Clarity on Swiss Taxes. Beyond limits

Transcription

1 Clarity on Swiss Taxes Beyond limits

2 Swiss tax landscape 4 16 Corporate taxation Individual taxation

3 Clarity on Swiss Taxes EDITORIAL Welcome As reform dominates tax agendas worldwide, Switzerland remains competitive on the global tax stage according to KPMG s Swiss Tax Report This annual study compares corporate and individual tax rates at the national and international level, analyzing data to draw conclusions on the latest developments. Regulatory change is under way in many tax jurisdictions. KPMG s Swiss Tax Report 2018 reflects the fact that it usually takes time for the full effects to unfold. Shifts can also be abrupt, however. Perhaps the highest profile example is the recent US tax reform, with its far-reaching implications for individual and corporate taxpayers. So far, initial speculation that the move could trigger a new race to the bottom for competitive tax rates among Swiss cantons appears unfounded. Indeed, KPMG s report shows that natural viable tax rate limits have been reached in many cases, and Switzerland s own Tax Proposal 17 safeguards stability for the foreseeable future. Supranational regulations, such as BEPS and ATAD II, or even transnational agreements are also increasingly part of the global tax landscape. Ongoing global shifts have become the norm overall. In addition, digital megatrends are gathering speed, ready to drive the next phase of the tax landscape evolution. What will this mean for Switzerland? Peter Uebelhart Head of Tax, KPMG Switzerland KPMG s tax experts are observing regulatory and technological developments, ready to analyze the impact for our clients. Please contact us for personal insights and advice on any tax matter. Peter Uebelhart 3

4 SWISS TAX REPORT 2018 Corporate taxation Corporate income tax Switzerland remains attractive against the global and international tax competition. Cantons of central and eastern Switzerland stand out once again as having particularly low tax rates. Several tax reforms around the world most recently in the US are driving the ongoing trend toward lower corporate income tax. Successive cuts are also planned in parts of Europe in the coming years, including France and the UK. Tax rates are also expected to fall in Switzerland, especially in connection with the Tax Proposal 17. 4

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6 CORPORATE TAXATION: CORPORATE INCOME TAX Which businesses are shouldering the tax burden in Switzerland? While over two-thirds of taxable companies pay virtually no tax, 2.93% carry almost 90% of the total direct (federal) tax burden. Companies in privileged tax regimes account for 46.5% (around CHF 4.3 billion) of direct federal taxes paid 1. Contribution of businesses to tax revenues from direct federal taxes (by profit levels) 87.76% 67.04% Taxpayers 13.62% 10.81% 9.68% 2.93% 1.11% 5.60% 1.28% 0.18% Contribution to direct federal taxes Taxable profit in CHF 1,000/year 1 According to the FTA Note: latest available data for the tax period Source: Federal Tax Administration FTA, 2018: 6

7 Clarity on Swiss Taxes Corporate income tax rates in the cantons 2017 and 2018 The cantons of central Switzerland once again top the table for the lowest ordinary corporate income tax rates. These cantons also showed little movement in terms of tax rates, with Zug, Schwyz and Schaffhausen the only ones to adjust their rates slightly downward. The bottom of the league is dominated by western Switzerland, the Mittelland region and the city cantons. Jura, Ticino and Solothurn were the only ones to cut rates, and even then only very slightly. However, further cuts especially in the higher tax cantons are expected in connection with the pending Tax Proposal 17. Lucerne Nidwalden Obwalden Appenzell A. Appenzell I. Zug Uri Schwyz Neuchâtel Glarus Schaffhausen Grisons Thurgau St. Gallen Aargau Fribourg Jura Ticino Basel-Landschaft Zurich Vaud Solothurn Bern Valais Basel-Stadt Geneva Figures in percent Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, BL, BE, GE, GL, GR, JU and NE for Source: KPMG Switzerland. 7

8 CORPORATE TAXATION: CORPORATE INCOME TAX Corporate income tax rates in the cantons trend 2007 vs Corporate tax rates have fallen particularly noticeably in Lucerne, Appenzell A., Neuchâtel, Schaffhausen and Grisons, with a rate of 12% emerging in practice as the lowest limit. Only very small changes in ordinary corporate tax rates can be observed in the Mittelland region, western Switzerland and the city cantons. Within this group, Basel-Landschaft was the only canton to significantly cut the rate, while Valais actually increased its rate marginally. Lucerne Nidwalden Obwalden Appenzell A Appenzell I Zug Uri Schwyz Neuchâtel Glarus Schaffhausen Grisons Thurgau St. Gallen Aargau Fribourg Jura Ticino Basel-Landschaft Zurich Vaud Solothurn Bern Valais Basel-Stadt Geneva Figures in percent Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, BL, BE, GE, GL, GR, JU and NE for Source: KPMG Switzerland. 8

9 Clarity on Swiss Taxes Corporate income tax rates in the cantons trend 2007 to 2018 Average income tax rates continue to fall marginally. 3.05% 20.76% 19.44% 18.96% 18.70% 18.31% 18.06% 18.01% 17.90% 17.89% 17.80% 17.74% 17.71% Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, BL, BE, GE, GL, GR, JU and NE for Source: KPMG Switzerland. 30% 28% Corporate income tax rates in the cantons trend 2007 to 2018 Corporate income tax rates continue to stagnate, with Schwyz, Zug and Schaffhausen alone in reducing rates slightly. 26% 24% Geneva 22% Basel-Stadt Bern Vaud Zurich 20% Aargau 18% 16% 14% 12% Swiss average St. Gallen Grisons Schaffhausen Neuchâtel Schwyz Zug Obwalden Nidwalden Lucerne Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, BL, BE, GE, GL, GR, JU and NE for Source: KPMG Switzerland. 9

10 CORPORATE TAXATION: CORPORATE INCOME TAX Corporate income tax rates in the cantons in 2018 Cantons with a corporate income tax rate above the Swiss average (17.71%) Cantons with a corporate income tax rate below the Swiss average (17.71%) Figures in percent 22.2 Basel-Stadt 15.6 Neuchâtel 20.5 Jura 21.4 Solothurn 18.6 Aargau 20.7 Basel-Landschaft 12.3 Lucerne 21.6 Bern 12.7 Obwalden 21.4 Vaud 19.9 Fribourg 24.2 Geneva 21.7 Valais Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, BL, BE, GE, GL, GR, JU and NE for Source: KPMG Switzerland. 10

11 Clarity on Swiss Taxes 15.8 Schaffhausen 14.5 Zug 12.7 Nidwalden 21.2 Zurich 14.9 Uri 15.2 Schwyz 16.4 Thurgau 17.4 St. Gallen 15.7 Glarus 13.0 Appenzell A Appenzell I Grisons 20.6 Ticino 11

12 CORPORATE TAXATION: CORPORATE INCOME TAX The cantons compared with European countries The comparison with Europe shows hardly any change in the lower tax rates, with the cantons of central Switzerland enjoying a particularly good position. The Channel Islands and certain (south) eastern European states are the only locations to offer even lower ordinary corporate income tax rates. Ireland remains Switzerland s main competitor in Europe. There is little change in Europe s center field apart from Croatia and a few Swiss cantons, which lowered their income tax rates. Guernsey Montenegro Hungary Bulgaria Lucerne Ireland Liechtenstein Cyprus Nidwalden Obwalden Appenzell A. Appenzell I. Zug Uri Albania Lithuania Serbia Schwyz Neuchâtel Glarus Schaffhausen Romania Grisons Thurgau St. Gallen Croatia Ukraine Aargau Poland +/ Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Albania, AI, GL, GR and NE for Sources: KPMG Switzerland, KPMG International: 12

13 Clarity on Swiss Taxes The countries of central Europe bring up the rear in the attractiveness rankings for ordinary corporate tax rates. Norway and Luxembourg reduced their rates once again in 2018 and France is planning successive cuts to bring its rate down to 25% by Turkey and Germany bucked the trend by increasing their rates. UK Slovenia Fribourg Estonia Jura Ticino Basel-Landschaft Slovakia Zurich Vaud Solothurn Bern Valais Turkey Denmark Sweden Basel-Stadt Norway Italy Geneva The Netherlands Austria Spain Luxembourg Greece Germany France Malta /- compared with previous year Figures in percent Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for BE, BL, GE and JU for Sources: KPMG Switzerland, KPMG International: 13

14 CORPORATE TAXATION: CORPORATE INCOME TAX Global comparison (selected countries) Despite massive tax cuts in the US, the famous offshore domiciles plus Hong Kong and Singapore remain the clear leaders in terms of tax appeal. In a global comparison, Switzerland retains its place in the top third. Bahamas Bahrain Bermuda Cayman Islands Dubai Qatar Hong Kong Singapore Swiss average Russia Malaysia China Indonesia Panama Canada South Africa USA Australia Japan Brazil India UAE /- compared with previous year Figures in percent Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Bahamas, Bermuda, Cayman Islands, Dubai, Russia and UAE for Sources: KPMG Switzerland, KPMG International: Trend: countries Only a few countries have actually increased their corporate income tax rates since Mexico Iceland Slovakia Greece Chile Figures in percent Maximum corporate income tax rates, Source: KPMG International: 14

15 Clarity on Swiss Taxes Trend: countries In recent years, corporate income taxes have seen huge reductions, especially in the Middle East and currently in the US. The UK and France have also already announced a larger cut. Kuwait Gibraltar Qatar Italy USA UK Japan Germany China Hungary Sweden Jordan Russia Luxembourg Swiss average Malaysia Singapore South Korea Hong Kong The Netherlands France Figures in percent Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Gibraltar and Russia for Sources: KPMG Switzerland, KPMG International: 15

16 SWISS TAX REPORT 2018 Individual taxation Income tax Income tax rates have not seen any major changes in the past year in Switzerland or internationally. The general downward trend in individual tax rates appears to be tailing off. Switzerland remains a highly attractive location not just for businesses, but also for individuals. 16

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18 INDIVIDUAL TAXATION: INCOME TAX Who shoulders the tax burden in Switzerland? In Switzerland, 3.63% of taxpayers, i.e. those with the highest income, pay more than 50% of direct federal taxes from natural persons. Contribution of individuals to tax revenues from direct federal taxes (by income bracket) 53.06% 35.04% 26.19% 15.69% 16.29% 15.14% 12.78% 2.63% % 8.24% 4.31% 3.63% Taxpayers Contribution to direct federal taxes Taxable income in CHF 1,000 / year Note: latest available data for the tax period Source: Federal Tax Administration FTA, 2018: 18

19 Clarity on Swiss Taxes The 10% of taxpayers with the highest income shoulder the burden for 80% of direct federal taxes, while the top 1% in terms of income account for 42.74% (prior year 41.3%). Contribution of individuals to tax revenues from direct federal taxes (by income bracket) Figures in percent Percentage share of taxpayers in direct federal taxes Note: latest available data for the tax period 2014, including persons taxed on a lump-sum basis and taxpayers where income taken into account in determining the tax rate is different from the taxable income. Source: Federal Tax Administration FTA, 2018: 19

20 INDIVIDUAL TAXATION: INCOME TAX Income tax rates in the cantons 2017 and 2018 The cantons of central Switzerland also lead the tax league for individual taxation. The bottom of the ranking is dominated by the cantons of western Switzerland and the Mittelland region. Elsewhere there was no movement in tax rates, apart from in Lucerne. Zug Obwalden Appenzell I. Uri Nidwalden Schwyz Appenzell A. Lucerne Glarus Grisons Schaffhausen Thurgau St. Gallen Aargau Solothurn Fribourg Valais Basel-Stadt Neuchâtel Zurich Jura Ticino Bern Vaud Basel-Landschaft Geneva Figures in percent Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Source: KPMG Switzerland. 20

21 Clarity on Swiss Taxes Income tax rates in the cantons trend 2007 to 2018 After a modest slide in recent years, the average maximum tax rates appear to have stabilized. 0.89% 34.85% 34.61% 34.25% 34.05% 33.84% 33.76% 33.77% 33.86% 33.98% 33.99% 33.96% 33.96% Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Source: KPMG Switzerland. 21

22 INDIVIDUAL TAXATION: INCOME TAX Income tax rates in the cantons trend 2007 to 2018 The cantons of central Switzerland have occupied the top spots in the tax ranking for over a decade. Apart from Uri, tax rate reductions were only marginal. Obwalden, Schwyz and Schaffhausen were the only cantons to increase their tax rates, while Aargau, Solothurn and Jura saw the most significant rate cuts. Neuchâtel, Bern, Vaud and Geneva have maintained the same rates for over 10 years. Zug Obwalden Appenzell I. Uri Nidwalden Schwyz Appenzell A. Lucerne Glarus Grisons Schaffhausen Thurgau St. Gallen Aargau Solothurn Fribourg Valais Basel-Stadt Neuchâtel Zurich Jura Ticino Bern Vaud Basel-Landschaft Geneva Figures in percent Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Source: KPMG Switzerland. 22

23 Clarity on Swiss Taxes Income tax rates in the cantons trend 2007 to 2018 The majority of top tax rates saw marginal variations in recent years. Alongside significant cuts in Aargau, Thurgau and St. Gallen, increases were notable in Schaffhausen and Schwyz. 46% 44% Geneva 42% 40% 38% Vaud Bern Zurich Neuchâtel Basel-Stadt 36% 34% 32% Aargau Swiss average St. Gallen Thurgau Schaffhausen Lucerne 30% 28% Schwyz 26% 24% 22% Nidwalden Obwalden Zug 20% Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Source: KPMG Switzerland. 23

24 INDIVIDUAL TAXATION: INCOME TAX Individual income tax rates in the cantons in 2018 Cantons with an individual income tax rate above the Swiss average (33.96%) Cantons with an individual income tax rate below the Swiss average (33.96%) Figures in percent 37.4 Basel-Stadt 39.3 Neuchâtel 40.5 Jura 34.2 Solothurn 42.2 Basel-Landschaft 34.1 Aargau 31.2 Lucerne 41.3 Bern 24.3 Obwalden 41.5 Vaud 36.0 Fribourg 44.8 Geneva 36.5 Valais Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Source: KPMG Switzerland. 24

25 Clarity on Swiss Taxes 32.3 Schaffhausen 22.9 Zug 25.6 Nidwalden 39.8 Zürich 25.4 Uri 28.2 Schwyz 32.5 Thurgau 33.5 St. Gallen 31.6 Glarus 30.5 Appenzell A Appenzell I Grisons 40.7 Ticino 25

26 INDIVIDUAL TAXATION: INCOME TAX The cantons compared with European countries The tax payable on top incomes remains particularly low in the countries of (south) eastern Europe (partly due to flat rate systems). Latvia ended its flat rate tax system in 2018 and increased its tax rates massively in some income brackets. Most of the Swiss cantons compare to the European average when it comes to top income tax rates. Bulgaria Lithuania Hungary Ukraine Estonia Jersey Czech Republic Zug Obwalden Appenzell I. Uri Nidwalden Schwyz Appenzell A. Lucerne Latvia Glarus Poland Grisons Schaffhausen Thurgau St. Gallen Aargau Solothurn Cyprus Turkey Fribourg Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Jersey: income tax rate for Sources: KPMG Switzerland, KPMG International: 26

27 Clarity on Swiss Taxes Individual income tax rates are especially high in western Europe and Scandinavia. Following significant increases in 2017, Luxembourg and Sweden cut their tax rates back down in Norway, Finland and the Netherlands also reduced their tax rates slightly once again. On average, tax rates across Europe have been stagnating in recent years, however. Valais Basel-Stadt Neuchâtel Zurich Jura Ticino Bern Vaud Basel-Landschaft Italy Geneva Germany Greece UK Spain /- compared with previous year Figures in percent Luxemburg Iceland Norway Ireland Portugal Belgium Slovenia The Netherlands Finland Austria Denmark Sweden Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Sources: KPMG Switzerland, KPMG International: 27

28 INDIVIDUAL TAXATION: INCOME TAX Global comparison (selected countries) While income tax increases remain off the table in the well-known offshore domiciles as well as several states in the Middle East, countries like South Africa, Australia, China or Japan have very high tax rates by global standards. The US also cut tax rates for natural persons this year, albeit less extensively than for companies. Bahamas Bahrain Bermuda Cayman Islands Oman Qatar UAE Figures in percent Russia Hong Kong Jordan Singapore Brazil Malaysia Indonesia New Zealand Swiss average India USA Australia China South Africa Japan Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective capital. Bahrain and Qatar: income tax rates for Sources: KPMG Switzerland, KPMG International: 28

29 Clarity on Swiss Taxes Trend: countries Following the introduction of flat rate taxes, the income tax rates for the highest earners have fallen massively in central Europe over the past years. Rising top income tax rates can be observed in western and southeast Europe in particular. Hungary Bulgaria Lithuania Czech Republic Croatia Poland Jordan Denmark Hong Kong Swiss average Germany Malaysia Isle of Man USA Spain Cyprus Greece UK Latvia Luxembourg Ireland Iceland Figures in percent Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective capital. Sources: KPMG Switzerland, KPMG International: 29

30 September 2017 Digitalisierung ist ein kultureller Prozess Stephan Sigrist, Gründer und Leiter Think Tank W.I.R.E., im Gespräch mit Michael Herzog Potenziale für das Schweizer Gesundheitswesen Einsparungen von CHF 300 Mio. So finden Sie den richtigen IT-Provider für Ihre Plattform Elektronisches Patientendossier October 2017 Digital labor demystified Why is digital labor becoming important now Ready to gain from digital labor September 2017 Profitability Low levels of RoE mean shareholder value at most banks is being diluted. Growth AuM for the Swiss private banking industry has remained flat for six years. Cost efficiency Median cost-income ratio rises to its highest level for seven years. kpmg.ch/pb Institute of Management kpmg.com January activity and 2018 outlook Take an industry-by-industry look at past deals and what to expect over the next 12 months. Swiss deals in 2017 View the M&A transactions that involved a Swiss buyer, seller or target. Appetite for change Migros and Farmy share how changing consumer trends are shaping corporate development. June 2017 Seizing the opportunity Time to face the digital reality Interviews Gert De Winter and Adrian Honegger, Baloise Group Philomena Colatrella, CSS Francis Blumberg, Swiss Re Hot topics Digital labor, future customer, claims management, data and governance PINBOARD Clarity on publications This series of publications from KPMG Switzerland provides insights, analyses and studies on a range of topics. All publications are available online. For more information, please contact kpmgpublications@kpmg.com. Latest issues Clarity on Digital Labor Clarity on Mergers & Acquisitions Clarity on KPMG Switzerland Rise of the robots The growing appetite of Swiss dealmakers Jahresbericht 2017 Clarity on Business Location CH Clarity on Digital Labor Clarity on Mergers & Acquisitions Annual Report KPMG Switzerland 2017 Clarity on Healthcare Digitalisierung: Wo liegen die Potenziale für das Gesundheitswesen? Clarity on Performance of Swiss Private Banks Clarity on Dynamic Audit How technology reshapes the audit and delivers more value Clarity on Insurance Digitalization Achieving agility: Towards a new business model Some limited change. Not radical enough Clarity on Healthcare Clarity on Performance of Swiss Private Banks Clarity on Dynamic Audit Clarity on Insurance Digitalization Clarity on kpmg.ch/clarity-on KPMG Knowledge App Get instant access to our experts knowledge with our KPMG Knowledge App for ipad, iphone and Android phone. KPMG Apps kpmg.ch/apps 30

31 Clarity on Swiss Taxes CONTACTS & IMPRINT For further information on Clarity on Swiss Taxes Please contact: Peter Uebelhart Head of Tax and Member of the Executive Committee Your local contacts for tax matters: Zurich / Ticino Stefan Kuhn Partner stefankuhn@kpmg.com Mittelland Hans Jürg Steiner Partner hsteiner@kpmg.com Western Switzerland Vincent Thalmann Partner vthalmann@kpmg.com Central Switzerland Dr. Frank Lampert Partner flampert@kpmg.com Eastern Switzerland Dr. Peter Michael Partner pmichael@kpmg.com Basel Reiner Denner Partner rdenner@kpmg.com Publisher KPMG AG Badenerstrasse 172 PO Box CH-8036 Zurich Orders Tax Marketing CH-FMTAXMarketing@kpmg.ch Concept and editing Eva Häfliger, KPMG AG Sandrine Hedinger, KPMG AG Design Dany Studerus, KPMG AG Illustrations [Page 1, 32] van Beusekom design & brand solution Pictures Shutterstock Articles may only be republished by written permission of the publisher and quoting the source KPMG s Clarity on Swiss Taxes. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received, or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The scope of any potential collaboration with audit clients is defined by regulatory requirements governing auditor independence. PERFORMANCE 2018 KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss legal entity. All rights reserved. neutral printed matter No myclimate The Climate Protection Partnership

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