Compare taxes in Switzerland: Income and wealth taxes on natural persons

Swiss canton and municipality tax rankings: Here’s how much natural persons pay

As was the case last year, the Canton of Zug remains the most affordable canton for natural persons in Switzerland when it comes to taxes. This is revealed in the Tax Monitor Switzerland 2023 from Credit Suisse. The tax rankings show hardly any changes compared to last year. However, there are some differences if you take a closer look.

Tax rankings reveal no change in top positions

The taxation of natural persons in Switzerland varies from canton to canton. According to the Credit Suisse tax index for natural persons, the income and wealth tax burden is lowest in the Canton of Zug – as was the case last year. The winner is followed by the cantons of Schwyz and Nidwalden. Individuals pay the highest rates in the cantons of Bern, Vaud, and Neuchâtel. Basel-Land recorded the most significant tax cut compared to 2022, leaping ahead of the cantons of Jura and Fribourg to take the 20th spot in the rankings.

Overall, the trend seen over the past ten years has largely continued. This is because, compared to legal entities, there have been only minor shifts for natural persons over the last decade.

Trend in cantonal tax burden on natural persons

Comparison of tax burden on natural persons by canton

Burden from income and wealth taxes in 2023 and 2022, Credit Suisse tax index for natural persons, average of Swiss municipalities = 100

Sources: TaxWare, Credit Suisse, Geostat

Tax burden varies depending on municipality

The tax burden on natural persons varies from one municipality to another in every canton. The reason is that, in Switzerland, the authority to raise taxes is divided between the federal government, cantons, and municipalities. Tax burdens can differ significantly as a result.

That is why the tax index for natural persons also covers the municipal level. The index reveals that municipalities in the Canton of Schwyz – specifically Wollerau, Freienbach, and Feusisberg – are the most affordable with respect to taxes. These intra-cantonal differences show that the municipality in which a natural person resides is reflected in their tax return.

Trend in cantonal tax burden on natural persons by municipality

Tax burden on natural persons by municipality

Burden from income and wealth taxes in 2023, Credit Suisse tax index for natural persons, average of Swiss municipalities = 100

Sources: TaxWare, Credit Suisse, Geostat

Impact of high real estate prices and other costs on tax savings

A person does not automatically reduce their total costs just because they take up residence in a low-tax municipality. Prices for real estate and other essential expenses are particularly high, especially in the popular "tax havens."

Simply comparing tax burdens neglects the fact that high real estate prices in low-tax regions can eat up a large chunk of the tax savings. What’s more, the regional differences in other categories of expenses – for example, health insurance premiums – have a serious impact on personal budgets.

Tax Independence Day: How long the Swiss work for the state

Tax Independence Day, or “TAX-I” for short, shows how long taxpayers works each year to earn the money to pay their taxes. In some cantons and municipalities with high taxes, they take longer. In others, their debt is settled earlier.

The indicator, calculated by Credit Suisse economists, shows the regional differences in tax burden in an easy-to-understand way using three model households. Once more, the numbers reveal that the Canton of Zug has maintained its hold on the top spot, which it has done for many years now. There, residents pay the least amount in taxes. As a result, their tax bill is paid off quickly. A married couple without children, for example, celebrates Tax Independence Day on February 20. The Canton of Schwyz sits in second place. Taxpayers in Vaud, Bern, and Neuchâtel have to work for the state the longest. Their TAX-I comes in April.

Credit Suisse economists use the Tax Independence Indicator, or TAX-I, to compare the individual tax burdens of the cantons and municipalities. The tax burden is measured starting on New Year’s Day. The measurements are based on the three model households – “single”, “dual-income couple with no children," and “family” – and take into account income taxes (federal, cantonal, and municipal) as well as wealth taxes and mandatory social insurance contributions (Old Age and Survivors' Insurance (AHV), Federal Disability Insurance (IV), the loss of earnings compensation scheme (EO), and unemployment insurance (ALV)).

Tax Independence Day in Swiss cantons

Tax Independence Day in Swiss cantons:

The day on which the taxes and mandatory contributions (AHV, IV, EO, and ALV) are earned; standard deductions taken into account; selected model households,* 2023

* Single person (gross income: CHF 75,000, net assets: CHF 100,000), married couple without children (gross income: CHF 150,000, net assets: CHF 200,000), married couple with two children (gross income: CHF 150,000, net assets: CHF 200,000)

Sources: TaxWare, Credit Suisse

Lump-sum withdrawal taxes vary depending on the canton and the municipality

A person wishing to take retirement capital out of their second or third pillar account can do so separately from other income at a reduced rate. Here too, there are major differences between the cantons.

From a total of CHF 100,000, the Canton of Appenzell Innerrhoden (cantonal capital) collects only 2.60% in taxes. On CHF 500,000, the figure is 5.09% in the same canton, whereas the canton of Basel-Stadt charges a whopping 9.4%. Even for individuals earning CHF 1,000,000, the Canton of Appenzell Innerrhoden remains at the top of the most affordable cantons, collecting a mere 5.34% – the lowest tax rate – on that amount. The Canton of Appenzell Innerrhoden is followed by the cantons of Nidwalden and Schaffhausen in places 2 and 3.

Here too, natural persons may be subject to different tax rates in the various municipalities of the cantons.

Lump-sum withdrawal taxes per canton

Comparison of taxes on lump-sum withdrawals by canton

Taxes (federal, cantonal, and municipal) on a one-time, lump-sum withdrawal of pension capital of CHF 100,000, CHF 500,000, or CHF 1 million from a second or third pillar account, married couple with no children, cantonal capitals, 2023

Sources: TaxWare, Credit Suisse

Where taxes are lowest on staggered lump-sum withdrawals

Due to tax progression, the staggered withdrawal of capital over several years has considerable tax benefits in many cantons. This is particularly true in the cantons of Schwyz and Basel-Land, for example. A married couple can save around CHF 40,000 in taxes on staggered capital withdrawals totaling one million Swiss francs.

However, staggered withdrawals must be planned at an early stage in individual cases – not least because tax practices vary greatly from canton to canton, and the pension funds provide different solutions. It is also important to obtain detailed information about this tactic beforehand.

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