Income Tax Part I – The Tax Liability

The probably most well-known type of tax is the income tax. Natural persons can be liable for income tax in Switzerland based on personal or economic affiliation.

The income tax levied by the federal government, cantons, and municipalities is probably the most well-known type of tax at all. Tax liability applies to natural persons. In the context of taxation, a distinction is made between unlimited and limited income tax liability.

Unlimited income tax liability due to personal affiliation

Unlimited income tax liability is based on the personal affiliation of the taxable person to the tax territory. Natural persons are liable for tax based on personal affiliation if they have their residence or habitual abode in Switzerland. In this country, a person is primarily liable for income tax if they:

• have their residence in Switzerland;
• remain in Switzerland for at least 30 days, regardless of temporary interruptions, and engage in economic activity; or
• remain in Switzerland for at least 90 days, regardless of temporary interruptions, without engaging in economic activity (Art. 3 DBG).

Unlimited income tax liability begins with the establishment of residence or stay in Switzerland and ends with the death or departure of the taxpayer (Art. 8 DBG).

Limited income tax liability due to economic affiliation

Persons are subject to limited income tax liability if they have only an economic relationship with the tax territory. Natural persons without residence or stay in Switzerland can be liable for income tax in Switzerland for various reasons. The main factors that establish economic affiliation are:

• the exercise of an economic activity or membership in the management of a legal entity in Switzerland;
• ownership or usufruct of properties located in the tax territory;
• ownership, partnership, or usufruct of businesses in Switzerland; or
• maintenance of business establishments here (Art. 4 and 5 DBG).

Limited income tax liability begins with the acquisition of taxable values and ends with their cessation (Art. 8 DBG).

Income taxation is family taxation

Income tax is based on the principle of family taxation. Families are considered economic units and are taxed together. Within the framework of family taxation, the income of spouses or registered partners is combined and taxed jointly. Additionally, the income of underage children is typically attributed to the holder of parental custody (Art. 9 DBG).

Source: Swiss Tax Conference (SSK): Brief Overview of Income Tax for Natural Persons (February 2021), p. 1f.

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