Swiss property taxes
Elizabeth Bagwell, Friday, 15 November 2013
This article is part of a series of 10 articles about buying property in Switzerland. The other articles in the series cover the following topics:
Swiss taxes are relatively low, overall, but the system is complex as taxes can be levied at three different levels federal (national government), cantonal (state) and communal (town or village).
When buying an investment property in Switzerland, you should consider, at minimum:
The property transfer tax is typically paid by the buyer, as are most of the costs of the transaction : . It is set at a cantonal level, which means that it differs in each of Switzerland's 26 cantons. We've listed approximate property transfer tax costs in some of the more popular cantons for international buyers.
Capital gains tax typically applies when you sell a property. In Switzerland, it is charged at a cantonal and communal (but not federal) level. This means that there is no standard charge. The total capital gains tax is typically 25-50% on the profit from selling a property. The profit is considered to be the selling price less the purchase price and the cost of improvements.
An additional surcharge may apply for properties sold within 0-5 years of being purchased. The full tax applies to properties owned for around 5 years (naturally the exact details vary) then the amount reduces, typically reaching a discount of up to 70% after 10-20 years.
Business properties are not subject to capital gains tax.
Income tax
In Switzerland, income tax is applied to your total income in Switzerland, or your joint income, if you are married. Up to three sets of income tax will apply: federal, cantonal and communal. Federal income tax ranges from 0-14%, depending on the amount of income earned.
Cantonal and communal taxes vary widely and there is no consistent pattern. Some communes may have very low tax rates while their neighbours have high ones. Cantonal and communal tax rates range from 0-20% depending on the level of income earned. Typically, taxes are progressive, with higher rates for high earners. However, the highest band tax rate varies enormously, from around 6-20%. Moreover, some cantons offer a fixed-fee tax rate for wealthy foreigners who wish to become resident in Switzerland but are not earning in the country. As the tax bills start at CHF 150,000 this is a cost saving only for the very wealthy.
It's worth noting that there are many standard deductions available. These may include:
Annual real estate taxes are levied by some cantons and communes. These may be wealth taxes or property taxes, typically to a maximum value of 1% of the property's worth at purchase.
It's worth noting that in most cases a primary residence is taxed as though it were producing rental income. The figure is set at purchase, and is not typically updated. Standard deductions typically counterbalance this.
Avoiding double taxation
As a general rule, any income (such as rent) or capital gains (such as the sale of a property) generated in Switzerland will be taxed in Switzerland, and exceptions are very rare. This usually means you will have to fill in a Swiss tax return if you have income in Switzerland. If you are resident, you will have to fill in a tax return anyway, so an investment property will not alter things.
However, if you are non-resident you risk double taxation as many countries tax citizens or residents on income earned anywhere in the world. A few countries, notably the USA, tax citizens on income earned anywhere in the world, whether they are resident in their home country or not. In these cases, double taxation may also be a risk.
Double taxation is generally easy to avoid as Switzerland has standard arrangements in place as well as specific agreements with several countries or groups, including the EU. Double taxation is generally considered bad for business by governments, so there is usually a space to indicate that tax has already been paid in Switzerland in your local tax return.
Figuring out your bill
The figures used throughout this article should be treated as estimates, as additional factors such as the type or value of the property, your income or residency status, may affect your tax situation. In addition, taxes may vary within as well as between cantons. Contact an accountant, notary or real estate agent in the canton in question for up-to-date figures.
This article is part of a series of 10 articles about buying property in Switzerland. The other articles in the series cover the following topics:
Swiss taxes are relatively low, overall, but the system is complex as taxes can be levied at three different levels federal (national government), cantonal (state) and communal (town or village).
When buying an investment property in Switzerland, you should consider, at minimum:
- Property transfer tax
- Income tax
- Capital gains tax
- Ongoing property taxes
The property transfer tax is typically paid by the buyer, as are most of the costs of the transaction : . It is set at a cantonal level, which means that it differs in each of Switzerland's 26 cantons. We've listed approximate property transfer tax costs in some of the more popular cantons for international buyers.
- Zurich 0%
- Schwyz 0%
- Bern 1.8%
- Graubunden 2%
- Vaud 3.3%
Capital gains tax typically applies when you sell a property. In Switzerland, it is charged at a cantonal and communal (but not federal) level. This means that there is no standard charge. The total capital gains tax is typically 25-50% on the profit from selling a property. The profit is considered to be the selling price less the purchase price and the cost of improvements.
An additional surcharge may apply for properties sold within 0-5 years of being purchased. The full tax applies to properties owned for around 5 years (naturally the exact details vary) then the amount reduces, typically reaching a discount of up to 70% after 10-20 years.
Business properties are not subject to capital gains tax.
Income tax
In Switzerland, income tax is applied to your total income in Switzerland, or your joint income, if you are married. Up to three sets of income tax will apply: federal, cantonal and communal. Federal income tax ranges from 0-14%, depending on the amount of income earned.
Cantonal and communal taxes vary widely and there is no consistent pattern. Some communes may have very low tax rates while their neighbours have high ones. Cantonal and communal tax rates range from 0-20% depending on the level of income earned. Typically, taxes are progressive, with higher rates for high earners. However, the highest band tax rate varies enormously, from around 6-20%. Moreover, some cantons offer a fixed-fee tax rate for wealthy foreigners who wish to become resident in Switzerland but are not earning in the country. As the tax bills start at CHF 150,000 this is a cost saving only for the very wealthy.
It's worth noting that there are many standard deductions available. These may include:
- Mortgage interest
- Maintenance and improvement costs
- Costs of hiring a property manager
Annual real estate taxes are levied by some cantons and communes. These may be wealth taxes or property taxes, typically to a maximum value of 1% of the property's worth at purchase.
It's worth noting that in most cases a primary residence is taxed as though it were producing rental income. The figure is set at purchase, and is not typically updated. Standard deductions typically counterbalance this.
Avoiding double taxation
As a general rule, any income (such as rent) or capital gains (such as the sale of a property) generated in Switzerland will be taxed in Switzerland, and exceptions are very rare. This usually means you will have to fill in a Swiss tax return if you have income in Switzerland. If you are resident, you will have to fill in a tax return anyway, so an investment property will not alter things.
However, if you are non-resident you risk double taxation as many countries tax citizens or residents on income earned anywhere in the world. A few countries, notably the USA, tax citizens on income earned anywhere in the world, whether they are resident in their home country or not. In these cases, double taxation may also be a risk.
Double taxation is generally easy to avoid as Switzerland has standard arrangements in place as well as specific agreements with several countries or groups, including the EU. Double taxation is generally considered bad for business by governments, so there is usually a space to indicate that tax has already been paid in Switzerland in your local tax return.
Figuring out your bill
The figures used throughout this article should be treated as estimates, as additional factors such as the type or value of the property, your income or residency status, may affect your tax situation. In addition, taxes may vary within as well as between cantons. Contact an accountant, notary or real estate agent in the canton in question for up-to-date figures.
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