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Cantons with Lowest Taxes in Switzerland

Updated on Tuesday 09th May 2017

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Switzerland is formed of 26 cantons (Aargau, Appenzell Inner Rhodes, Appenzell Ausserrhoden, Berne, Basel-Country, Basel-Stadt, Fribourg, Geneva, Glarus, Grisons, Jura Mountains, Lucerne, Neuchâtel, Nidwalden, Obwalden, St. Gallen, Schaffhausen, Solothurn, Schwyz, Thurgau, Ticino, Uri, Vaud, Valais, Zug, Zurich), which are able, under the applicable legislation in Switzerland, to organize their own taxation system.
 
Each canton is thus entitled to collect any tax that is not exclusively in the competence of the Swiss Confederation. That is why the cantonal tax laws and tax rates vary considerably from one canton to another and our team of company formation specialists in Switzerland can offer tax advice on each taxation framework available for corporate entities or for natural persons. 
 
Below, we present the cantons with the lowest corporate tax rates:
 

1. Lucerne

 
The canton of Lucerne applies the smallest corporate tax, imposed at the rate of 12,32%. Businessmen who want to open a company in Lucerne should know that the economy of the region is based on the following sectors: 
 
tourism; 
public sector;
metal industry. 
 

2. Nidwalden

 
Another canton with a small corporate tax rate (applicable at the rate of 12,66%) is Nidwalden
 
The main economic fields in Nidwalden are aviation and mechanical engineering and investors who want to open a company in Switzerland in these sectors will need to comply with the legislative framework available in this region. 
 
 

3. Obwalden

 
The third smallest corporate tax is applied in the Obwalden canton, where the rate is imposed at 12,89% on the company’s income. The canton provides a workforce with a high degree of skills and the top economic fields are represented by the tourism and plastic indutries.
 

4. Appenzell Ausserrhoden 

 
In Appenzell Ausserrhoden the tax on the corporate income is applicable at the rate of 13,04% and it is important to know that the local workforce is mainly employed in the canton’s main economic sector – the services sector. 52,6% of the total workforce is employed in this industry. 
 

5. Appenzell Inner Rhodes 

 
In the canton of Appenzell Inner Rhodes, the local authorities apply an income tax of 14,16% and the top economic fields are represented by agriculture, industry and the service sector. Our team of consultants in company registration in Switzerland can offer more details on how to start a business in one of these sectors. 
 

6. Zug 

 
In Zug, the corporate tax rate is of 14,6%. It is important to mention that Zug represents one of the most representative cantons in Switzerland from an economic point of view. Companies operating in Zug are specialized in activities related to the medical technology and electronic components. Another important economic field refers to the financial sector. 
 

7. Uri 

 
In Uri, the corporate tax rate is of 15,11%. The top fields are represented by the tourism industry, which employs more than 10% of the local workforce, as well as the construction sector. In this sense, we mention that numerous local and international companies have set their business operations in the latter field. 
 

8. Schwyz 

 
The eighth lowest corporate tax, applicable at the rate of 15,27%, is available in the canton of Schwyz. The canton develops its local economy in sectors that are characteristic to other cantons, such as agriculture or finance. Specific industries available here are the timber industry and the machine-tools field. 
 

9. Neuchâtel

 
In Neuchâtel, the tax on income is applicable at the rate of 15,61%. The canton is very well known for the watch industry, micro-technology and high-tech field. The region attracted over the years numerous companies operating in these sectors.  
 

10. Glarus 

 
With a corporate tax rate of 15,71%, the canton of Glarus attracted numerous local and foreign companies, and a large part of them are involved in operations related to the manufacturing field. 
 
Investors interested in company formation in Switzerland in the field of manufacturing could choose Glarus, as the manufacturing industry is the most developed in this region. 
 
The classification mentioned above provides a useful insight on the smallest taxes applicable to the income of companies
 

Cost of living in Swiss cantons 

 
The cost of living is not the same everywhere in Switzerland, for example, housing in the canton of Geneva is very expensive, which is not necessarily the case in the canton of Fribourg or in another similar canton
 
For many years, Swiss German cantons and even Central Switzerland have been cantons with the lowest taxes, offering cheaper taxes and Uri was one of the most advantageous region in this sense.  
 
In Switzerland, taxes represent about 11.6% of the average gross household income, being considered a major expense. From this point of view, it can be noticed that in the central and eastern side of the country can be found the cantons with the lowest taxes in Switzerland
 

Fiscal sovereignty in Switzerland 

Fiscal sovereignty in Switzerland is now shared by the three levels of government: the Confederation, cantons and communes and the boundary is set by the federal constitution, which provides that the cantons may levy a tax that is not reserved for the Confederation. 
 
Moreover, it is the cantonal constitutions that secure communal levies based on coefficients or multiple respective cantonal taxes.
 
As a general rule, all cantons in Switzerland impose the same types of taxes applicable to companies, as follows: 
 
excise duty;
withholding tax;
custom duties. 
 
 
However, due to the sovereignty of the cantons, the local authorities  can set up their own tax rates, with the consequence of regional disparities manifested by several differences in cantonal per capita income and tax burden, which can be doubled or more from one canton to another, drawing up a criteria for the cantons with the lowest taxes in Switzerland
 

Tax competition between Swiss cantons 

 
The mobility of capital and labor also increases tax competition and some cantons (Zug, Schwyz and Nidwalden) have removed their estate taxes and established more attractive prices to attract investors
 
 
This led to the establishment of a system of financial equalization, in order to mitigate the differences in financial capacity of cantonal and local authorities, through federal quotas (restitution of part of federal revenues) and grants. 

 

Please contact us for further information about taxation in each Swiss canton. Our specialists are able to provide certain data for taxes that must be paid for both companies and individuals in any part of Switzerland. They can also recommend you partners in other countries, such as Bulgaria and Iran, who can offer you details about opening a business there. 

 

 

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