The ‘Vaud Tax Monitor’ is a joint publication by KPMG and the Chamber of Commerce and Industry of Vaud (Chambre vaudoise du commerce et de l’industrie; CVCI) which examines the tax attractiveness of the canton of Vaud for both legal entities and individuals. Corporate taxes in this canton are currently among the highest in Switzerland. On 20 March this year, however, Vaud’s electorate overwhelmingly voted in favor of its CTR III, substantially cutting the canton’s profit tax rate. By reducing this to 13.79% from 2019, the canton of Vaud will have the opportunity to provide favorable long-term conditions that will benefit its future development and maintain its attractiveness. A further reduction of tax rates for individuals to consolidate this position would be welcome.
Corporate taxes: gradual reduction of corporate tax rate
- The tax rate on profit for ordinary taxed companies located in the canton of Vaud is currently the third highest in the nation. The decision taken on 20 March 2016 to introduce a single rate of 13.79% on 1 January 2019 will be especially beneficial for SMEs.
- Bucking the national trend, the canton of Vaud only began reducing its profit tax rate gradually – first in 2013 and then in 2016. The vote in favor of the 13.79% rate on 20 March 2016 and 2017 marks a significant turning point as it makes Vaud the first Swiss canton to enshrine its CTR III strategy in its legislation.
Individual tax rates in French-speaking Switzerland can only get better
- Compared to the canton of Vaud, peak income tax rates are only higher in the cantons of Geneva and Basel. In the cantons of French-speaking Switzerland, individuals in the middle to upper class generally pay some of the highest income taxes in the country.
- The burden on high-income taxpayers can thus practically double between the canton of Vaud and the cantons with the lowest tax rates. The same applies within the canton of Vaud itself in respect of municipal income taxes.
- Of the taxpayers in Vaud with a taxable income of less than CHF 60,000, 61.5% account for 16.4% of the canton’s income tax revenue, while 3.5% of taxpayers with an income in excess of CHF 200,000 make up 31.9% of the tax base.
- The canton of Vaud has one of Switzerland’s highest maximum rates of wealth tax.
- Of the taxpayers with less than CHF 500,000 in taxable assets, 89.4% account for a total of 13.8% of the canton’s wealth tax revenue, while 4.7% of taxpayers with assets in excess of CHF 1,000,000 make up 71.1% of this revenue.
Find the media conference slides here (in french only).