy
Average tax rates
The average tax rate dropped significantly from 2019 to 2020. This reflects what in some cases are drastic reductions in tax rates as a result of the tax reform (e.g. Geneva). A further reduction is expected over the next five years as certain cantons reduce their tax rates further (decisions have been approved by some, intentions communicated by others).
-4.32%
Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for GL, JU, OW and TG for 2019. Source: KPMG Switzerland
Individual taxes remain stable
Income tax rates for individuals are generally stable in Switzerland and abroad, which is why the increase in the canton of Basel-City stands out as a striking exception. Switzerland remains a highly attractive location not only for companies but also for private individuals.
* Individual income tax rates from 2019
Note: max. individual income tax rates single, no children, no denomination for the respective capital.
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