If you are a new arrival in Switzerland, or are about to move here, you may be wondering whether foreign nationals are taxed at a higher rate than the Swiss. This is what you should know.
First things first: overall, people living in Switzerland – including foreign nationals – “enjoy some of the lowest tax rates in Europe,” according to the Swiss government.
For instance, in an analysis of tax rates compiled by the Organisation for Economic Cooperation and Development (OECD), a single adult in Switzerland pays 11.5 percent of gross wages in taxes. In Europe, only residents of Poland pay less taxes.
In fact, it is precisely this comparably low tax rate (more so in some cantons than in others), that incites wealthy people to leave their high-tax countries and settle in Swiss cantons with the most favourable rates – for instance, Zug and Schwyz.
READ ALSO: Why do rich Norwegians flee to Switzerland?
These cases, however – along with the ultra-rich individuals from outside the EU and EFTA nations (Norway, Iceland, and Liechtenstein) who “buy” their way into Switzerland by negotiating lump-sum taxation – constitute only a very small number of the overall foreign population.
What about tax rules for ‘regular’ (non-billionaire) foreign residents?
Regardless of whether you are Swiss or a foreign national living in Switzerland on a B or C permit, you will be taxed on your income and assets.
These rates are set by the cantons for all adult residents living on their territories, and are the same regardless of nationality.
Logically, therefore, the more you earn and the more wealth you have accumulated, the higher your taxes will be – whether you are Swiss or not.
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There are, however, attempts under way to slap higher taxes on foreigners in Switzerland
In 2023, the right-wing Swiss People’s Party (SVP), instigated a move toward an “immigration tax” that would be imposed on foreign nationals for the “privilege of living in Switzerland” and “taking advantage of the country’s excellent infrastructure and other benefits.”
More recently, another party, the Liberal Radicals (PLR) launched another, though similar, proposal.
It calls for anyone moving to Switzerland to pay 3 percent of their income for 11 years, thus generating up to 1 billion francs annually, which would be redistributed among Switzerland’s population – for instance, in the form of a reduction in health insurance premiums.
READ ALSO: New plan launched to tax foreigners in Switzerland for first 11 years
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Do these attempts have any chances of actually being implemented?
At this point, they are only proposals and it is far too early to say whether anything concrete, legislation-wise, would come out of either one.
They will first need to be approved by both chambers of the parliament, considered by the Federal Council, and submitted to a referendum.
But judging by a prevalent reaction, such a law seems unlikely.
The Federal Council has said that such a move would be incompatible with freedom of movement agreement that Switzerland has with the EU and would be discriminatory against immigrants.
Business umbrella organisation EconomieSuisse is also skeptical about the proposal.
It fears that such a move would further exacerbate the existing labour shortage, as it would discourage foreigners from coming to Switzerland.
