Low taxes and ideal locations help make Zug and Zurich hotspots for setting up companies in Switzerland, a new study has found.

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BUSINESS

Zug, Zurich best for business: study

Low taxes and ideal locations help make Zug and Zurich hotspots for setting up companies in Switzerland, a new study has found.

A study by Credit Suisse confirms that Canton Zug and Canton Zurich remain the most attractive areas for setting up businesses in Switzerland.

Zug has consistently led the financial group’s ranking for years, as its advantages include a low tax rate, a local workforce with a high level of education, and good transport connections to the rest of the country.

As an economic centre, Zurich has high accessibility and solid figures regarding education, but falls behind Zug in tax terms,” the study said.

Zug has transformed itself over the years from an agricultural canton into a national economic centre with a strong appeal for international firms.

“The unique national combination of its low tax burden, a central location and large pool of qualified staff makes Zug virtually ideal as a location for business and a place to live,” the study said, adding that excellent transport links make it an even more attractive location.

Other cantons enjoying a relatively good position when it comes to establishing businesses are Aargau – one of the most northerly regions in the country – which enjoys a low tax burden, and Geneva, with a large availability of skilled workers.

According to the study, which was carried out on data collected since 2004 in 2,700 Swiss municipalities, the areas of Valais, Graubünden, Ticino and Uri are found at the lower end of the ranking, mainly due to their unfavorable Alpine terrain which makes them less accessible.

Jura and Neuchâtel are also considered too remote from the main transportation routes, the study said.

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TAXES

Which Zurich municipalities have the lowest and highest tax rates?

Switzerland’s largest city Zurich is the most expensive to live in. However, 47 out of 162 of the city's municipalities are reducing their tax rates this year, which will provide some financial relief to local residents.

Which Zurich municipalities have the lowest and highest tax rates?

That is a much higher number than last year, when only 12 Zurich municipalities had slashed their taxes.

This information comes from the canton’s official tax authority, as reported in the Swiss media on Tuesday. 

But first, what is a municipal tax and how is it calculated?

Switzerland has three levels of taxation: federal, cantonal, and municipal. While the cantonal tax rate is the same throughout a given canton, municipal (or local council) taxes vary from one local commune area to another.

For the latter, it may be difficult for a newly-arrived foreigners to understand how the rate is calculated, but this is essential information for any Zurich taxpayer.

For instance, your municipality may have a 115-percent tax rate, which seems like A LOT, but don’t panic.

This simply means that in that particular community, you have to pay 115 percent of the cantonal tax. 

For instance, let’s say the cantonal tax rate for your income bracket and family situation is is 5 percent.

If you earn 100,000 francs per year, then the cantonal tax will be 5,000 francs per year.

Where the municipal tax is 115 percent, you will pay 5,750 francs in total, as this is 115 percent of 5,000 francs. This amount covers both your cantonal and municipal taxes.

This is the situation for Zurich’s communes in 2023:

Dägerlen residents will see by far the largest reduction of all Zurich communes — down from 117 to 105 percent.

While this cut has moved Dägerlen from the 124th to 61st place among the municipalities with the lowest tax rates, other townships are doing even better on this front: the lowest tax rate (72 percent) can be found in Kilchberg.

Dägerlen is followed by six municipalities which slashed their taxes by 5 percent, and three with a 4- percent cut.

Consequently, three communities — Küsnacht, Rüschlikon and Herrliberg — are now in second, third, and fourth place, respectively, in terms of favourable tax rates.

Next are Winkel (5th place), Neerach (6th), and Stäfa (7th), with Erlenbach, Uitikon and Zumikon taking the 8th place.

Wila lowered the tax rate by 3 percent and Wildberg by 2 percent.

Some municipalities, on the other hand, have become more expensive, at least from the tax perspective — some more so than others.

Though Bachs increased its tax by just 1 percentage point, it is now the second most expensive Zurich municipality (128 percent).

The priciest — at 130 percent — is Maschwanden.

You can see the current tax rates in all Zurich communities here.

READ MORE: EXPLAINED: Where in Switzerland has the lowest and highest taxes
 
 
 
 

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