In 2022, the direct federal tax (dft) accounts for 33.4% of total receipts of the federal budget. Together with value added tax (29.9%), it is the most important source of receipts for the Confederation.

Direct federal tax

The dft is levied on the income of individuals (48% of dft) and the net profit of companies (52% of dft). The wealth of individuals and the capital of companies are in contrast not targeted by the dft. The cantons assess and collect this federal tax annually for the Confederation, under its supervision.

The revenue from dft goes into the Confederation’s general fund coffers and, together with virtually all other federal receipts, is used to perform the Confederation’s various tasks. Each canton delivers generally 78.8% of the tax amount, fines and interest it collects to the Confederation. The cantonal share thus amounts to 21.2%.

Natural persons

Income tax is probably the best-known type of tax and is levied on the income of natural persons. This tax, to which all citizens are subject in principle, is of great importance for the fiscal revenue of public authorities. Both the Confederation and all cantons and municipalities levy a general income tax. In principle, it is assessed on the sum of all income (e.g. from employment or self-employment, from investment income, etc.). However, this sum (gross income) does not correspond to the taxable income. This only results after expenses, general deductions and social deductions have been made. Only the taxable income serves as the basis for calculating the tax. The amount of income tax calculated in this way thus takes into account individual circumstances in various respects, namely the amount of income, the costs of earning the income as well as the family burdens or personal living conditions. The income tax is thus a tax by measure and takes into account in a pronounced way the economic capacity of each individual taxpayer.

Legal entities

Legal persons are companies, corporations or institutions to which civil or public law confers their own legal personality and thus the ability to exercise rights and assume obligations independently, namely corporations, cooperatives, associations and foundations.

The method of taxation is not the same for all types of legal persons. Three main categories of legal persons are distinguished in tax law:

• Corporations (joint-stock companies, limited partnerships, limited liability companies): These pay a tax on profits and - only in the cantons - a tax on capital. The Federal Law on Direct Federal Tax provides for a proportional tax rate for profit tax. This is 8.5% of the net profit after deduction of taxes for corporations.
• Cooperatives: Cooperatives pay a tax on net profit as well as - at the cantonal level - a capital tax. The proportional rate of 8.5% for the profit tax applied for dft corresponds to that for corporations.
• Associations, foundations and other legal entities (e.g. public and ecclesiastical corporations and institutions). As a rule, these pay a profit tax and - only at the cantonal level - a tax on capital, unless they are exempt from tax liability due to their charitable, social or cultural purpose or due to their modest profit and/or capital. However, a lower proportional tax rate of 4.25% and an exemption limit of CHF 5,000 apply to profit tax.