Swiss business taxes: companies and sole proprietors

At a glance

• A limited company (SA/AG) or LLC (Sàrl/GmbH) pays tax on profit and, at cantonal and communal level, on taxable capital.
• For a sole proprietorship, business income is taxed in the entrepreneur’s hands; there is no separate corporate taxpayer.
• Direct federal tax is only part of a company’s tax bill. Cantonal and communal taxes are added to it.
• VAT concerns turnover and transactions, rather than profit. Track it separately.
• A useful budget distinguishes business taxes, the owner’s taxes and social insurance contributions.

Limited company, LLC or sole proprietorship: who pays tax?

An LLC and its member are two separate taxpayers. The company declares its profit; the member declares their salary, dividends and the tax value of their membership interests, among other items. Owning 100% of the company does not remove this separation.

As a sole proprietor, you declare net business income alongside your other income. Business assets enter your personal tax return under the applicable rules. A withdrawal from your business account is not a deductible salary paid to yourself: profit is what matters, even if you leave the money in that account.

OASI/AHV contributions are not taxes. They are nevertheless a cash outflow to budget for, and their treatment differs between self-employment and employment by your own company.

Corporate income tax: start with the right profit figure

For Swiss corporate income tax, accounting profit is the starting point. Tax adjustments may then be needed for private expenditure booked as business costs, disallowed depreciation, insufficiently justified provisions or benefits granted to related parties on unusual terms.

Consider a company reporting CHF 100,000 accounting profit before tax. It has recorded CHF 5,000 of private expenditure with no commercial justification. Adding this back produces taxable profit before deduction of taxes of CHF 105,000, assuming no other adjustments. At a purely hypothetical effective rate of 14% on that pre-tax base, the provision would be CHF 14,700, compared with CHF 14,000 without the adjustment: a difference of CHF 700.

This example isolates the corporate income tax effect. It does not address possible consequences of the private benefit for the recipient, withholding tax or social insurance. The 14% rate is neither a cantonal tariff nor a universal calculation rule.

The federal component

For a corporation, the statutory direct federal tax rate is 8.5% of taxable net profit. Because taxes are deductible, this is not 8.5% of profit before tax. Considered in isolation, it corresponds to approximately 7.83% of profit before that tax. It is not the company’s combined tax rate.

Cantonal and communal components

These depend on the place of taxation and the applicable tariff. In Geneva or Lausanne, an SME does not necessarily face the headline maximum rate shown for a cantonal capital in a national ranking. Some tariffs have bands and municipal multipliers can vary.

For an initial budget, a hypothetical combined rate of 14% on CHF 100,000 pre-tax profit would produce CHF 14,000 tax and CHF 86,000 after tax. This illustrates the approach; it does not replace a calculation for your municipality, capital and tax year.

A business operating across several cantons may need a tax allocation. A registered address alone does not automatically move the taxation of the whole business.

Capital tax

Cantons and municipalities also tax company capital under their own rules. The tax base is not necessarily limited to the CHF 20,000 registered when an LLC was formed: it includes reserves and retained earnings, among other items, with the necessary tax adjustments.

Rates, minimum taxes, reliefs and opportunities to credit income tax against capital tax vary. A company without profit is therefore not automatically tax-free. Check the cantonal calculation for Geneva, Vaud, Fribourg, Valais, Neuchâtel, Jura or Bern, rather than applying one Swiss-wide percentage.

VAT: separate from direct taxes

VAT applies to transactions, even when a business makes no profit. Compulsory registration generally arises from CHF 100,000 in relevant worldwide annual turnover; the nature of supplies and any exceptions need to be assessed.

A VAT-registered business charges VAT on taxable supplies and, under the effective reporting method, deducts the input tax it is entitled to recover. The difference is paid to the Federal Tax Administration (FTA). Amounts collected as VAT are not freely available profit.

The current rates are 8.1% standard, 2.6% reduced and 3.8% for qualifying accommodation services. The correct rate depends on the supply, not your canton. See our Swiss VAT article for rates, categories and registration rules.

Since 2025, eligible businesses can apply for annual VAT reporting. This does not mean ignoring VAT during the year: instalments and ongoing accounting remain necessary.

Dividends: personal tax and withholding tax

A dividend generally comes from profit already taxed in the company. It then enters the member’s personal tax assessment. This is economic double taxation, which partial taxation of dividends can mitigate in qualifying circumstances.

The company must also handle withholding tax on the distribution. For an ordinary CHF 10,000 dividend subject to 35% withholding, it normally pays CHF 6,500 to the recipient and CHF 3,500 to the FTA. The recipient may obtain a refund if the conditions are met. The withholding is therefore not necessarily a permanent additional 35% charge.

Check the applicable withholding tax forms and deadlines before making a distribution. Any comparison between salary and dividends must also include social insurance and pension provision.

Other taxes and charges to remember

Owning or buying property may trigger property taxes, transfer duties or other charges depending on the canton and transaction. There is no uniform national 1.5% property tax to apply to every Swiss business.

Stamp duties can also affect certain capital or securities transactions. They do not apply indiscriminately to every invoice or every company formation. Identify unusual transactions before signing a financing arrangement, property purchase or restructuring.

Organise your tax year to avoid surprises

Keep the balance sheet, income statement and supporting documents up to date. Document mixed business and private expenses, such as private use of a company vehicle, as well as financial transactions between the company and its members.

At each interim closing, compare expected profit with tax instalments. If business grows strongly, adjust the provision and consider changing advance payments. Low instalments temporarily improve the bank balance, not the final tax assessment.

Prepare a calendar that separates tax returns, direct tax instalments, VAT returns, payroll and dividend decisions. Deadlines depend on the tax and canton: the 60-day VAT rule does not extend to every tax obligation.

Accounting books and supporting documents must generally be retained for ten years. Some records, particularly those relating to property for VAT purposes, require longer retention. Records must remain usable: saving a file without being able to retrieve the underlying invoices is not enough.

Our accounting services connect bookkeeping, year-end accounts and tax returns so that provisions reflect your actual business activity.

For the overall structure, see the Swiss tax system. If you are comparing business locations, our Switzerland–France corporate tax comparison uses a worked example and explains why tax residence and real operations matter.

Frequently asked questions

Sources and updates

• SECO: taxation of corporations.
• FTA: taxation of legal entities, April 2026 (French).
• Geneva: calculating corporate tax (French).
• Vaud: corporate income tax (French).
• FTA: annual VAT reporting (French).

Adapted from the French article whose sources were reviewed on 20 September 2026. Rates used in the examples are explicitly hypothetical.