Switzerland Publishes 2012 Flat Tax Figures

By ExpatBriefing.com Editorial 27 May, 2013

Switzerland's Conference of Cantonal Finance Directors (FDK) has published details of the latest figures from the Swiss cantons, pertaining to the controversial flat tax regime currently benefiting wealthy foreigners in the Confederation.

The survey reveals that the number of foreigners subject to the lump sum tax in the Confederation had reached 5,634 at the end of 2012, compared to 5,445 in 2010. While marking a further rise in the number of taxpayers subject to the regime, the increase has undoubtedly slowed over the course of the last few years. Indeed, while the number rose by 20.7 percent between 2006 and 2008, the increase in the number of flat tax taxpayers between 2010 and 2012 was merely 3.5 percent.

Switzerland's flat tax yielded a total of CHF695m (USD717m) last year, up just 4 percent from 2010 (CHF668m), when the last cantonal survey was carried out. In contrast, the product of the levy had risen by 47.4 percent between 2006 and 2008.

According to the survey, the lowest amount of flat tax collected last year was CHF10,000, while the highest tax payment in 2012 was CHF8.2m The average amount of flat tax collected per wealthy taxpayer has continually risen over the course of the past few years, from CHF94,549 in 2006, to CHF115,531 in 2008, to CHF122,681 in 2010, and finally to CHF123,358 in 2012.

Concluding, the FDK underlines its support for and need to preserve the lump sum tax regime, vehemently rejecting the people's initiative calling for an end to what they claim is an unfair system. Alluding to the Swiss parliament's decision on September 28, 2012, to toughen the regime, the FDK argues that the reform will ensure that this "economically important instrument" is used in a more targeted way and serves to increase transparency. The initiative simply fails to recognize the benefits of the recently enacted reform, the Conference stresses.

Measures aimed at tightening the controversial flat tax regime, which is based on the costs of living rather than on an individual's wealth or income, are to apply from 2016: the tax base for calculating direct federal and cantonal tax will be seven times the cost of living, compared with five times as is currently the case.

In addition, as regards direct federal tax, a minimal taxable income of CHF400,000 will apply. The Swiss cantons will be required to determine their own minimum taxable amount.

For any individuals subject to the Confederation's flat tax regime at the time of the legislative changes' entry into force, the current law will continue to apply for a further five years.

Despite the Federal Council's attempts to gain acceptance for the flat tax regime, in November 2012 a Swiss people's initiative, launched by Switzerland's Alternative Left party, succeeded in gaining the necessary 100,000 signatures to trigger a referendum on plans to abolish the regime nationwide. The referendum is likely to be held in two years' time.

Tags: Individuals | Expatriates | Finance | Tax | Law | Switzerland | Tax Breaks | Tax Reform | Individual Income Tax |


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