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  • Tag Archive: personal tax

    1. Switzerland personal tax issues – An overview

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      Switzerland personal tax issues – Introduction


      Switzerland is a country that levies taxes on three levels: federal, cantonal, and municipal. The tax rates are progressive, meaning they take into account the economic capacity of a taxpayer. Each canton has a set of tax deductions that reduce the tax base and, hence, the marginal tax rate.

      Tax residency

      In terms of tax residency, individuals are liable to pay tax in Switzerland if they have their tax residency in Switzerland or if their stay in Switzerland exceeds a certain period of time. Swiss tax residents are subject to unlimited taxation on their worldwide income and worldwide assets, with some exceptions for foreign real estate and foreign business income.

      Employment income

      Swiss-sourced employment income is fully taxable in Switzerland, unless a double taxation agreement provides otherwise. The same tax rate for employment income applies also to interest and dividend income.

      Swiss-sourced interest payments and dividends are subject to Swiss withholding tax at a rate of 35%, but Swiss tax residents are entitled to a full refund provided the investment income is declared in their annual tax return.

      Dividend income

      Dividend payments from a majority shareholding are taxed to the extent of 70% at the federal level and to the extent of 50 to 80% at the cantonal level, depending on the cantonal tax provisions.

      Capital gains tax

      In terms of capital gains tax, there is no capital gains tax on the disposal of movable assets such as shares and collectibles, but in cases of excessive trading, hedging, and debt-financing, the tax administration may conclude that the individual is a professional securities trader subject to income tax on his or her gains. Gains on immovable property are taxable, and a real estate transfer tax is due in many cantons on the change of ownership of real property.

      Wealth tax

      All cantons (and all municipalities) levy a wealth tax on global net wealth, which includes all movable, immovable, and business assets, works of art, jewelry, and other collectibles.

      Spouses are exempt from gift and inheritance tax in all cantons, and lineal descendants in most cantons.

      The right to tax gifts and donations is in the canton where the donor or testator is or was domiciled, and the tax rate is determined by the amount of the gift or inheritance and the degree of kinship.

      Common Reporting Standard

      Finally, Switzerland has been a signatory to the Common Reporting Standard since 2017 and has entered into various exchange of information programs with a number of participating jurisdictions. Information on a client’s Swiss bank accounts will therefore be exchanged with the tax authorities of their home country if that country is a participating jurisdiction.

      If you have any queries about Switzerland personal tax issues, or Swiss tax matters in general, then please do get in touch.

      The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    2. Cyprus Tax residency for individuals – an overview

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      This article provides a brief overview of Cyprus tax residency in relation to individuals, the implications of such a status and some of the practical considerations.

      Cyprus tax residence – the general rule

      Firstly, an individual who is present in Cyprus for 183 days will be resident for tax purposes in Cyprus.

      Cyprus tax residence – ‘the 60-day rule’

      In addition, one will also be resident for tax purposes in Cyprus under the so-called 60 day rules where each of the following is satisfied:

      • You remain in Cyprus for one or more periods totalling a minimum of 60 days;
      • You are not present in any other state for a total of over 183 days;
      • You are not resident for tax purpose in any other state for the same tax year;
      • You have some relevant activity in Cyprus, specifically that:
        • You operate a business in Cyprus;
        • are employed in Cyprus; or
        • hold a position in a company that is tax resident in Cyprus; and
      • You maintain a permanent residence in Cyprus (either owned or rented).

      Tax residency and Cyprus personal taxes

      Cyprus personal income tax is imposed on the worldwide income of individuals that are  resident for tax purposes in Cyprus.

      However, income from dividends and (most types of) interest income that is received by individuals are exempt from personal income tax

      From 16 July 2015, individuals are subject to Special Defence Contribution on dividends and interest income where the person is both both Cyprus tax resident and Cyprus domiciled.

      Capital gains are also not usually taxable in Cyprus unless they have arisen in respect of Cyprus situs immovable property

      Individuals who are not tax residents of Cyprus are taxed only on certain types of income accrued or derived from sources in Cyprus.

      Cyprus tax residency – practical considerations

      In order to obtain a certificate of tax residence, all supporting documents must be submitted to the Tax Department of Cyprus. These docs must be stamped.

      If the documents are in any other language than English or Greek then they must be translated.

      If an individual is considering relocating to Cyprus, expert advice should be taken with respect to Cypriot as well as cross-border tax implications arising from the relocation.

      If you have any queries about this article, tax residency in Cyprus, or tax matters more generally, then please do not hesitate to get in touch.

      The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article