Switzerland: Switzerland to keep lump-sum tax for foreigners
07 October 2014
Posted by: Author: Ulrika Lomas
Author: Ulrika Lomas (Tax-News.com)
flat tax regime, which is based on a person's cost of living, rather than their
wealth or income, should be retained, the Swiss Government has said, stating
that it is critical to Switzerland's appeal as a business location and any
change would impinge on cantons' fiscal autonomy.
argued that foreigners living in Switzerland should be taxed on the basis of
their income and assets, like other taxpayers.
76 percent of all
taxpayers subject to the regime live in one of four cantons (Vaud, Valais,
Geneva and Ticino). The Council said that abolishing expenditure-based taxation
would disproportionately affect these cantons. The Council believes that the
decision on providing expenditure-based taxation should therefore continue to be
left to the cantons.
After a previous
challenge, changes were announced in 2012 which will see the tax base rise from
five times the cost of living, to seven times the cost of living from January
1, 2016. As regards direct federal tax, a minimal taxable income of CHF400,000
(USD414,293) will apply, and the Swiss cantons will be allowed to determine
their own minimum taxable amount.
According to the
Federal Council, these revisions aim "to reach a well-balanced compromise
between tax equity and locational appeal, which should not be called into
This article first appeared on tax-news.com.