Switzerland

Resident companies are subject to Swiss corporate income tax (CIT) on their taxable profits generated in Switzerland. CIT is levied at the federal, cantonal, and communal levels. Foreign-source income attributable to foreign permanent establishments (PEs) or real estate property located abroad is excluded from the Swiss tax base and only taken into account for rate progression purposes in the cantons that apply progressive tax rates.

Non-resident companies may be subject to Swiss CIT if they (alternatively) have a PE in Switzerland, own real estate property in Switzerland, are partners of a Swiss business, have loan receivables secured by a mortgage on Swiss real estate property, or deal with or act as a broker of Swiss real estate property. Non-resident companies are taxed on their income generated in Switzerland (see the Branch income section).

Federal level

Switzerland levies a direct federal CIT at a flat rate of 8.5% on profit after tax. Accordingly, CIT is deductible for tax purposes and reduces the applicable tax base (i.e. taxable income), resulting in a direct federal CIT rate on profit before tax of approximately 7.83%. At the federal level, no corporate capital tax is levied.

Cantonal/communal levels

In addition to the direct federal CIT, each canton has its own tax law and levies cantonal and communal corporate income and capital taxes at different rates. Therefore, the tax burden of income (and capital) varies from canton to canton. Some cantonal and communal taxes are imposed at progressive rates.

Overall tax rates

As a general rule, the overall approximate range of the maximum CIT rate on profit before tax for federal, cantonal, and communal taxes is between 11.9% and 20.5%, depending on the company’s location of corporate residence at a specific capital of a canton in Switzerland. With the entry into effect of the Federal Act on Tax Reform and AHV (old-age and survivors' insurance) Financing (TRAF) as of 1 January 2020, the cantons introduced internationally accepted measures, such as an Organisation for Economic Co-operation and Development (OECD) compliant patent box, a research and development (R&D) super deduction, and other measures. These measures can lead to lower effective tax rates.

Base Erosion and Profit Shifting (BEPS) 2.0 - Pillar Two

The Federal Council in January 2022 decided to implement the minimum tax rate agreed by the OECD and G20 member states by means of a constitutional amendment, subject to a public vote. The constitutional amendment was adopted in the public vote on 18 June 2023 and entered into force on 1 January 2024. By means of a temporary ordinance (‘Mindestbesteuerungsverordnung’), the Federal Council decided on 22 December 2023 to implement in a first step the Qualifying Domestic Minimum Top-Up Tax (QDMTT) for financial years starting on or after 1 January 2024. Starting 1 January 2025, the Income Inclusion Rule (IIR) was implemented. With respect to the Undertaxed Profits Rule (UTPR), the Federal Council postponed the implementation for the time being. The Swiss Pillar Two ordinance includes a direct reference to the OECD Model Rules, Commentary, and Guidance. As such, the Swiss QDMTT and the IIR are closely aligned with the OECD framework. 

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.