Many company executives are attracted by the scenery, high paying jobs and low tax rates offered in Switzerland. © Keystone / Christian Beutler
Swiss Finance Minister Ueli Maurer has hinted that cantons might lower income taxes for well-heeled executives as the country braces for the impact of a minimum corporate tax rate.
Speaking to the NZZ am Sonntag newspaper, Maurer said cantons are discussing the idea of reducing upper rates for high earners. As in many countries, people pay progressively higher rates in Switzerland when their incomes reach a certain level.
“I could well imagine that some cantons will flatten out tax progression a bit to become more attractive for high-income employees,” said Maurer on SundayExternal link. However, he pointed out that this is a decision for individual cantons, rather than the government.
This certainly appears to be a possibility in canton Zug, which is home to many multinational companies. Lowering income taxes in this way would be “a good way to keep Zug as an attractive location”, canton Zug finance director Heinz Tännler told the newspaper. No decision has been taken so far and the canton will meet with companies on Monday to outline possible reforms.
Canton Vaud, in western Switzerland, says it will consider offering more tax deductions for foreign executives for moving home or sending their children to private school. But not every canton has it in mind to offer tax sweeteners to top managers.
Global standards
Switzerland has agreed to join a global push to set a minimum tax rate of 15% for companiesExternal link with a turnover of more than €750 million (CHF786 million). On Thursday, Maurer said the measure will be introduced in Switzerland from 2024External link.
The aim of the minimum rate is to stop tax havens from poaching companies and taxable revenues from other countries. The measure will affect an estimated 2,000 Swiss subsidiaries of foreign companies and about 200 Swiss firms. NZZ am Sonntag says up to CHF3 billion in annual corporate tax revenues are at stake.
There are several other measures that cantons could take in addition to adjusting income taxes for individuals. These include tax credits for research activities or lowering social welfare contributions that companies pay.
Other countries might offer land at discount prices to build factories or subsidise companies for creating a large number of jobs.
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