Clarity on Swiss Taxes 2019

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Clarity on Swiss Taxes

Playing to natural strengths 4 16

Corporate taxation Individual taxation Clarity on Swiss Taxes

EDITORIAL Welcome

Switzerland remains competitive on the global tax stage according to KPMG’s “Swiss Tax Report 2019”. This annual study analyzes corporate and individual tax rates in Switzerland and internationally, analyzing data to draw comparisons between locations.

After a long and drawn-out reform process, the Swiss Federal Act on Tax Reform and AHV Financing (TRAF) is reaching the final stages of maturity. Some cantons have already responded by adjusting their corporate tax rates, and others are sure to follow in 2019 and 2020. These steps towards lower tax rates confirm that the Swiss cantons are committed to competitive taxation. This will be welcomed by companies as they seek stability amid the turbulence of global protectionist trends, like tariffs, Brexit and digital service tax.

It’s not just in Switzerland that tax laws are being revised. The national reforms of recent years are part of a global shift towards international harmonization but also increased legislation. For tax departments, these regulatory developments mean increased pressure. Their challenge is to safeguard compliance, while also managing the risk of double or over-taxation. In our fast-paced world, data-driven technology and digital enablers will play an increasingly important role in achieving these aims. Peter Uebelhart Head of Tax & Legal, KPMG Switzerland Going forward, it’s important that Switzerland continues to play to its natural strengths to remain an attractive business location and global trading partner. That means creating certainty by finalizing the corporate tax reform, building further on its network of FTAs, delivering its “open for business” message and pressing ahead with the Digital Switzerland strategy.

Our multidisciplinary teams closely follow shifts in the international and Swiss tax landscape, seek innovative ways to respond to change, and deliver expert advice – whatever your current tax topic.

Individual taxation Peter Uebelhart

3 SWISS TAX REPORT 2019 Corporate taxation

Corporate income tax

Attractive tax rates remain a natural strength in Switzerland. With some cantons already preparing for the changes that Switzerland’s new tax law will bring, the cluster of lower tax cantons in central and eastern Switzerland is less striking due to lower rates overall. Switzerland compares favorably to most of Europe and is likely to retain this position even as countries like the UK and France successively lower their rates.

4 Clarity on Swiss Taxes

5 CORPORATE TAXATION: CORPORATE INCOME TAX Which businesses are shouldering the tax burden in Switzerland?

While over two-thirds of taxable companies pay virtually no tax, 2.80% carry around 90% of the total direct (federal) tax burden. This means the tax burden is shouldered by an even smaller number of companies than in the prior year (2018: 2.93%).

Contribution of businesses to tax revenues from direct federal taxes 88.08% (by profit levels)

67.43%

Taxpayers

13.47% 10.77% Contribution to 9.43% direct federal 2.80% taxes 1.08% 5.53% 1.24% 0.16% Taxable profit in 0 - 10 10 - 50 50 - 100 100 - 1000 1000+ CHF 1,000/year

Note: Latest available data for the tax period 2015. Source: Swiss Federal Tax Administration FTA, 2019, https://www.estv.admin.ch/estv/de/home/allgemein/ steuerstatistiken/fachinformationen/steuerstatistiken/direkte-bundessteuer/dbst-jp-kantone-2015.html.

6 Clarity on Swiss Taxes

Corporate income tax rates in the cantons – 2018 and 2019 The cantons of central Switzerland continue to dominate in terms of lowest ordinary corporate income tax rates. Tax rates in these cantons were generally stable, with very modest downward adjustments in Zug, Schwyz and Glarus only, and a negligible increase in Schaffhausen. Basel-Stadt and Vaud stand out for their drastic tax cut rates (from 22.18% to 13.04% and 21.37% to 14.00%, respectively) in anticipation of the changes to come from TRAF. Further cuts are expected in higher tax cantons, including Geneva, Bern and Zurich, also in connection with TRAF.

12.32 2018 Lucerne 12.32 2019 12.66 Nidwalden 12.66 Figures in percent 12.74 Obwalden 12.74 Appenzell A. 13.04 13.04 22.18 Basel-Stadt 13.04 Vaud 21.37 14.00 14.16 Appenzell I. 14.16 14.51 Zug 14.35 14.92 Uri 14.92 Schwyz 15.19 15.02 15.61 Neuchâtel 15.61 15.70 Glarus 15.68 15.75 Schaffhausen 15.82 16.12 Grisons 16.12 Thurgau 16.43 16.43 17.40 St. Gallen 17.40 18.61 Aargau 18.61 19.86 Fribourg 19.86 20.53 Jura 20.53 20.55 Ticino 20.55 Basel-Landschaft 20.70 20.70 21.15 Zurich 21.15 Solothurn 21.38 21.38 21.64 Bern 21.63 21.74 Valais 21.74 24.16 Geneva 24.16

Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, GL, NE, GE, JU and SG for 2018. The income tax rate of Schaffhausen is based on the tax rate before the vote on 24 March 2019. Source: KPMG Switzerland.

7 CORPORATE TAXATION: CORPORATE INCOME TAX

Corporate income tax rates in the cantons – trend 2007 to 2019 Ordinary corporate income tax rates barely changed in the Mittelland, Western Switzerland and city cantons. Only Bern, Uri and Ticino cut rates more extensively. Corporate income tax rates fell particularly sharply in Neuchâtel, Schaffhausen, Grisons, Basel-Stadt and Vaud. It is interesting to note that 12% has become established as the minimum rate in practice.

21.57 2007 Valais + 0.17 21.74 2019 24.24 Geneva - 0.08 24.16 Figures in percent 21.32 Zurich - 0.17 21.15 13.12 Obwalden - 0.38 12.74 16.98 Thurgau - 0.55 16.43 21.12 Jura - 0.59 20.53 15.47 Appenzell I. - 1.31 14.16 22.76 Solothurn -1.38 21.38 16.32 Uri - 1.40 14.92 22.00 Ticino - 1.45 20.55 19.08 St. Gallen - 1.68 17.40 16.10 Zug - 1.75 14.35 23.40 Bern -1.77 21.63 21.95 Fribourg - 2.09 19.86 22.32 Aargau - 3.71 18.61 19.98 Glarus - 4.30 15.68 17.27 Nidwalden - 4.61 12.66 19.76 Schwyz - 4.74 15.02 25.65 Basel-Landschaft - 4.95 20.70 18.04 Appenzell A. - 5.00 13.04 22.18 Neuchâtel - 6.57 15.61 18.90 Lucerne - 6.58 12.32 22.84 - 7.02 Schaffhausen 15.82 23.53 - 9.53 Vaud 14.00 24.81 - 11.77 Basel-Stadt 13.04 29.06 Grisons - 12.94 16.12

Note: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for AI, GE, GL, JU, NE and SG for 2018. Source: KPMG Switzerland.

8 Clarity on Swiss Taxes

Corporate income tax rates in the cantons – trend 2007 to 2019 The recent dip in average Swiss tax rate is attributable primarily to the cuts in Basel-Stadt and Vaud. The trend is set to continue with a larger fall in 2020 when new legislation (TRAF) is expected to come into force.

20.76% – 3.70%

19.44% 18.96% 18.70% 18.31% 18.06% 18.01% 17.90% 17.89% 17.80% 1 7. 7 4 % 17.71%

17.06%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Corporate income tax rates in the cantons – trend 2007 to 2019 The trend towards stagnation of corporate tax rates continues in 2019. Only Basel-Stadt and Vaud reduced their corporate tax rates.

LLucerneuzern 28% NNidwaldenidwalden OObwaldenbwalden AAppenzellppenzell A A..(AR) AAppenzellppenzell I .I.(AI) 24% ZZugug UUriri SSchwyzchwyz NNeuchâteleuenburg 20% GGlaruslarus SSchaffhausenchaffhausen GGrisonsraubünden TThurgauhurgau 16% SSt.t. G Gallenallen AAargauargau FFribourgreiburg JJuraura 12% TTicinoessin BBasel-Landschaftasel-Landschaft ZZurichürich WVaudaadt 8% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

9 CORPORATE TAXATION: CORPORATE INCOME TAX Corporate income tax rates in the cantons 2019

10 Clarity on Swiss Taxes

Cantons with a corporate income tax rate above the Swiss average (17.06%) Cantons with a corporate income tax rate below the Swiss average (17.06%)

Figures in percent 15.8 13.0 Schaffhausen Basel-Stadt 16.4 Thurgau 18.6 Aargau 13.0 20.7 21.2 Appenzell A. 20.5 Basel-Landschaft Zurich Jura 14.2 Appenzell I. 21.4 Solothurn 14.4 Zug 1 7. 4 12.3 St. Gallen Lucerne 15.0 15.6 Schwyz Neuchâtel 15.7 12.7 Glarus Nidwalden 12.7 21.6 Obwalden Bern 14.9 Uri 16.1 19.9 Grisons 14.0 Fribourg Vaud

20.6 Ticino

21.7 Valais 24.2 Geneva

11 CORPORATE TAXATION: CORPORATE INCOME TAX

The cantons compared with European countries The comparison with Europe shows hardly any change in lower tax rates, with the cantons of central Switzerland enjoying a particularly positive position. They are joined now by Basel-Stadt and Vaud. The Channel Islands and certain (south) eastern European states are the only locations to offer even lower ordinary corporate income tax rates. Ireland remains Switzerland’s main competitor in Europe.

There is little change in Europe’s center field, with only minimal changes in income tax rates to report in some of the Swiss cantons.

Guernsey +/– 0 Montenegro 9.00 Hungary 9.00 Bulgaria 10.00 Lucerne 12.32 Ireland 12.50 Fribourg Liechtenstein 12.50 Cyprus 12.50 Jura Nidwalden 12.66 Ticino Obwalden 12.74 Basel-Landschaft Basel-Stadt 22.18 | 13.04 - 9.14 Slovakia Appenzell A. 13.04 Zurich Vaud 21.37 | 14.00 - 7.37 Solothurn Appenzell I. 14.16 Sweden Zug 14.51 | 14.35 - 0.16 Bern Uri 14.92 Valais Albania 15.00 Turkey Lithuania 15.00 Denmark Serbia 15.00 Norway Schwyz 15.19 | 15.02 - 0.17 Italy Neuchâtel 15.61 Geneva Glarus 15.70 | 15.68 - 0.02 The Netherlands Schaffhausen 15.75 | 15.82 + 0.07 Austria Romania 16.00 Spain Grisons 16.12 Luxembourg Thurgau 16.43 Greece St. Gallen 17.40 Germany Croatia 18.00 France Ukraine 18.00 Malta

Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Hungary, Liechtenstein, Albania, Ukraine, NE, AI, GL and SG for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

12 Clarity on Swiss Taxes

At the lower end of the attractiveness ranking for ordinary corporate tax rates are various European countries. Norway, France and Sweden reduced their rates once again in 2019, with France planning successive cuts to bring its rate down to 25% by 2022.

Aargau 18.61 2019 Poland 19.00 +/- compared with previous year Slovenia 19.00 Figures in percent UK 19.00 Fribourg 19.86 Estonia 20.00 Jura 20.53 Ticino 20.55 Basel-Landschaft 20.70 Slovakia 21.00 Zurich 21.15 Solothurn 21.38 Sweden 22.00 | 21.40 - 0.60 Bern 21.64 | 21.63 - 0.01 Valais 21.74 Turkey 22.00 Denmark 22.00 Norway 23.00 | 22.00 - 1.00 Italy 24.00 Geneva 24.16 The Netherlands 25.00 Austria 25.00 Spain 25.00 Luxembourg 26.01 Greece 29.00 | 28.00 - 1.00 Germany 30.00 France 33.00 | 31.00 - 2.00 Malta 35.00

Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

13 CORPORATE TAXATION: CORPORATE INCOME TAX

Global comparison (selected countries) The traditional offshore domiciles plus Hong Kong and Singapore remain the clear leaders in terms of tax appeal. In a global comparison, Switzerland retains its place in the top third – this year with a lower average tax rate overall thanks mainly to cuts in Basel-Stadt and Vaud.

Bahamas 0.00 2019 +/- compared with Bahrain 0.00 previous year Bermuda 0.00 Figures in percent Cayman Islands 0.00 Dubai 0.00 Qatar 10.00 Hong Kong 16.50 Singapore 1 7. 0 0 Swiss average 17.71 | 17.06 - 0.65 Russia 20.00 Malaysia 24.00 China 25.00 Indonesia 25.00 Panama 25.00 Canada 26.50 USA 27.00 South Africa 28.00 Australia 30.00 India 35.00 | 30.00 - 5.00 Japan 30.86 | 30.62 - 0.24 Brazil 34.00 UAE 55.00

Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for Bermuda and UAE for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/ services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

Trend: countries 2007 – 2019 Only a few countries have actually increased their corporate income tax rates since 2007. Even then increases have generally been modest (2% to 3%), with the exception of Chile, which has increased its rate by 10% in total since 2007.

28.00 2007 Mexico + 2.00 30.00 2019 18.00 Iceland + 2.00 20.00 Figures in percent 19.00 Slovakia + 3.00 21.00 25.00 Greece + 4.00 28.00 1 7. 0 0 Chile + 10.00 27.00

Maximum corporate income tax rates,Source: KPMG International: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

14 Clarity on Swiss Taxes

Trend: countries 2007 – 2019 In recent years, corporate income taxes have seen huge reductions, especially in the Middle East and, with its reform now implemented, the US. The UK and France have also already announced larger cuts.

55.00 Kuwait - 40.00 15.00 35.00 Gibraltar - 25.00 10.00 35.00 Qatar - 25.00 10.00 37.25 Italy - 13.25 24.00 40.00 USA - 13.00 27.00 30.00 UK - 11.00 19.00 40.69 Japan - 10.07 30.62 38.36 Germany - 8.36 30.00 33.00 China - 8.00 25.00 16.00 Hungary - 7.00 9.00 28.00 Sweden - 6.60 21.40 25.00 Jordan - 5.00 20.00 24.00 Russia - 4.00 20.00 20.76 Swiss average - 3.70 17.06 29.63 Luxembourg - 3.62 26.01 27.00 Malaysia - 3.00 24.00 20.00 Singapore - 3.00 1 7. 0 0 27.50 South Korea - 2.50 25.00 33.00 France - 2.00 31.00 17.50 Hong Kong - 1.00 2007 16.50 2019 25.50 The Netherlands - 0.50 25.00 Figures in percent

Maximum corporate income tax rates, CH: max. effective rate on pre-tax profits for federal/cantonal/municipal taxes in the respective cantonal capital. Corporate income tax figures for South Korea, Hungary and Qatar for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/corporate-tax-rates-table.html.

15 SWISS TAX REPORT 2019 Individual taxation

Income tax

Income tax rates in Switzerland and internationally are generally stable, with the significant decrease in the canton of Nidwalden a striking exception. Switzerland remains a highly attractive location not just for businesses, but also for individuals.

16 Clarity on Swiss Taxes

17 INDIVIDUAL TAXATION: INCOME TAX Who shoulders the tax burden in Switzerland?

In Switzerland, 3.66% of taxpayers, i.e. those with the highest income, pay more than 50% of direct federal taxes from natural persons.

Contribution of individuals to tax revenues from direct federal taxes 53.09% (by income bracket)

34.87%

26.28%

16.25% 15.67% 15.17%

12.83%

Taxpayers 8.23% 7.00% Contribution to direct federal 4.36% taxes 3.66% 2.60% Taxable income in CHF 1,000 / year 0 - 50 50 - 75 75 - 100 100 - 150 150 - 200 200+

Note: latest available data for the tax period 2015. Source: Federal Tax Administration FTA, 2019, https://www.estv.admin.ch/estv/de/home/allgemein/steuerstatistiken/fachinformationen/ steuerstatistiken/direkte-bundessteuer/np_kanton_dbs_2015.html.

18 Clarity on Swiss Taxes

79.45

99 - 100

The 10% of taxpayers with the highest income shoulder the burden for almost 80% of direct federal taxes from natural persons, while the top 1% in terms of income contribute 41.33% (prior year 42.74%).

Contribution of individuals to tax revenues from direct federal taxes 41.33 Figures in percent

98 - 99

11.31

97 - 98

7.07

96 - 97 4.99

95 - 96 3.73 9.63 90 - 95

4.59 10.57 2.78 6.95 1.77 Percentage 1.04 0.17 0.37 0.66 share of 0.00 taxpayers in direct federal 0 10 20 30 40 50 60 70 80 90 100 taxes

Note: latest available data for the tax period 2015, including persons taxed on a lump-sum basis and taxpayers where income taken into account in determining the tax rate is different from the taxable income. Source: Federal Tax Administration FTA, 2019, https://www.estv.admin.ch/estv/de/home/allgemein/steuerstatistiken/fachinformationen/steuerstatistiken/direkte-bundessteuer.html.

19 INDIVIDUAL TAXATION: INCOME TAX

Income tax rates in the cantons – 2018 and 2019 The cantons of central Switzerland also lead the tax league for individual taxation. Overall, tax rates in the lower tax cantons were very stable, with some tiny downward movements and one marginal increase (in Appenzell Ausserrhoden). The highest cantonal tax rates for individuals are found in Western Switzerland and the Mittelland region. Rates increased in Aargau and Ticino, but fell in Jura and Neuchâtel.

22.86 2018 Zug 22.38 2019 24.30 Obwalden 24.30 Figures in percent

Appenzell I. 24.86 24.86 25.35 Uri 25.35 Nidwalden 25.55 25.55 28.21 Schwyz 27.53 30.48 Appenzell A. 30.74 31.17 Lucerne 31.16 Glarus 31.56 31.56 Schaffhausen 32.29 31.89 32.18 Grisons 32.18 32.48 Thurgau 32.48 33.52 St. Gallen 33.52 34.18 Solothurn 33.97 34.05 Aargau 34.38 36.02 Fribourg 36.02 36.50 Valais 36.50 Basel-Stadt 37.43 37.36 Neuchâtel 39.33 38.09 39.76 Zurich 39.76 40.46 Jura 40.15 Bern 41.27 41.27 Vaud 41.50 41.50 Ticino 40.72 41.77 42.17 Basel-Landschaft 42.17 Geneva 44.75 44.75

Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Income tax figures for AI, GL, OW, SG and UR for 2018. Source: KPMG Switzerland.

20 Clarity on Swiss Taxes

Income tax rates in the cantons – trend 2007 to 2019 Following two years without change in the average maximum tax rates, the figure has decreased slightly but remains stable.

– 0.96%

34.85% 34.61% 34.25% 34.05% 33.98% 33.99% 33.96% 33.96% 33.84% 33.76% 33.77% 33.86% 33.89%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

21 INDIVIDUAL TAXATION: INCOME TAX

Income tax rates in the cantons – trend 2007 to 2019 The cantons of central Switzerland have occupied the top spots in the tax attractiveness ranking for over a decade. Various cantons of eastern Switzerland have reduced their income tax rates, while Obwalden, Schwyz and Schaffhausen have increased theirs. There has been very little movement in the higher tax cantons over the last 12 years. Neuchâtel, Bern, Vaud and Geneva have maintained the same rates for this entire period.

23.10 2007 Zug 22.38 2019 24.01 Obwalden 24.30 Figures in percent 26.14 Appenzell I. 24.86 33.00 Uri 25.35 26.74 Nidwalden 25.55 25.19 Schwyz 27.53 31.26 Appenzell A. 30.74 32.55 Lucerne 31.16 34.49 Glarus 31.56 25.20 Schaffhausen 31.89 32.95 Grisons 32.18 Thurgau 35.63 32.48 36.16 St. Gallen 33.52 36.47 Solothurn 33.97 36.84 Aargau 34.38 36.33 Fribourg 36.02 37.00 Valais 36.50 38.91 Basel-Stadt 37.36 39.34 Neuchâtel 38.09 40.16 Zurich 39.76 43.54 Jura 40.15 41.28 Bern 41.27 41.50 Vaud 41.50 Ticino 41.02 41.77 42.55 Basel-Landschaft 42.17 44.76 Geneva 44.75

Note: max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. AI, GL, OW, SG and UR: income tax rates for 2018. Source: KPMG Switzerland.

22 Clarity on Swiss Taxes

Income tax rates in the cantons – trend 2007 to 2019 The majority of top tax rates saw marginal variations in recent years. Alongside significant cuts in Aargau, Thurgau and St. Gallen, increases were notable in Schaffhausen and Schwyz.

50%

45% Geneva

Vaud Bern 40% Zurich

Neuchâtel Basel-Stadt

35% Aargau Swiss average St. Gallen Thurgau Schaffhausen Lucerne 30%

Schwyz

25% Nidwalden Obwalden

Zug

20%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

23 INDIVIDUAL TAXATION: INCOME TAX Individual income tax rates in the cantons 2019

24 Clarity on Swiss Taxes

Cantons with an individual income tax rate above the Swiss average (33.89%) Cantons with an individual income tax rate below the Swiss average (33.89%)

Figures in percent 31.9 37.4 Schaffhausen Basel-Stadt 32.5 Thurgau 34.4 Aargau 30.8 42.2 39.8 Appenzell A. Zurich 40.2 Basel-Landschaft Jura 24.9 Appenzell I. 34.0 Solothurn 22.4 Zug 33.5 31.2 St. Gallen Lucerne 27.5 38.1 Schwyz 31.6 Neuchâtel 25.6 Glarus Nidwalden 24.3 41.3 Obwalden Bern 25.4 Uri 32.2 36.0 Grisons 41.5 Fribourg Vaud

40.8 Ticino

36.5 Valais 44.8 Geneva

25 INDIVIDUAL TAXATION: INCOME TAX

The cantons compared with European countries The tax payable on top incomes remains particularly low in the countries of (south) eastern Europe (partly due to flat rate systems). Lithuania recently increased its tax rates to – a still competitive – 20%. Most of the Swiss cantons compare to the European average when it comes to top income tax rates. Tax rates in Europe are generally stable, with the significant decrease in Nidwalden a striking exception.

Bulgaria 10.00 2019 +/- compared with Romania 10.00 previous year

Hungary 15.00 Figures in percent

Ukraine 18.00

Estonia 20.00

Guernsey 20.00

Jersey 20.00

Czech Republic 22.00

Zug 22.86 | 22.38 - 0.48

Obwalden 24.30

Appenzell I. 24.86

Uri 25.35

Nidwalden 36.50 | 25.55 - 10.95

Schwyz 28.21 | 27.53 - 0.68

Appenzell A. 30.48 | 30.74 + 0.26

Lucerne 31.17 | 31.16 - 0.01

Latvia 31.40

Glarus 31.56 Luxemburg

Schaffhausen 32.29 | 31.89 - 0.40

Poland 32.00

Grisons 32.18

Thurgau 32.48

St. Gallen 33.52

Solothurn 34.18 | 33.97 - 0.21 The Netherlands

Aargau 34.05 | 34.38 + 0.33 Finland

Cyprus 35.00

Malta 35.00

Turkey 35.00

Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Hungary and Ukraine: income tax rate for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual-income-tax-rates-table.html.

26 Clarity on Swiss Taxes

Individual income tax rates are especially high in western Europe and Scandinavia. The Netherlands and Sweden once again reduced their rates slightly, while Denmark implemented a small increase. On average, tax rates across Europe have been stagnating in recent years, however.

Fribourg 36.02 2019 +/- compared with Valais 36.50 previous year

Basel-Stadt 37.43 | 37.36 - 0.07 Figures in percent

Neuchâtel 39.33 | 38.09 - 1.24

Norway 46.60 | 38.20 - 8.40

Zurich 39.76

Jura 40.46 | 40.15 - 0.31

Bern 41.27

Vaud 41.50

Ticino 40.72 | 41.77 + 1.05

Basel-Landschaft 42.17

Italy 43.00

Geneva 44.75

Germany 45.00

Greece 45.00

UK 45.00

Spain 45.00

Luxemburg 45.78

Iceland 46.24

Ireland 48.00

Portugal 48.00

Belgium 50.00

Slovenia 50.00

The Netherlands 51.95 | 51.75 - 0.20

Finland 53.75

Austria 55.00

Denmark 55.85 | 55.89 + 0.04

Sweden 57.34 | 57.19 - 0.15

Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective cantonal capital. Sources: KPMG Switzerland, KPMG International: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual-income-tax-rates-table.html.

27 INDIVIDUAL TAXATION: INCOME TAX

Non-european comparison (selected countries) The well-known offshore domiciles as well as several states in the Middle East remain committed to their zero income tax policies. Countries like South Africa, Australia, China and Japan have very high tax rates by global standards. Only in Jordan was there a significant hike in income tax rates (from 20% to 30%).

Bahamas 0.00 2018

2019 Bahrain 0.00 Figures in percent Bermuda 0.00

Cayman Islands 0.00

Oman 0.00

Qatar 0.00

UAE 0.00

13.00 Russia 13.00 15.00 Hong Kong 15.00 22.00 Singapore 22.00 27.50 Brazil 27.50 28.00 Malaysia 28.00 20.00 Jordan 30.00 30.00 Indonesia 30.00 33.00 New Zealand 33.00 33.96 Swiss average 33.89 35.88 India 35.88 37.00 USA 37.00 45.00 Australia 45.00 45.00 China 45.00 45.00 South Africa 45.00 55.95 Japan 55.95

Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective capital. New Zealand and Bermuda: income tax rates for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual-income-tax-rates-table.html.

28 Clarity on Swiss Taxes

Trend: countries 2007 – 2019 Following the introduction of flat rate taxes, the income tax rates for the highest earners have fallen massively in central Europe over the past 12 years. Rising top income tax rates can be observed in northern Europe, Luxembourg and the Mediterranean in particular.

36.00 2007 Hungary - 21.00 15.00 2019 24.00 Bulgaria - 14.00 10.00 Figures in percent 32.00 Czech Republic - 10.00 22.00 45.00 Croatia - 9.00 36.00 40.00 Poland - 8.00 32.00 27.00 Lithuania - 7.00 20.00 59.00 Denmark - 3.11 55.89 16.00 Hong Kong -1.00 15.00 34.85 Swiss average - 0.96 33.89 45.00 Germany 0.00 45.00 28.00 Malaysia 0.00 28.00 18.00 Isle of Man + 2.00 20.00 43.00 Spain + 2.00 45.00 35.00 USA + 2.00 37.00 30.00 Cyprus + 5.00 35.00 40.00 Greece + 5.00 45.00 25.00 Jordan + 5.00 30.00 40.00 UK + 5.00 45.00 25.00 Latvia + 6.40 31.40 39.00 Luxembourg + 6.78 45.78 41.00 Ireland + 7.00 48.00 35.70 Iceland + 10.54 46.24

Max. income tax rates for single taxpayers with no children and no religious denomination living in the respective capital. Hungary: income tax rates for 2018. Sources: KPMG Switzerland, KPMG International, https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online/individual-income-tax-rates-table.html.

29 PINBOARD

“Clarity on” publications This series of publications from KPMG Switzerland provides insights, analyses and studies on a range of topics. All publications are available online. For more information, please contact [email protected].

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Recovery of a divided industry 0.499 0.27 4 June 2018 0.1 Recovery 0.43099 May 2018 0.693 Performance 0.10.384 84 Ever-changing challenges 0.103 Booming August 2018 0.294 12 Internal line-up – The winning triad 0.793 0.499 equities 4 – Structure 0.1 0.27 Key findings 93 AuM up 0.430 0.199 100 0.430 Read the results of KPMG’s – Knowledge 17 0.558 0.384 0.693 Cost 0.384 cyber security survey 2018 – Compliance culture Industry performance 0.103 0.184 0.103 Joint Effort – the silver bullet for combating financial crimes Bull markets drove significant increases in control 0.499 0.294 50 0.499 Assets under Management and profits, but Net Strategy 0.274 4 14 0.793 Nov Dez 0.27 Okt 0.199 g Sep New Money continues to disappoint. 93 Jul Au 99 Interviews 0.1 Jun 0.1 Interviews 0.693 Apr May 0 Feb Mar Martin Peter, UBS Switzerland AG 0.558 Jan 0.693 Oliver Bussmann, Crypto Valley Association 0.184 0.184 Aurélien Dubus, BNP Paribas (Suisse) SA 32 0.294 Christian Unger, Partners Group 0.294 Gemma Aiolfi, Basel Institute on Governance Median bank insights 0.793 Markus Naef, SwissSign 0.793 Bernhard Hecht, Prosecutors Office of the Canton of Zurich 0.193 While the industry is recovering amid positive 0.193 Renato Renner, ETH Zurich 0.558 Daniel Tewlin, Former Prosecutors Office of the Canton of Zurich markets, the weaker half of banks still struggled 0.558 Brad Smith, Microsoft Arnaud Beuret, Former MROS to improve RoE and Cost-income ratio. 34 Articles Annual report 2018 Learn how to build resilience Read our insights into how financial institutions can prevent Institute of Management and trust in our digital economy and detect financial crime

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Clarity on Clarity on Clarity on Clarity on KPMG Switzerland Performance of Swiss Cyber Security Financial Crime in Banking Private Banks

Clarity on Clarity on Clarity on Healthcare Mergers & Digital Digitales Zeitalter – Spitallandschaft im Wandel Acquisitions Labor

Swiss deal flows Rise of the robots hit record high

January 2019

September 2018

10 Integrierte Versorgung soll sich auf den Patientennutzen 16 konzentrieren 2018 activity and 2019 outlook Marcel Napierala, CEO Medbase, An industry-by-industry look at last im Gespräch mit KPMG year’s deals and what you might expect over the next 12 months. 14 October 2017 Digitalisierung im Schweizer 22 14 Gesundheitswesen Private Equity and the Wo steht die Ärzteschaft? Swiss economy Digital labor demystified SECA’s General Secretary shares his 22 insights into how Private Equity makes 32 Strategische Entwicklung the Swiss economy stronger. Why is digital labor becoming im digitalen Zeitalter important now Strukturiertes Vorgehen ist angesagt 76 Detailed 2018 transaction list 46 View the M&A deals that involved Ready to gain from digital labor a Swiss buyer, seller or target.

Clarity on Clarity on Clarity on Healthcare Mergers & Acquisitions Digital Labor

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30 Clarity on Swiss Taxes

CONTACTS & IMPRINT

For further information on Clarity on Swiss Taxes

Please contact: Publisher KPMG AG Peter Uebelhart Badenerstrasse 172 Head of Tax & Legal and Member of PO Box the Executive Committee CH-8036 Zurich +41 58 249 42 24 [email protected] Orders Tax Marketing +41 58 249 29 69 Your local contacts for tax [email protected] matters: Concept and editing Zurich / Ticino Central Switzerland Céline Fontanive, KPMG AG Stefan Kuhn Dr. Frank Lampert Simone Graven, KPMG AG Partner Partner +41 58 249 54 14 +41 58 249 49 84 Design [email protected] [email protected] Dany Studerus, media // design

Mittelland Eastern Switzerland Illustrations Hans Jürg Steiner Dr. Peter Michael Shutterstock Partner Partner +41 58 249 20 57 +41 58 249 25 54 Pictures [email protected] [email protected] Keystone [page 1] Shutterstock [pages 10/11, 24/25] Western Switzerland Basel Vincent Thalmann Reiner Denner Partner Partner +41 58 249 64 18 +41 58 249 42 40 [email protected] [email protected]

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