Tax Reductions in the Swiss Cantons of Geneva and Lucerne
On 27 September 2009 citizens in the cantons of Geneva and Lucerne accepted improvements in tax law and tax reductions for corporations and individuals. As of 2012, Lucerne will have the lowest Swiss-wide corporate tax rate. The main changes are outlined below.
Canton of Geneva: Capital Tax Credit for Corporations The revision of corporate tax law in Geneva makes it possible to credit capital tax against income tax, however only up to the amount of CHF 8500 (CHF 15,087 effectively). This measure applies as of 2009.
Cap of 60% for Cantonal and Communal Taxes for Individuals After the Canton of Vaud earlier this year, Geneva’s citizens accepted to place a cap of 60% of net taxable income for cumulated cantonal and communal income and wealth taxes. This cap does not include federal income tax. Further improvements include a correction of the marriage penalty by means of integral splitting. For families with children, a deduction of CHF 9000 in 2010 and CHF 10,000 from 2011 replaces the tax rebate applied until now.
Canton of Lucerne: Corporate Income Tax Rate Halved The cantonal statutory corporate income tax rate is lowered from 3% to 1.5% as of 2012. With the new tax reduction, the total tax burden in the canton of Lucerne will vary between approximately 4.3% and 6.5% (depending on the commune) and will be the lowest of any Swiss canton. A plan to allow cantonal corporate income tax to be credited against capital tax, however, has been postponed.
New Child Care Deductions for Families The tax burden of middle-income residents will be alleviated through a linear tax cut reducing progressivity, and tax thresholds will be adjusted for inflation. For parental child care, CHF 2000 per child can be newly deducted. For outside child care, costs are deductible as long as they exceed the general child care deduction of CHF 2000.
Implications The decisions made by voters over the weekend further increase the significance of Switzerland as a business and residential location and may encourage further enhancements in other cantons. For further information, please contact Claude-Alain Barke (PwC Geneva/Lausanne), Markus Anderrüthi (PwC Zug) or your usual PwC advisor.