Expenditure-based taxation
The tax is calculated on the basis of the annual expenses corresponding to the taxpayer's standard of living and that of the persons he supports, expenses incurred during the calculation period in Switzerland and abroad, with the higher of the following amounts as the starting point:
- CHF 400,000;
- For taxpayers who have their own household: an amount corresponding to seven times the annual rent or rental value;
- For other taxpayers: an amount corresponding to three times the annual pension price for room and board at the place of residence;
or as a control calculation, the sum of the following incomes:
- Income from immovable assets located in Switzerland;
- Income from movable property located in Switzerland;
- Income from securities placed in Switzerland, including loans secured by real estate pledges;
- Income from copyrights, patents and similar rights exercised in Switzerland;
- Swiss retirement allowances, source annuities and pensions;
- Income for which the taxpayer claims full or partial relief from foreign taxes under a double taxation agreement concluded with Switzerland.
For the determination of expenditure, the cantonal authority, aligning itself with cantons where expenditure-based taxation is present, obliges the taxpayer to submit a form to determine whether the last year's value is still current or whether adjustments, both in favour of and against the taxpayer, should be applied.
It should also be noted that, for the time being only at the federal level (FDTA Art. 14 para. 3 lett. a), the minimum taxation has increased from CHF 400,000 to CHF 421,700.
There is no further news regarding expenditure-based taxation.
New share right
As of 1 January 2023, the new share law came into force.
Mention should be made here of the implementation of the 'Capital Band' (CB), which allows the company to undertake capital creations and repayments over a period of five years. Only after this period must the calculation be made to see what the taxation of such transactions might be.
In general, the following formula should be taken into account:
- If the contributions to the reserves during the CB period is greater than the repayments of capital from reserves, then we are in the presence of a withdrawal of the 'Capital Contribution Reserve' (CCR), which will benefit from the exemption upon payment. We advise you to consult Circular No. 29c of 23.12.2022 for a more detailed picture of the specifics.
Increased deductions for children and needy dependents
The increase is due to the deduction on payments, premiums and contributions for life, health and accident insurance as well as interest on savings capital.
The taxpayer or the person whose support he provides pursuant to Art. 34 para. 1 lit. a) and b) of the Federal Direct Tax Act (FDTA) is allowed to deduct the actual costs up to a maximum amount for each child who is a minor, in training or studying up to the age of 28 and for each person residing in Switzerland who is totally or partially incapable of gainful employment and whose support the taxpayer provides:
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CHF 10,500 for spouses living in a common household;
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CHF 5,200 for other taxpayers:
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CHF 14,800 for spouses living in a common household but who do not pay any contributions to pension institutions;
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CHF 7,400 for other contributors who do not, however, pay any contributions to pension institutions.
