TAXES IN THE CANTON OF NIDWALDEN

Document Sample
TAXES IN THE CANTON OF NIDWALDEN Powered By Docstoc
					                    TAXES       IN THE   C ANTON   OF   N IDWALDEN
Information about the Tax Act
                                                                               PREFACE


                                                                               The fully revised Tax Act came into force in the Swiss Canton of Nidwalden on
                                                                               1 January 2001. In an intercantonal as well as an international comparison,
                                                                               the Tax Act is markedly progressive. Nevertheless, over recent years a number
                                                                               of provisions have been revised and supplemented, thereby further reducing
                                                                               the tax burden on natural persons and legal entities across the board. Profes-
                                                                               sional tax experts from the Canton of Nidwalden, in collaboration with the
                                                                               Cantonal Tax Authority, have now revised the previous guide, incorporating
                                                                               the latest changes to the tax legislation (status: 1 January 2007). This provides
                                                                               an insight into the most important taxes in the Canton of Nidwalden, exam-
                                                                               ining in particular the following special aspects:


                                                                               Natural persons
                                                                               •   Low income tax rates
                                                                               •   Partial income splitting and family-friendly social allowances
                                                                               •   Very low wealth tax rates
                                                                               •   Extensive double taxation relief
                                                                               •   Modest taxation of capital payments from pension funds
                                                                               •   Moderate property tax and tax on the imputed rental value
                                                                               •   Attractive lump-sum taxation rates

                                                     “Taking off and
                                               leading the way”                Legal entities

                                                                               • Low rates for tax on profits
                                                                               • Low rates for capital tax
                                                                               • Attractive taxation of holding and management companies


                                                                               Special taxes
                                                                               • Numerous tax deferral and comprehensive offsetting opportunities for prop-
                                                                                 erty gains tax
                                                                               • Tax exemption for gifts, reductions for corporate succession as well as at-
                                                                                 tractive taxation of gifts to or from a (foreign) foundation under inheritance
                                                                                 and gift tax




Community of interests of Nidwalden trustees                           2   3                                                Community of interests of Nidwalden trustees
N ATURAL                    PERSONS            I


Income and wealth tax
Natural persons benefit from
low income and very low
wealth tax rates. Families in
particular benefit from partial
splitting, higher deductions for
children and a substantially
higher child care allowance. The
double taxation of investments
and investment income is large-
ly moderated.
                                                   “Fertile ground
                                                            for low rates”
Tax rate
To calculate income tax and wealth
tax, the simple tax rate is multiplied
by the overall tax multiplier (can-
tonal/municipal). In the case of a
taxable income of CHF 300 000 or
more, the simple tax rate is a max-
imum of 3 %. The simple wealth tax
rate is 0.35 ‰. A tax allowance of
CHF 70 000 applies to spouses, and
the allowance for unmarried tax-
payers is CHF 35 000. An additional
tax allowance of CHF 15 000 may
be deducted for each child.

Direct federal tax is imposed in add-
ition to cantonal and municipal
taxes. The rate is the same for the
whole of Switzerland, whereby dir-
ect federal tax contains no provi-
sion for asset tax. In the case of a
married Roman Catholic couple in
the municipality of Hergiswil, for
example, the overall taxation on in-
come and wealth with an overall
tax multiple of 4.46 (canton/munici-
pality), including direct federal tax
for the 2007 tax period, is shown in
the following charts. The tax bur-
den rises proportionally with in-
creasing income; if the taxable in-
come is CHF 100 000, the total tax
burden is 12.2 %, while the total
tax burden on a taxable income of
CHF 300 000 is 21.8 %. The max-
imum tax burden in the Municipality
of Hergiswil (municipal/cantonal/
federal) is 24.88 %.


Community of interests of Nidwalden trustees                                 4   5   Community of interests of Nidwalden trustees
N ATURAL                    PERSONS            II


Partial income splitting
To determine the tax rate for jointly
taxable spouses, the taxable in-                                      “Optimum conditions for
come is divided by 1.85. Here, it                           a successful launch”
does not matter whether both or
only one of the spouses earn an in-
come. The same applies to wid-
owed, separated, divorced or single
taxpayers with children living under
the same roof for whose mainte-
nance they are primarily respon-
sible. Single persons pay their taxes
in accordance with the tax rate
without the divisor. The Canton of
Nidwalden has for years recognised
the system of partial income split-
ting. Among other things, splitting
also moderates or eliminates the
“marital penalty”.


Social deductions

Social deductions are determined
on the basis of the taxpayer's cir-
cumstances at the end of the tax
period or at the end of the tax obli-
gation. In order to reduce the bur-
den on families, the child’s al-
lowance has been extended and
the child care allowance has been
substantially increased.


Double taxation relief
The profits and capital of legal ent-
ities are subject to profit and capital
tax. If natural persons own a share
of the company, they are also sub-
ject to wealth tax, while dividend




Community of interests of Nidwalden trustees        6   7            Community of interests of Nidwalden trustees
N ATURAL                    PERSONS            III


earnings are subject to income tax.
This leads to a double taxation bur-
den, which is eased in the Canton
of Nidwalden. In the case of divi-
dend income from stock corpor-
ations or co-operatives domiciled in
Switzerland in which the sharehold-
er owns a stake of at least 5 %, or if
the corresponding stake has a mar-
ket value of at least CHF 5 million,
only half the rate of income tax is
applied, while the associated
wealth tax is reduced to 0.2 ‰. This
means that the double taxation
burden is reduced with respect to
both income and wealth tax. This
applies to both distributed profits
and benefits in kind.


Capital payments from
pension funds
Capital payments from pension
funds are taxed separately from the                                                      property and imputed rental values       basic rate of tax by the combined
remaining income on an annual                                                            determined in this way form the          tax multiple (cantonal/municipal).
basis. The basic tax rate is two-                        “Lift off and use the           basis for calculating the income
fifths of the ordinary tax rate or             favourable conditions”                    and wealth tax. The imputed rental
0.8 %, whichever is higher.                                                              value of owner-occupied residences       Lump-sum taxation
                                                                                         equals 70 % of its market rental
                                                                                         value.                                   Natural persons who become domi-
Property taxes                                                                                                                    ciled or resident in the Canton of
                                                                                                                                  Nidwalden for the first time or after
Property values and imputed rental                                                       Minimum tax on property                  an absence of at least ten years and
values are determined moderately.                                                                                                 who do not exercise any gainful
As a rule, the properties are in-                                                        The minimum tax applies in lieu of       employment in the Canton can
spected beforehand. The assess-                                                          ordinary income and wealth taxes.        benefit from the system of lump-
ment is a simplified procedure based                                                     It is only imposed if the ordinary in-   sum taxation where the income tax
on generally accepted rules. Per-                                                        come and wealth taxes are lower          is based on their living expend-
centage adjustments to take ac-                                                          than the minimum tax. The basic          itures, instead of paying income
count of general market fluctu-                                                          rate of tax is 0.3 ‰ of the taxable      and wealth tax. As a rule, this
ations are made before the                                                               value of the property. The minimum       reduces the tax burden.
beginning of every tax period. The                                                       tax is calculated by multiplying the




Community of interests of Nidwalden trustees                                     8   9                                            Community of interests of Nidwalden trustees
KNW-STEUERPROSPEKT-07E        10.7.2007        9:47 Uhr    Seite 10




            L EGAL              ENTITIES



            Profit and capital taxes                       the company in which a stake is         least two-thirds of the total assets
                                                           owned, or must have a market            or earnings for an extended period
            Legal entities are taxed accord-               value of at least CHF 2 million.        of time. Holding companies are es-
            ing to their legal form and busi-              Capital gains are taxed if the sale     sentially prohibited from exercising
            ness activities; they benefit                  proceeds exceed the investment          any business activity in Switzerland.
            from low profit and capital tax                costs and provided that the invest-     They are, however, permitted to
            rates as well as from the attract-             ment was kept for at least one year.    carry out subsidiary activities such
            ive rates applied to holding and                                                       as group management, administra-
            management companies.                          In addition to cantonal and munici-     tion and the exploitation of intan-
                                                           pal taxes, a direct federal tax is      gible assets or financial transac-
                                                           levied. This is applied at the stand-   tions. Holding companies pay a
            Stock corporations and                         ard rate of 8.5 % for the whole of      fixed capital tax at a rate of 0.25 ‰,
            co-operatives                                  Switzerland. The overall tax burden     or a minimum of CHF 500.
                                                           on the profits of a company domi-
            The basic rate of profit tax is 2.5 %,         ciled in the municipality of Her-
            while the basic rate of capital tax is         giswil, with a combined tax mul-        Management companies
            0.25 ‰. To calculate the rate of               tiple of 4.3 (cantonal/municipal),
            profit and capital tax payable by              and taking account of direct federal    Management companies are stock
            stock corporations and co-opera-               tax for the tax period 2007, is         corporations, co-operatives or foun-
            tives, the basic rate of tax is multi-         shown below.                            dations. These primarily exercise
            plied by the combined tax multiple                                                     management activities in Switzer-
            (cantonal/municipal). However, the                                                     land, and are taxed either as domi-
            minimum rate of tax is CHF 500 per             Holding companies                       ciliary companies (management ac-
            annum.                                                                                 tivity without business activity in
                                                           Stock corporations and co-opera-        Switzerland) or as mixed com-
            In the case of income on invest-               tives whose principal statutory pur-    panies (management companies
            ments in other companies, tax on               pose is the permanent administra-       with subordinated business activity
            profits is reduced by the ratio of             tion of investments in other            in Switzerland).
            earnings from these holdings to                companies are exempt from any tax
            overall taxable net profits. However,          on profits. This is conditional upon    Domiciliary companies are not per-
            the investment must equal at least             the investment or the profits from      mitted to exercise any business ac-
            20 % of the fixed capital stock of             the investment accounting for at        tivity in Switzerland. Their business                          “Deployment of precision
                                                                                                   activities must entail both procure-          instruments to reach the destination”
                                                                                                   ment as well as distribution on for-
                                                                                                   eign markets. Mixed companies
                                                                                                   may exercise a subordinate busi-
                                                                                                   ness activity in Switzerland, but        Management companies also pay a         multiplying the basic rate of tax by
                                                                                                   these must primarily focus on for-       fixed capital tax of 0.25 ‰. The        the combined tax multiple (canton-
                                                                                                   eign activities.                         minimum tax levied is CHF 500,          al/municipal).
                                                                                                                                            and the maximum is CHF 10 000.
                                                                                                   The tax imposed on profits is based
                                                                                                   on divisional accounts. Income                                                   Minimum tax on land
                                                                                                   from investments in other com-           Associations, foundations and
                                                                                                   panies as well as capital gains and      other legal entities                    The minimum tax takes the place of
                                                                                                   valuation gains on such investments                                              ordinary taxes on profit and capital.
                                                                                                   are tax-exempt. Other earnings           The simple tax on net profits is        This is only imposed when the ordin-
                                                                                                   generated in Switzerland are sub-        1.2 %. A profit of less than CHF        ary profit and capital tax is less
                                                                                                   ject to ordinary taxation. For domi-     10 000 is not taxed. The simple cap-    than the minimum tax. The basic
                                                                                                   ciliary companies, other foreign in-     ital tax amounts to 0.25 ‰. Capital     rate of tax is 0.3 ‰ of the taxable
                                                                                                   come is subject to ordinary taxation     of less than CHF 100 000 is not         value of the land. The effective rate
                                                                                                   at between 0 % and 20 %, while           taxed. The tax on profits and capital   is calculated by multiplying the
                                                                                                   the rate for mixed companies is be-      of associations, foundations and        basic rate of tax by the combined
                                                                                                   tween 10 % and 30 %.                     other legal entities is calculated by   tax multiple (cantonal/municipal).


            Community of interests of Nidwalden trustees                                                                              10    11                                                                              Community of interests of Nidwalden trustees
                                                    S PECIAL             TAXES               I


                                                    Property gains tax
        “Location with                              Natural persons and legal en-
many advantages”                                    tities benefit from numerous tax
                                                    deferral as well as comprehen-
                                                    sive loss offsetting opportuni-
                                                    ties.


                                                    Tax rate
                                                    Property gains tax is levied on the
                                                    profit earned on the sale of a piece
                                                    of land. A legal transaction which
                                                    has the same legal effect as a sale is
                                                    treated as a sale for tax purposes.
                                                    The gain is calculated on the differ-
                                                    ence between the total sales pro-
                                                    ceeds and the investment costs
                                                    (original purchase price plus value-
                                                    adding investments). In the case of
                                                    property used for business pur-
                                                    poses, a proportion of the gain
                                                    (book profit made through retrieved
                                                    depreciation on the property) is
                                                    subject to ordinary income tax or
                                                    profit tax. Only the proportion of
                                                    the gain which exceeds this (rate of
                                                    appreciation) is subject to property
                                                    gains tax. The seller of the property
                                                    pays the tax.

                                                    The tax burden is determined on
                                                    the basis of the duration of owner-
                                                    ship, and ranges between 12 %
                                                    (minimum tax rate for ownership of
                                                    30 years or more) and 36 % (maxi-
                                                    mum rate for ownership of one
                                                    year or less).


                                                    Tax deferral
                                                    Tax deferral is granted in particular
                                                    on transfers of ownership due to
                                                    inheritance, transfers of property
                                                    between spouses under marital
                                                    property law as well as to settle ex-
                                                    traordinary contributions made by
                                                    one spouse towards supporting the
                                                    family and claims brought under di-
                                                    vorce law (provided both spouses
                                                    agree to the tax deferral), transfers


Community of interests of Nidwalden trustees   12   13                                           Community of interests of Nidwalden trustees
S PECIAL                 TAXES                 II


of ownership in the course of re-                   Inheritance and gift taxes                and in-laws, 10 % for uncles, aunts
structuring (under certain condi-                                                             and their descendants, and 15 %
tions), and replacement purchases                   Natural persons and legal en-             for all others.
(under certain conditions). Deferred                tities benefit from tax-exempt
taxes are settled when the next tax-                gifts, from reductions in con-
able sale of the property takes                     junction with corporate succes-           Tax reductions for
place.                                              sion, as well as from the attract-        corporate successions
                                                    ive taxation of gifts made to or
                                                    from a (foreign) foundation.              When taking over business assets in
Offsetting losses                                                                             conjunction with a corporate suc-
                                                                                              cession, successors may under cer-
Losses which occur when part of a                   Tax-exempt gifts                          tain circumstances be granted a tax
property is sold can be offset                                                                reduction of up to 75 %.
against future gains on the sale of                 Any inheritance of property is sub-
the remaining pieces by subtracting                 ject to inheritance tax. All voluntary
them from the original cost of the                  gifts made between living persons,        (Non-domestic) foundations
property. Losses on the sale of                     insofar as the recipient is enriched
property can also be set off against                by the assets of another without          Provided that the bequest of assets
property gains reported in the same                 corresponding compensation, are           or the gifting thereof to a (non-
year.                                               subject to gift tax. The tax is levied    domestic) foundation is performed
                                                    when the testator/testatrix or the        exclusively and irrevocably for the               “Tax landscape with
Losses from the sale of properties                  donor was resident in the Canton          benefit of a precisely described      delightful prospects”
which comprise business assets are                  of Nidwalden, or if land located in       group of persons, the tax rate may
deemed to be the same as ordinary                   the Canton is transferred. The tax is     be determined on the basis of the
business losses; ordinary business                  payable by the recipient of the gift.     relationship between the benefi-
losses or losses brought forward                                                              ciary and the founder. Subsequent
can also be set off against property                However, gifts made to spouses,           donations of foundation assets to
gains.                                              children, grandchildren as well as to     the beneficiary are tax-exempt.
                                                    stepchildren and foster children,
                                                    gifts made to partners (provided
                                                    that they have co-habited for a
                                                    period of at least five years), as well
                                                    as gifts to tax-exempted legal en-
                                                    tities are all tax-exempt. Furthermore,
                                                    the tax-exempt sum of CHF 20 000
                                                    per annum may be deducted from
                                                    taxable transfers of assets (per an-
                                                    num and recipient).


                                                    Tax rates
                                                    Inheritance and gift tax rates
                                                    amount to 3 % for parents, step-
                                                    parents and foster parents, 5 % for
                                                    siblings and their descendants,
                                                    grandparents, great-grandparents




Community of interests of Nidwalden trustees                                                                                  14    15                                Community of interests of Nidwalden trustees
YOUR             TAX EXPERTS AND CONTACTS




                                               Alpina Treuhand AG         Cantonal Tax Authority
                                               Seestrasse 91              Bahnhofplatz 3
                                               CH-6052 Hergiswil          CH-6371 Stans
                                               Tel. +41 41 632 69 69      Tel. +41 41 618 71 27
                                               Fax +41 41 630 69 70       Fax +41 41 618 71 39
                                               www.alpinatreuhand.ch      steueramt@nw.ch
                                                                          www.nw.ch/steuern

                                               BDO Visura
                                               Obere Spichermatt 12       Municipal Tax Authorities
                                               CH-6371 Stans
                                               Tel. +41 41 618 05 50      Beckenried
                                               Fax +41 41 618 05 60       Tel. 041 624 46 25
                                               www.bdo.ch                 Fax 041 624 46 24
                                                                          Buochs
                                                                          Tel. 041 624 52 62
                                               Balmer-Etienne AG Stans    Fax 041 624 52 42
                                               Buochserstrasse 2          Dallenwil
                                               CH-6370 Stans              Tel. 041 629 77 93
                                               Tel. +41 41 619 26 26      Fax 041 629 77 98
                                               Fax +41 41 619 26 00       Emmetten
                                               www.balmer-etienne.ch      Tel. 041 624 99 99
                                                                          Fax 041 624 99 98
                                                                          Ennetbürgen
                                               Christen und Zobrist       Tel. 041 624 40 18
                                               Treuhand AG                Fax 041 624 40 19
                                               Achereggstrasse 10         Ennetmoos
                                               CH-6362 Stansstad          Tel. 041 618 20 02

                                                                                                           Design and layout: TRIART.CH, Stansstad · Photos: perretfoto.ch, Emmetten
                                               Tel. +41 41 618 26 18      Fax 041 618 20 09
                                               Fax +41 41 618 26 19       Hergiswil
                                               www.christen-treuhand.ch   Tel. 041 632 65 72
                                                                          Fax 041 632 65 77
                                                                          Oberdorf
                                               Würsch Treuhand AG         Tel. 041 618 62 63
                                               Sonnenbergstrasse 23       Fax 041 618 62 60
                                               CH-6052 Hergiswil          Stans
                                               Tel. +41 41 630 19 53      Tel. 041 618 80 24
                                               Fax +41 41 630 33 28       Fax 041 618 80 35
                                               info@wuersch-treuhand.ch   Stansstad
                                                                          Tel. 041 618 24 02
                                                                          Fax 041 618 24 25
                                                                          Wolfenschiessen
                                                                          Tel. 041 628 15 84
                                                                          Fax 041 628 15 80



Community of interests of Nidwalden trustees                                                          16