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Agenda/Contents Real Estate Transfer Tax Real Estate Capital Gains Tax Inheritance and Gift Tax Tax on Pension Capital Distribution
Real Estate Transfer Tax Real Estate Transfer Tax The taxation is not linked to the realization of a gain (the transaction as such is triggering this tax). The tax is levied mostly by the cantons and, in some cantons, also by the municipalities. There is no real estate transfer tax on federal level. The tax is imposed on The actual (legal) transfer of real estate; In some cantons the economical transfer is also subject to taxation (e.g. purchase of stock of real estate companies). Some cantons also tax the constitution of mortgages. Slide 3
Real Estate Transfer Tax Real Estate Transfer Tax VD: The tax is levied by the canton and the municipality of situation of the real estate or of the transferred or constituted right. Taxation of (legal) transfer of real estate as well as of economical transfers (e.g. transfer of the right to purchase a real estate). GE, VS: the tax is only levied by the canton. Subject to exceptions, the purchaser is usually liable for the tax, subject to exceptions: VD: several liability of the seller GE, VS: no several liability of the seller Slide 4
Real Estate Transfer Tax Real Estate Transfer Tax The tax is usually assessed on the basis of the actual purchase price. Otherwise, In the absence of such (e.g., in case of barter or if the purchase price is obviously below fair market value), the tax will be based on the fair market value or other relevant values (e.g. fiscal value). Slide 5
Real Estate Transfer Tax Real Estate Transfer Tax Generally the rates are flat between 1 and 3% in most cantons/municipalities. Some cantons have reduced rates for specific cases (such as transfers among family members). VD: The cantonal rate is 2.2% and the municipal rate ranges from 0 to 1.1% (max. global rate = 3.3%). GE: The ordinary rate is 3%. VS: The rate varies from 0.4 to 1.2%, depending on the value of the real estate. Slide 6
Real Estate Capital Gains Tax Real Estate Capital Gains Tax Private capital gains made on the disposal of real estate are subject to taxation at cantonal/municipal levels. The taxes are levied on the difference between the sale price and the purchase price. Improvements made during the holding period are deducted from the gain. The tax rate is progressive, depending on the actual gain and on the duration of the ownership period (VS) or only on the latter element (GE, VD). The shorter the holding period the higher the tax rate. In Vaud, years of own occupation count double. Deferral opportunities in certain cases. Ex: when sales proceeds stemming from the disposal of the main place of abode are re-invested into another main place of abode in Switzerland within a certain time frame. Slide 7
Real Estate Capital Gains Tax Real Estate Capital Gains Tax On federal level, no taxation of gains made on the disposal of real estate attributed to the taxpayer s private wealth. Gains made on the sale of real estate attributed to the taxpayer s business wealth are subject to the ordinary income taxes, at federal, cantonal and municipal levels. Slide 8
Real Estate Capital Gains Tax Real Estate Capital Gains Tax Rates / duration of holding period (Geneva, Vaud) Slide 9
Inheritance and Gift Tax Inheritance Tax There is no inheritance tax on federal level. With the exception of the canton of Schwyz all cantons levy an inheritance tax. In some cantons, municipalities also have the ability to levy such tax (LU, FR, GR, VD). The following transfers are exempted from inheritance taxes: - To spouses and registered partners (see, however, Geneva); - To direct descendants, in most cantons (except AI, VD, NE); - To direct ascendants in some cantons (UR, OW, ZG, FR, AR, TI, VS, GE); Slide 10
Inheritance and Gift Tax Inheritance Tax The tax rates are usually progressive and depend on the degree of relationship. Cantonal laws also provide for deductions and exempt amounts. The rates can amount up to about 50% with regards to transfers to unrelated parties. The canton of the last residence of the deceased is entitled to levy the inheritance tax. Inheritance tax on real estate is subject to the tax rules of the canton where it is located. Real estate located abroad is not subject to cantonal inheritance taxes (unilateral relief). The heirs are liable for the payment of the tax. The taxes are predominantly assessed on the basis of an inventory of the inherited assets. Slide 11
Inheritance and Gift Tax Inheritance Tax VD: The tax due on foreigner s estate opened in the canton is halved, provided the deceased never worked in Switzerland. GE: The estate of a taxpayers who benefited from the lump-sum tax regime for at least one year of the three years preceding their death, does not benefit from the exemption for spouses and direct descendants. VS: Exemption for transfers in direct line. Switzerland has concluded double taxation treaties on inheritance taxes with the following 10 countries: Austria, Denmark, Finland, France, Germany, Great Britain, the Netherlands, Norway, Sweden and the United States of America. Slide 12
Inheritance and Gift Tax Gift Tax There is no gift tax on federal level. With the exception of the canton of Schwyz and Luzern (in certain circumstances, gifts may be subject to the inheritance tax in Luzern), all cantons levy gift taxes. Rules and tariffs are similar to the inheritance tax rules of the respective canton (tax exempt amounts can differ, however). There are no tax treaties that cover gift taxes. Consequently, double taxation may occur in cross-border situations. Slide 13
Inheritance and Gift Tax Maximum Tax Rate for Non-related Recipients GE: 54.6% VD: 50% FR: 50% NE: 45% VS: 25% SZ: 0% Slide 14
Tax on Pension Capital Distribution Tax on Pension Capital Distribution Lump-sum pension payments are subject to the income tax but assessed separately from other items of income. Special tax rates: Federal taxes: 1/5 of rate on the respective income, i.e. max. 2.3% Cantonal rules vary: - Tax rate is divided by a certain factor - Lump-sum is transferred into an annuity to determine the tax rate - Lump-sum is divided by a factor to determine the tax rate GE: 1/5 of the cantonal and communal rate on the respective income. VD: 1/3 of the cantonal and communal rate on the respective income. Slide 15
Tax on Pension Capital Distribution Tax on Pension Capital Distribution This applies to Swiss pension schemes (2 nd pillar) and to 3 rd pillar a accounts. Foreign pension payout may be treated similarly. Lump-sum payouts are taxed in the canton of residence at the time of payout. In addition to the federal and the cantonal tax, the municipalities can also levy a tax on pension capital distribution. Slide 16
Tax on Pension Capital Distribution Tax on Pension Capital Distribution (canton & municipality) Tax rates for lump-sum pension distributions Slide 17
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