Tax comparison for companies: Which is the most tax-efficient canton in 2022?

Companies in Switzerland pay two different corporate taxes: a profit tax and a capital tax, which is a tax on equity. The profit tax is levied at the federal, cantonal, and municipal levels. Due to the federal system, there is tax competition between the cantons and the communes. The assessment is carried out by the canton, which means that certain tax deductions vary from canton to canton. The tax burden varies significantly in Switzerland. In this article, you will find out which location is particularly tax-favourable for your company.

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Profit tax is lowest in central Switzerland, with the canton of Zug having the lowest average. Meggen, in the canton of Lucerne, is the most tax-favourable municipality in Switzerland in terms of profit tax. It has reduced its profit tax by 0.13% to 11.20% in 2022. Bern is the most expensive canton for legal entities, with an average profit tax rate of around 21%.

Some cantons also apply minimum taxes for companies. This is an additional burden, especially for small businesses. For example, the canton of Appenzell Ausserrhoden requires a minimum capital tax of CHF 900 per year. This means that a canton with a low profit tax rate is not always tax-friendly for small companies. More information here.

The different types of corporate taxation in Switzerland

The term “corporate taxes” refers to the entire range of taxes payable by companies. The primary types of taxes are profit and capital taxes for corporations, and income and wealth taxes for partnerships. In principle, all corporations and partnerships domiciled in, or managed from Switzerland must pay these taxes.

Differences in the taxation of partnerships and corporations

Partnerships: taxes on private and business assets

Partnerships, such as limited partnerships, general partnerships and sole proprietorships, are not considered legal entities in Switzerland. Therefore, they are not subject to corporate tax in the traditional sense.

Instead, sole proprietors and partners pay taxes on all their assets and income, both private and business, to the federal, cantonal and municipal authorities. These are all viewed as personal taxes. In contrast to corporations, it is not possible for partnerships to deduct the taxes paid from their taxable net profit.

Corporations: separation of business and private assets

There is a clear separation between business and private assets in corporations such as GmbHs and AGs. The company itself is taxed, while shareholders and partners pay income taxes on dividends and pay wealth taxes according to the share value.

This arrangement leads to a double tax burden, as both the company, and the partners or shareholders, pay taxes.

Calculation of profit tax for corporations

Fundamentals of the profit tax calculation

Profit tax, also known as income tax, is levied on corporations such as GmbHs and AGs on the basis of their taxable profit. The Confederation levies a fixed tax rate of 8.5% (as at the time of writing) on the profit after tax.

The cantons and municipalities levy additional taxes, although the exact rates vary from canton to canton, and some cantons apply different surcharges or reduced rates.

Church taxes for companies

Most cantons also levy church taxes in addition to profit tax. These taxes benefit the Reformed, Roman Catholic, Christian Catholic churches or the Jewish community. Church tax is mandatory for companies in these cantons and, unlike private individuals, they cannot leave the church to avoid this tax liability.

Overview of capital and profit tax

Below is a brief overview of the tax rates (before tax) in each Canton for the year 2022. In each case, the tax rates are provided for the cantonal capital and for the most tax-friendly municipality:

Canton Zug

• City of Zug: profit tax: 11.85%, capital tax: 0.07%
• Municipality of Baar: profit tax: 11.83%, capital tax: 0.07%

Canton Nidwalden

• Municipality of Stans: profit tax: 11.98%, capital tax: 0.01%
• Standard tax rate for all communes

Canton Glarus

• Gemeinde Glarus: Gewinnsteuer: 12.30%, Kapitalsteuer: 0.25%

Canton of Lucerne

• Municipality of Lucerne: profit tax: 12.32%, capital tax: 0.18%
• Municipality of Meggen: Profit tax: 11.20%, capital tax: 0.14%

Canton Uri

• Municipality of Altdorf: profit tax: 12.62%, capital tax: 0.00%

Canton of Appenzell Innerhoden

• Municipality of Appenzell: profit tax 12.66%, capital tax: 0.05%
• Uniform tax rate for all communes

Canton Obwalden

• Municipality of Sarnen: profit tax: 12.73%, capital tax: 0.00%
• Standard tax rate for all communes

Canton Schaffhausen

• Municipality of Schaffhausen: profit tax: 13.00%, capital tax: 0.05%
• Municipality of Buchberg: profit tax: 12.78%, capital tax: 0.04%

Canton Basel-City

• City of Basel: profit tax: 13.04%, capital tax: 0.10%

Canton Appenzell Ausserhoden

• Municipality of Herisau: profit tax: 13.04%, capital tax: 0.07%
• Standard tax rate for all municipalities

Canton Thurgau

• Municipality of Frauenfeld: profit tax: 13.22%, capital tax: 0.15%
• Municipality of Münsterlingen: Profit tax: 12.67%, capital tax: 0.15%

Canton Neuchâtel

• City of Neuchâtel: profit tax: 13.57%, capital tax: 0.50%
• Standard tax rate for all communes

Canton of Fribourg

• City of Fribourg: profit tax: 13.87%, capital tax: 0.19%
• Commune of Sévaz: profit tax: 13.04%, capital tax: 0.15%

Canton of Vaud

• City of Lausanne: profit tax: 14.00%, capital tax: 0.14%
• Municipality of Coinsins: profit tax: 13.32%, capital tax: 0.12%

Canton of Geneva

• City of Geneva: Profit tax: 14.00%, Capital tax: 0.40%
• Municipality of Anières: profit tax: 13.72%, capital tax: 0.38%

Canton Schwyz

• Municipality of Schwyz: profit tax: 14.06%, capital tax: 0.01%
• Municipality of Wollerau: profit tax: 11.76%, capital tax: 0.01%

Canton St.Gallen

• City of St.Gallen: Profit tax: 14.40%, capital tax: 0.06%
• Standard tax rate for all municipalities

Canton Graubünden

• City of Chur: profit tax: 14.77%, capital tax: 0.47%
• Standard tax rate for all municipalities

Canton Aargau

• City of Aarau: Profit tax: 15.06%, Capital tax: 0.13%
• Standard tax rate for all municipalities

Canton Solothurn

• City of Solothurn: profit tax 15.29%, capital tax: 0.18%
• Municipality of Feldbrunnen: Profit tax: 14.22%, capital tax: 0.14%

Canton Jura

• City of Delémont: profit tax: 16.00%, capital tax: 0.19%
• Municipality of Les Breuleux: capital tax: 0.17%

Canton Valais

• City of Sion: profit tax: 16.98%, capital tax: 0.05%
• Standard tax rate for all communes

Canton Basel-Landschaft

• Municipality of Liestal: 17.94%, capital tax: 0.16%
• Municipality of Bottmingen: 15.87%, capital tax: 0.16%

Canton Ticino

• City of Bellinzona: profit tax: 19.16%, capital tax: 0.28%
• Municipality of Bioggio, profit tax: 17.23%, capital tax: 0.23%

Canton of Zurich

• City of Zurich: profit tax: 19.65%, capital tax: 0.17%
• Municipality of Kilchberg: profit tax: 17.35%, capital tax: 0.13%

Canton of Berne

• City of Bern: profit tax: 21.04%, capital tax: 0.01%
• Municipality of Walliswil b. N.: 19.40%, capital tax: 0.01%

The following additional details should be noted, which could reduce the effective tax rate in some cantons:

• Canton Bern does not tax the first CHF 20,000 of profit.
• Basel-Landschaft taxes the first CHF 100,000 of profit at only 6%.
• The canton of Valais levies a profit tax of 11.89% on the first CHF 250,000 of profit, after which a tax rate of 16.98% is levied.