In the past three years, the cantons of Zurich (ZH), Schaffhausen (SH), Appenzell Ausserrhoden (AR), Basel-Stadt (BS) and Basel-Landschaft (BL) have abolished lump-sum taxation. In these cantons lump-sum taxpayers will now be taxed on the same basis as regular taxpayers regarding cantonal and communal taxes. At the federal level, lump-sum taxation is still possible for persons domiciled in these cantons.
The cantons of Glarus (GL), Thurgau (TG), St. Gallen (SG), Lucerne (LU) and Bern (BE), on the other hand, have decided to uphold lump-sum taxation, albeit with stricter rules. In principle, these cantons have increased or will increase the minimum taxable income for lump-sum taxpayers.
Lump-sum taxation in the different cantons:
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Amendments at federal level
Based on the political developments at the cantonal level, the traditional Swiss lump-sum taxation at the federal level has also come under pressure. In order to maintain the lump-sum tax system at the federal level and to increase its acceptance, the Swiss Parliament approved the following measures, which, however, are yet to enter into force:
- With regard to federal direct taxes, the minimum taxable income shall be CHF 400,000. Cantons still granting the lump-sum taxation will also be obliged to introduce a minimum income threshold, the amount of which will be at their discretion;
- With respect to married couples, both husband and wife will be required to meet all conditions for lump-sum taxation;
- Cantons providing for lump-sum taxation will also be required to levy a wealth tax for lump-sum taxpayers.
When exactly the new regulations will enter into force is not yet clear. Within two years from the date of enactment, those cantons with lump-sum taxation regimes which are not in line with the new federal regulation will need to adapt their system. The new regulations, however, provide for a generous transition period of five years. Therefore, taxpayers subject to lump-sum taxation may still benefit from the currently applicable system for another five years after the changes become effective.
Initiative at federal level
At the time of the Swiss Parliament's approval of the aforementioned amendments, a popular initiative requesting the abolition of lump-sum taxation in Switzerland was submitted and subsequently approved at federal level. When exactly, the Swiss citizens will be called to vote on the matter is not yet determined. If the initiative is accepted, the lump-sum tax system will be abolished at federal and cantonal level within a maximum of three years of its acceptance.