Table of contents
What is wealth tax?
You may have heard it before, but Switzerland is still one of the few countries to have a wealth tax. Wealth tax is a tax that supplements income tax. Wealth tax is not levied by the Confederation.
In addition to its contribution in terms of tax revenue, wealth tax is also a control tax.
By monitoring changes in the taxpayer's assets over time, the tax authorities are able to check that income has been declared correctly.
Items subject to wealth tax
The taxpayer's wealth is broadly defined. It includes all movable and immovable property. The following in particular are subject to wealth tax:
- the buildings
- shares, bonds and transferable securities of any kind, capital outlays, contributions and limited partnerships representing an interest in a business, company or association
- shares, bonds and transferable securities of any kind, capital outlays, contributions and limited partnerships representing an interest in a business, company or association
- units in collective investments that own real estate directly, for the difference between the value of the total assets of the investment and the value of its directly owned real estate
- mortgages and unsecured claims
- the elements that make up commercial assets
- life and old age insurance for their cash value
- les bijoux et l’argenterie, lorsque leur valeur dépasse 2’000 CHF
- livestock, both dead and alive
Items exempt from wealth tax
- furniture, including artistic and scientific collections that can be considered as such
- clothing
- household utensils
- books for the use of the taxpayer and his family
- capital paid in as savings (LPP)
Determining gross and net assets
Wealth tax is levied on the taxpayer's total net wealth as at 31.12 of the year in question, after social security deductions. It is therefore important to make a proper assessment of this.
In general, assets must be valued at market value. [Art.14 al.1 LHID] Market value means the price that would be obtained in the event of a sale under normal conditions.
However, cantons may depart from this valuation method and use the return value. The yield value is obtained by dividing the yield for a given period by a capitalisation rate.
The yield value is mainly used for buildings used for agricultural purposes. On the other hand, property that is not used for agricultural purposes cannot be valued solely on the basis of yield.
Determination of gross assets
Moveable assets
The market value is decisive valuation at 31.12. of the year for which tax is due.
Cash
Certificate from your bank as at 31.12.
Tax value Cryptocurrencies
Every year, the Federal Tax Administration publishes the exchange rates for each virtual currency of a certain size, compiling data from several platforms.
In the absence of a valuation price, the cryptocurrency in question must be declared at its initial purchase price converted into Swiss francs and not at the price on 31.12.
Listed securities
This type of security is valued at its market value at 31.12.
Non-listed securities Switzerland
Non-listed securities are valued according to the yield and intrinsic value of the company in question. In practice, the cantonal tax authorities refer to the valuation rules set out in CSI Circular No. 28. Special valuation rules apply to real estate companies.
The valuation of Swiss securities will be provided to you directly by the cantonal administration.
Foreign unlisted securities
This type of security is treated in the same way as unlisted Swiss securities. The tax authorities must be provided with all the information they need to assess the company correctly, including balance sheets, profit and loss accounts, annexes and the purchase contract.
However, you can ask the tax authorities for a Ruling.
Loans granted
A certificate signed by the person paying the benefit is sufficient.
Business assets
Are valued at their taxable value, which generally corresponds to the book value.
Life insurance subject to surrender
Certificate from life insurance provider at 31.12.
Jewellery and silverware
At market value, i.e. resale value under normal conditions
Real estate assets
Buildings
The tax value corresponds to the purchase price on the contract.
Properties subject to usufruct are taxable with the usufructuary.
Property abroad
The purchase price of the property is decisive converted into francs using the tax rate for the year of acquisition. Property abroad is included only for the purpose of setting the tax rate.
Properties received as gifts/assignments
The tax value corresponds to the value retained by the tax authorities at the time of the event.
Rental properties
A property containing more than two dwellings is considered to be a rental property. Its value will be determined by capitalising the rents received and/or the annual rental value. The capitalisation rate change every year.
Commercial and/or industrial property
This type of property is valued taking into account the current value of the land, buildings and ancillary facilities.
Farm buildings
Properties used for farming and forestry, including the part used as the owner's home, are valued at their yield value.
It should be noted that the Federal Council has published the new guide to estimating agricultural yield value which came into force on 1 April 2018. Guide link
Determining net assets
Wealth tax is levied on the taxpayer's total net wealth, which is made up as follows:
+ gross assets (movable and immovable)
- debts (mortgage, unsecured and private)
- social deductions (depending on your situation)
= Net taxable wealth
Gross assets
All your movable and immovable property (see above) valued in accordance with the above as at 31.12. of the year in question.
Debts
Debts are deducted from gross assets.
They include :
- unsecured debts (unguaranteed debts)
- mortgage
- justified private debt
- Extracts from negative accounts
- Interest receipts
Debts can only be deducted from assets if they are actually owed by the taxpayer.
The guarantees may only be deducted in the event of the ascertained insolvency of the principal debtor. If the guarantee is by several people the calculation is made on a pro rata basis.
Geographical breakdown of debt
Persons who also own assets outside the canton of Geneva may deduct from their gross taxable assets only the portion proportional to the assets subject to tax in the canton.
Social deductions on wealth
The canton of Geneva provides for flat-rate social security deductions on all net assets declared by taxpayers liable for tax in the canton:
82,200 -> Single person without dependent children (e.g. single, widowed, separated or divorced)
164,400 -> Single person with dependent children or living in a joint household
41,100 -> for each additional child
Deduction for the self-employed and partnerships :
up to CHF 500,000 for half of the assets invested in the taxpayer's commercial, craft or industrial business; if a partner in an SNC: in proportion to his shareholding.
Social security deductions on assets outside Switzerland
For taxpayers who, in addition to assets subject to tax in the canton, own assets outside the canton that are not subject to cantonal tax, the department allocates these deductions as follows proportionally assets subject to cantonal tax as a proportion of total assets.
Wealth tax calculation and scales
Wealth tax is calculated in brackets that accumulate in stages.
To do this, you need to work out which band you are in and then apply the rate for the final band to the difference between the top band and the bottom band.
Example of calculation of wealth tax and supplementary tax for 2021
Calculation for a net worth of CHF 450,000 for a single person living in Geneva.
| CHF 450,000 | Net wealth |
| CHF 82,040 | Social deduction |
| CHF 367,960 | Taxable assets |
Calculation of basic tax
Tax for levels fully exceeded 338,033: CHF 760.55
(cumulative tax (197.20+253.50+309.85))
Tax on the balance at the following rate: CHF 89.80
(367,960-338,033 = 29'927 * 0.3%)
| Total supplementary tax on wealth. | 850.35 CHF |
Calculation of supplementary wealth tax
Tax for levels fully exceeded 338,033: CHF 28.20
(Cumulative tax (12.70+15.70))
Tax on the balance at the following rate CHF 9.00
(367,960-338,033 = 29,927 * 0.03%)
Total basic wealth tax CHF 37.20
Calculation of additional cantonal and municipal wealth tax :
The basic tax determined below should be :
- add the cantonal additional centimes
- to add the additional cantonal centime to finance home help (1% of basic tax)
- to add the additional communal centimes (calculated on the basic tax)
Tax advice: wealth tax
In this article, we take a general look at the wealth tax system. The most important thing to remember is that wealth tax is levied by the cantons and municipalities, not by the federal government, and that it is important to declare your wealth fairly.
If you want to avoid the calculations mentioned in point 4 and leave this task to the specialists, don't hesitate to get in touch with us. If you have any questions or requests, please contact us via our contact form.
