Swiss accounting: legal framework
Swiss companies must maintain accounting that adequately reflects their financial position and operating results, per Swiss Code of Obligations Articles 957–958. Annual statements may follow Swiss GAAP FER (most common for SMEs), IFRS (for listed companies and international groups), IFRS for SMEs, or US GAAP. Mandatory components per Art. 958c: balance sheet, income statement, notes, plus cash-flow statement and management report for larger entities.
Audit thresholds (CO Art. 727)
A statutory full audit is mandatory if two of three thresholds are met for two consecutive years:
- Balance sheet ≥ CHF 20 million
- Annual turnover ≥ CHF 40 million
- ≥ 250 full-time equivalents
Below those thresholds, a limited-scope review applies. Companies with ten or fewer FTEs may opt out of audit entirely with unanimous shareholder consent. Both audit types must be performed by an auditor registered with the Federal Audit Oversight Authority (RAB / ASR).
VAT in Switzerland
The Swiss VAT system runs three rates and a worldwide-turnover registration threshold:
| Rate | Applies to |
|---|---|
| 8.1% | Standard rate (since 2024) |
| 2.6% | Reduced, basic foodstuffs, books, newspapers, medicine |
| 3.8% | Special, hotel accommodation |
Compulsory registration applies if worldwide annual turnover reaches CHF 100,000 (CHF 250,000 for non-profit sport/cultural associations) per VAT Act Art. 10. Voluntary registration below the threshold is possible.
Corporate tax, combined effective rates
Federal corporate tax is uniform at 8.5% on profit after tax (Art. 68 DBG). Cantonal and municipal rates vary materially; combined effective rates for 2025/2026:
| Canton | Combined effective rate |
|---|---|
| Zug | ~11.85% |
| Lucerne | ~12.15% |
| Nidwalden | ~12.0% |
| Schwyz | ~14.0% |
| Geneva | ~14.0% |
| Vaud | ~14.0% |
| Zurich | ~19.65% |
| Bern | ~21.04% |
Source: PwC Tax Summaries 2025; cantonal tax administration sites. Verify each rate against the current PwC release at the time of reliance, cantonal reforms continue.
Withholding tax
35% on dividends paid by Swiss companies, refundable to qualifying treaty residents per applicable double-tax agreements (typically 0–15% residual for corporate shareholders ≥ 10–20% participation). 35% on interest from Swiss bank deposits (not on regular corporate bonds). Per Withholding Tax Act.
Payroll & social security
When a Swiss company hires its first employee, registration with the cantonal AHV/IV compensation office must follow within 30 days. Joint employer-employee contributions: AHV/IV/EO 10.6% (5.3% each, no salary cap); ALV 2.2% on salaries up to CHF 148,200; BVG (occupational pension) mandatory above CHF 22,680 annual salary; family-allowance fund (cantonal) 1.0–3.5% employer; UVG accident insurance split between occupational (employer) and non-occupational (employee). For foreign employees, withholding "Quellensteuer" applies cantonally.
Recent regulatory developments (2024–2026)
- VAT rate increase: standard rate rose from 7.7% to 8.1% effective 1 January 2024 (financing AHV reform).
- Corporate Tax Reform (TRAF / STAF, in force 2020): abolished cantonal-level holding/mixed/domiciliary regimes; introduced patent box, R&D super-deduction, notional interest deduction in qualifying cantons.
- OECD Pillar Two (15% global minimum tax): Switzerland adopted constitutional amendment 2023 + implementing federal law; QDMTT applies from 2024 to large MNEs with consolidated turnover ≥ EUR 750M.
- Federal Transparency Act (TRA / TJG): centralised beneficial-owner register, phased through 2025–2026.
Frequently asked questions
What is the Swiss VAT rate?
Standard 8.1% (since 2024); reduced 2.6% (food, books, medicine); special 3.8% (hotels). VAT Act Art. 25.
What is the VAT registration threshold?
Compulsory if worldwide annual turnover reaches CHF 100,000; voluntary registration possible below. VAT Act Art. 10.
When does my Swiss company need an audit?
Mandatory full audit if two of three thresholds met for two consecutive years: balance ≥ CHF 20M / turnover ≥ CHF 40M / 250 FTE. Otherwise limited audit; opt-out possible if FTE ≤ 10 with shareholder consent. CO Art. 727.
What is the cheapest canton for corporate tax?
By combined effective rate, Zug (~11.85%), Lucerne (~12.15%), Nidwalden (~12%). Federal direct tax is uniform at 8.5% on profit after tax (Art. 68 DBG).
What is Swiss GAAP FER?
Swiss-specific accounting standards lighter than IFRS, designed for SMEs. Used by ~85% of Swiss SMEs; IFRS preferred by listed companies and MNEs. Both accepted under CO Art. 962.
What is the corporate withholding tax rate?
35% on dividends paid by Swiss companies, refundable to qualifying treaty residents per DTA (typically 0–15% residual for corporate shareholders ≥ 10–20% participation).
Do I need to register with social security on first hire?
Yes, registration with cantonal AHV/IV compensation office within 30 days of first employee. AHV/IV/EO contribution: 10.6% joint employer-employee.
What is BVG and when is it mandatory?
Occupational pension (2nd pillar). Mandatory for employees earning ≥ CHF 22,680 / year; rates vary by age band and chosen pension fund.
How does Pillar Two affect Swiss companies?
OECD Pillar Two QDMTT applies from 2024 to MNE groups with consolidated turnover ≥ EUR 750M; ensures effective tax rate ≥ 15% per jurisdiction. Smaller Swiss companies unaffected.
What is TRAF / STAF?
Federal Act on Tax Reform and AHV Financing (in force 2020). Abolished cantonal holding/mixed regimes; introduced patent box, R&D super-deduction, NID. Most cantons cut headline rates.