What foreigners in Switzerland need to know about taxes

Switzerland is one of the wealthiest countries in the world — 15.7% of the adult population are millionaires, putting the country far ahead globally. This makes Switzerland an attractive destination for expats. Foreigners planning a move to Switzerland should be aware of the following tax obligations:

Progressive income tax by canton

Income taxes vary significantly depending on your place of residence — in addition to the federal tax, each canton and municipality sets its own tax policy:

• Geneva and Vaud are among the cantons with high income taxes. Top earners might pay more than 40%.
• Zug, Schwyz, and Nidwalden are considered tax-friendly for wealthy individuals and companies.
• Most cantons have a progressive tax rate, meaning the rate increases with income.
• Obwalden and Uri have a much flatter progression but no longer a true flat-rate tax, as their systems were aligned with federal guidelines in 2020.

Location plays a major role in assessing your tax burden. Anyone planning to settle in Switzerland will benefit from expert advice to compare and reduce taxes and insurance costs. Zürcher Treuhand GmbH and Simplecare.ch AG offer comprehensive and results-oriented support for new residents — contact us today.

Wealth tax in Switzerland

What many newcomers find surprising: In Switzerland, both the canton and the municipality levy an annual wealth tax.

• The tax is levied on net assets: total assets minus debts (e.g., mortgages).
• The average tax rate across all cantons for assets worth CHF 1 million is approximately 0.32%, resulting in a tax liability of CHF 3’200.
• Tax exemptions are set by each canton — for example, in Zurich: CHF 80’000 for single individuals, CHF 160’000 for married couples.

What counts towards your wealth?

• Bank deposits, cash, and precious metals
• All securities such as shares and business interests — more info on founding a company as a foreigner
• Particularly valuable art pieces
• Vehicles such as cars, motorcycles, and boats
• Real estate within Switzerland
• Foreign real estate (and income from it) is included in the calculation, but it only increases the tax rate, not the total taxable wealth or income.

No tax is levied on winnings from Swiss casinos (lottery and sports betting winnings are only taxed above CHF 1 million). However, these winnings increase your wealth and therefore indirectly affect your wealth tax.

Inheritance tax for foreigners

Inheritance tax varies greatly in Switzerland, as it is regulated by the cantons. The degree of relationship is decisive.

• Children are exempt from inheritance tax in nearly all cantons.
• Unrelated heirs may face tax rates of 30–50% in certain cantons.
• Schwyz and Obwalden do not levy inheritance tax at all.
• For inheritances from abroad, the tax laws of the country of origin usually apply — there is no unified double taxation treaty for inheritances.

Gift tax

Anyone receiving a significant gift may be subject to gift tax. As with inheritance, the relationship and the local exemption limit determine the amount of tax. The tax rates for inheritance and gifts are usually the same in most cantons. Therefore, giving a gift before death does not automatically avoid taxes. However, splitting gifts over several years can reduce the tax burden, depending on the canton.

• For movable assets like cash, securities, or cars, the tax rate is based on the donor's canton. In theory, a donor could move to a canton with lower rates to reduce taxes.
• Real estate is taxed in the canton where it is located.
• Gifts are tax-free in Schwyz, Obwalden, and (under conditions) in Lucerne.
• In Lucerne, gifts made up to five years before death can be retroactively treated as inheritance.
• The recipient is responsible for reporting the gift to the tax authorities.
• For gifts from abroad, the tax rules of the respective country usually apply.

It is generally advisable to consult a professional trustee for high-value gifts. If you want to ensure that a gift does not become a burden, contact Zürcher Treuhand GmbH for a personal consultation today.

Buying and taxing property as a foreigner

The following rules apply to foreigners planning to purchase property in Switzerland:

• EU/EFTA citizens residing in Switzerland may buy residential property without a permit.
• Third-country nationals with a B permit may purchase a primary residence but need a cantonal permit for secondary or vacation homes.
• Commercial properties are generally exempt unless they are used for real estate trading.

Property owners in Switzerland are subject to the imputed rental value — a notional rental income that is taxed as income based on the property's location and market value. This applies even if the owner lives in the property. However, mortgage interest and maintenance costs can be deducted.

Additional possible taxes:

• Property tax (only in some cantons)
• Real estate gains tax on property sales
• Real estate transfer tax (applies when buying/selling real estate)

Withholding tax for foreigners

The so-called withholding tax applies to:

• All foreigners without a C residence permit living in Switzerland
• Cross-border commuters, as well as artists and athletes, among others

The employer deducts the tax directly from the salary and forwards it to the tax authorities. If your gross annual income exceeds a certain threshold (e.g., CHF 120’000 in the canton of Zurich) or if you have additional income, you will need to file a standard tax return (subsequent ordinary assessment, NOV).

Flat-rate taxation for wealthy foreigners

Those who move to Switzerland without working here and who possess significant wealth may qualify for flat-rate taxation under certain conditions.

• Taxation is based on living expenses in Switzerland, not actual income or wealth.
• The flat tax is not available in the cantons of Zurich, Schaffhausen, Basel-Stadt, Basel-Landschaft, and Appenzell Ausserrhoden.
• It is typically negotiated on an individual basis with the tax authorities before the move.
• This status is often granted only for a limited number of years.

Taxation of stocks and classification as a professional securities trader

• Capital gains from trading stocks and cryptocurrencies are generally tax-free for private individuals in Switzerland (though they are subject to wealth tax).
• Dividends, interest, and bond yields are considered income and are taxable.
• If someone is classified as a professional trader, capital gains become taxable — but losses are deductible in return.

The tax authorities rarely classify individuals as professional traders. However, if certain criteria such as volume, trading frequency, and financing methods are met, particularly successful traders may be subject to closer scrutiny. In practice, the vast majority of private investors never have to worry about this status.

Pillar 3a: retirement savings with tax advantages

Those who want to allocate some of their disposable income to future planning should consider making contributions to Pillar 3a. This private pension scheme allows annual tax deductions up to a legally set maximum (CHF 7’258 for 2025). Upon retirement, the 3a funds are taxed at a reduced rate.

If you have further questions about your individual tax situation in Switzerland, we recommend a personal consultation with Zürcher Treuhand GmbH. We will guide you through all financial and tax-related matters — from immigration to estate planning.