Corporate tax in the canton of Zug – Calculator and key insights for founders in Switzerland

As an entrepreneur, you try to provide informative content online so that potential customers can find you. However, that is just one reason why we write these articles and provide you with our various tax calculators. Another important reason is that it is extremely difficult to find good explanations for the mechanisms and final tax rates that your GmbH (LLC) or AG (LTD) must pay each year.

For example, you can find official sites presenting things like this table, but even after looking at it for some minutes, you won't get any relevant answers, no, you will likely be more confused.

We therefore do our best to explain the essential factors to aspiring entrepreneurs in such a way that even those readers who do not work full-time in the tax or accounting sector, are not familiar with all technical terms and special regulations, but instead run flourishing companies or are in the process of founding companies with great potential and big ambitions. For this audience, we try to break down the most important aspects of taxation in Switzerland so that you can optimize your company accordingly.

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The most important principles of Switzerland's corporate tax system for LLCs and LTDs

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In this article, we only deal with the most common types of companies, the AG (LTD) and the GmbH (LLC). The most important aspects of taxation are the same for these two legal forms:

Types of taxes for companies in Switzerland

• Profit and capital tax. Profit taxes are paid at federal, cantonal and municipal levels, while capital taxes are only payable at cantonal and municipal levels.‍

• ‍Value-Added-Tax. You are required to register for VAT and to submit periodic statements of input taxes paid and received sales taxes to the EStV (Federal Tax Administration), if your annual revenue exceeds CHF 100,000.

• Tax at source. Depending on your residence permit, you are subject to tax at source, i.e. all salary payments that you receive from your company are taxed upon transaction. If you are a Swiss passport or C-permit holder, you do not pay your taxes at source. Instead, you will receive a tax bill from the tax authorities once a year after filing your tax return.

• Withholding tax. In Switzerland, a federal tax of 35% is levied on certain types of income, which primarily serves to prevent tax evasion. This 'withholding tax' applies primarily to income from dividends. The paying party (such as a bank or a Swiss company) deducts the tax directly from the gross amount before it is paid out to the recipient. This tax serves as an incentive for taxpayers to declare their income in full, as you can request a refund or credit on their total tax liability if you report the income on their tax return. Foreign investors have the option of reducing or avoiding this tax through double taxation treaties or special agreements with EU countries.

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Further important aspects of taxation for companies in Switzerland

• Social security contributions. You are required to pay social security contributions for your employees and yourself, including pension and unemployment insurance contributions (1st pillar) and occupational pension contributions (2nd pillar). These contributions amount to at least 10.6% of payroll. Half of this (5.3%) is paid by the employee, the other half is paid by the employer, which can of course be the same person if you pay yourself a salary from your AG or GmbH.
  In addition, every person must pay for private health insurance.
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• Extension of the first financial year. If you start your business at any time within a calendar year, you have the option to extend your first fiscal year until December 31 of the following year, meaning you don't have to file your taxes at the end of the incorporation year.
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• Income taxation of wages. You must state the salary that you pay yourself in your personal tax return, which is subject to the income tax rates of your canton and municipality. To calculate your personal income tax, please use our Income tax calculator for the canton of Zug.

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How to benefit from corporate tax regulations in Zug, Switzerland

Taxation of dividends

If you own at least 10% of the company's shares, only 70% of your dividends are taxed at income tax rates. All dividends are subject to withholding tax, i.e. approximately 30% of the taxable dividend amount is withheld by the tax authorities when the dividend is paid out. After the tax returns for your company and yourself individually have been filed and processed, the difference between the income tax rate of the taxable dividend amount and the approximately 30% withholding tax is paid back to you. This is usually around half of the 30%, i.e. 15%, of the taxable dividend amount.

Instant depreciation

In the canton of Zug, certain expenses can be amortized by up to 80% in the year of purchase. Since depreciation is recorded as an expense, this reduces your operating profit and, accordingly, your company's taxable profit.

R&D prints

Expenses for research and development as well as for certain trademarks and property rights can be deducted by up to 50% in the canton of Zug.

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Tax calculator for corporations in the canton of Zug

This tool allows you to obtain a precise estimate of your tax burden based on your specific company data. However, we recommend that you always consult a tax expert for detailed tax planning tailored to your individual circumstances. With the right knowledge and advice, you can make the most of the benefits of the Swiss tax system for your company.

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‍* All information provided and results of the calculator without warranty. We are not liable for the results of the calculator and recommend consulting a tax advisor for an exact calculation of the taxes to be paid.

** Please note, that the tax calculator only accepts numbers, for example “100000” and not “100,000”.

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How corporate taxes are calculated in the canton of Zug, Switzerland

Profit tax

The main tax burden is on the company's net profit in any given financial year. That sounds confusing, because net profit is generally understood as profit after tax. However, for unknown reasons, this is the case in Switzerland:

Example scenario to demonstrate profit taxation in Switzerland

You have generated a profit of CHF 100,000. Now you pay a tax rate on a specific percentage of that profit. For example, you pay:

• At federal level: They pay 8.5% or CHF 8,500 profit tax to the federal government.
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• Cantonal level: You pay 3.5% profit tax on 82% of your profit. With a profit of CHF 100,000, you would pay CHF 2,870 or 2.87% of your initial profit to the canton.
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• Municipality level: You pay 3.5% profit tax on 52% of your profit. If your profit was CHF 100,000, you would pay CHF 1,823.85 or 1,82385% of your initial profit to the municipality.
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• Church tax: Yes, no matter what, you are subject to pay a small percentage to the Catholic and Protestant churches in Switzerland. This is often discussed and strongly questioned by many. We will see how much longer these church taxes remain in place. However, until today it is like that: You pay 3.5% profit tax on 5.373% of your initial profit to the Catholic Church. With an initial profit of CHF 100,000, you would therefore pay CHF 188.05 (0.18805%) to this side of the altar and 3.5% to 1.743% of your profit, which results in CHF 61 (0.061%) to the Protestant Church on the other side.

If we add up all of these amounts, you pay 13.4429% on your profit of a total of CHF 100,000.

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But wait, remember we said you are taxed on your NET profit?

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That's right, you're not actually paying CHF 13,442.9 on your initial profit of CHF 100,000, no. Instead, you deduct this 13.4K from the 100K, and now you have your net profit of CHF 86,557.1. And that amount, those CHF 86.5K, is what you actually pay tax on.

In short, you must apply the tax rates set by Switzerland, its cantons and municipalities to your profit and then deduct them from your profit. This results in the taxable profit (CHF 86.5K in our example above) on which your company is taxed in the respective proportions at each of the above levels and at the respective tax rates.

Therefore, if we continue the example above to calculate the actual profit taxes that we ultimately have to pay, we end up with the following amounts based on our taxable profit of CHF 86,557.1:

• CHF 7,357.35 or 7.35735% to the federal government
• CHF 2,484.19 or 2.48419% to be paid to the canton
• 1,578.67 CHF or 1.57867% to the municipality
• CHF 162.77 or 0.16277% to the Catholic Church
• 52.80 CHF or 0.05280% to the Protestant Church

Finally, this means, on an initial profit of CHF 100,000, we have to pay a total of 11.63578% in profit tax. In this example we use the profit tax bases and rates for 2024 of the Canton of Zug, as they can be found in this table:

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*Note that this percentage is based on your initial profit and must be deducted from it to calculate your taxable profit (i.e. CHF 86,557 if your profit is CHF 100,000). Your taxable profit is then subject to the same tax bases and tax rates, meaning that your final profit tax liability is 11.6%.

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Capital tax

There is a relatively small amount you will need to pay on the capital in your company. Instead of percentages, we are actually speaking about per mille amounts here.

The capital tax is payable on the share capital or equity your company holds. I.e. an LTD (AG), at the date of its incorporation usually holds CHF 100,000 in capital, as that is the minimum share capital to be provided by the shareholders upon founding the company. The share capital amount of a company (CHF 100K for an AG and CHF 20K for a GmbH) is also the minimum taxable capital of any company.

For our example AG with CHF 100,000 in equity, a capital tax of 0.0706%, or CHF 70.6, must be paid. As you can see, this is a negligible amount. However, as you can see in §75 of the Tax Act, the first CHF 200,000 of any legal entity's equity is tax-free.

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Minimum tax

Each corporation pays a minimum amount of CHF 250 in taxes per year, if the profit and capital taxes do not exceed this amount.

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Value-added-tax (VAT)

Value-added-tax is an entire subject in itself, which we cover in more detail in this article. However, we will provide you with the key points that you need to know as a business owner in Switzerland:

When do I have to register for VAT?

You are required to register your company for VAT, obtain a VAT number and disclose it on all your invoices as soon as your company generates revenues of more than CHF 100,000 per year. You register for a VAT number at the ePortal of the Swiss Confederation.

How is VAT declared?

There are two ways to declare your VAT. The most common method is the so-called effective method, which requires you to declare the input tax paid by your company and the sales tax charged to its clients on a quarterly basis.

The other method is the net tax method, in which the federal tax administration sets a fixed rate that varies by industry. The VAT due is then calculated by multiplying the turnover by this rate.

Your invoices must show standard VAT rates, regardless of which method you use to declare input tax and value added tax.

What are the VAT rates in Switzerland?

The current VAT rates are:

• 8.1% for goods and services — standard rate
• 3.8% for accommodation/hotels — special rate
• 2.6% for everyday goods, such as food and beverages, books, newspapers, medicines, plants, etc. — reduced rate
• 0% or excluded from value added tax are doctor visits, schools, further education, cinema, theatre, concerts, money and capital movements (interest), insurance, as well as the rental and sale of real estate

In most cases, the standard rate of 8.1% applies, which was slightly raised from previously 7.9% at the beginning of 2024. Compared to neighboring European countries such as Germany or Austria, where VAT rates are closer to 20%, Swiss VAT is still quite low. For this reason, some goods, such as technical devices, are cheaper in Switzerland than in surrounding countries.

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In conclusion, it can be said that the Swiss corporate tax system is complex but certainly attractive. From profit tax to capital tax to value added tax and various cantonal taxes — every aspect plays an important role in a company's overall tax burden. We hope this article and the tax calculator presented here were helpful in giving you a good basic understanding of the taxation of Swiss companies.