Wealth tax is an important specificity of Swiss tax law. It is levied exclusively by cantons and municipalities on the net assets of natural persons domiciled in Switzerland. Its amount can weigh significantly on the assets of wealthy taxpayers, particularly when assets are illiquid (properties, company participations). PBM Avocats accompanies its clients in Geneva and Lausanne in assessing and declaring their assets, challenging excessive valuations and legally structuring their assets to reduce the tax burden.
General Principles: Base and Tax Liability
Every natural person domiciled in a Swiss canton is liable to the cantonal wealth tax (art. 13 TAHA). The tax applies to the taxpayer's total net assets at the closing date of the tax period (31 December). Taxable assets include all positive asset values: bank holdings, listed and unlisted securities, claims, vehicles, properties, valuable objects, real rights and mortgage claims. All attested debts are deducted to arrive at the net assets subject to tax.
Tax liability is unlimited for persons domiciled in Switzerland, covering all worldwide assets, subject to the rules of cantonal attribution for properties and permanent establishments situated outside the canton of domicile (inter-cantonal and conventional rules). Persons not domiciled in Switzerland who own properties there are subject to limited liability in respect of those assets.
Asset Valuation: Cantonal Rules and Methods
Asset valuation is a crucial issue, as it directly determines the tax base. The TAHA requires cantons to value assets at market value, while authorising a capitalised yield value for real property (art. 14 TAHA). In practice, cantons often apply an official value below the actual market value for real property, which constitutes an indirect advantage for property owners. This value is generally revised periodically.
For listed securities, valuation is straightforward: the price on 31 December of the fiscal year. For participations in unlisted companies, the Swiss Tax Conference (STC) has established a standard method (Circular No. 28) combining yield value and asset value. This method may lead to challengeable valuations, notably for growing start-ups or companies under restructuring. PBM Avocats assists you in assessing the relevance of challenging the valuation retained by the tax authority and, where appropriate, in commissioning an independent expert.
Works of art, collections and jewellery are valued at their market value. Perpetual annuities and usufructs are capitalised according to official tables. Bank account holdings and claims are declared at their nominal value.
Rates, Schedules and Social Deductions in the Cantons of Geneva and Vaud
The rates and schedules of wealth tax vary considerably depending on the canton and municipality of domicile. In Geneva, wealth tax is progressive (Law on the Taxation of Natural Persons, LIPP) and applies to net assets exceeding an exemption threshold. Flat-rate social deductions are granted for the taxpayer, spouse and dependent children. The municipal tax is added as a multiplier coefficient. The overall Geneva rate, combined with the municipal tax, is one of the highest in Switzerland for large fortunes.
In the canton of Vaud, wealth tax is also progressive (Law on Direct Cantonal Taxes, LI-VD). The marginal rate applies to net assets exceeding the statutory social deductions. Vaud deductions are comparable in structure to those of Geneva, but rates and schedules differ. It is therefore important for persons considering a change of domicile to analyse the precise impact on their wealth tax burden.
Exemptions and Special Situations
Certain assets are legally exempt from wealth tax or benefit from favourable treatment. Tied pension assets (second-pillar OPA and third-pillar 3a) are not subject to wealth tax as long as they have not been paid to the beneficiary. Movable assets for personal use (household furniture, clothing) are exempt. Copyrights and moral rights over works whose holder is still living are generally not included in taxable assets.
Specific rules apply to agricultural and forest operations (valuation at yield value) and to certain financial instruments. Asset planning — notably through fiduciary structures, foundations or partnerships, when legally justified — can allow assets to be structured in a way that optimises the tax burden, subject to anti-abuse and tax evasion rules.
Frequently Asked Questions on Wealth Tax
Does the Confederation levy wealth tax in Switzerland?
No. Unlike income tax, wealth tax is an exclusively cantonal competence. The Confederation does not levy wealth tax on natural persons. Each canton and, by way of multiplier, each municipality, is free to set its own schedule, social deductions and asset valuation rules, within the framework set by the Federal Act on the Harmonisation of Direct Taxation of Cantons and Municipalities (TAHA). This results in significant disparities between cantons. By way of example, the overall wealth tax rate can vary from less than 0.1% in certain cantons to considerably more in others.
How are properties valued for wealth tax?
The valuation of properties for tax purposes is regulated by cantonal law. Most cantons use a tax value (official or estimated value) below the actual market value. The TAHA requires that this under-valuation not be excessive and that the tax value not exceed the capitalised yield value or the market value (art. 14 para. 2 TAHA). In Geneva, properties are valued according to a periodically revised tax value system. In the canton of Vaud, an official rental value system serves as the basis for valuation. The tax under-valuation can represent a significant asset advantage for property owners.
Are pension assets subject to wealth tax?
No. Tied pension assets — that is, second-pillar assets (occupational pension OPA) and third-pillar 3a assets — are exempt from wealth tax as long as they have not been paid out to the taxpayer. Pensions currently being drawn constitute taxable income, but do not constitute taxable assets. Third-pillar 3b assets (free-passage life insurance policies, ordinary savings accounts), however, are subject to wealth tax according to their surrender value or nominal value.
How are participations in unlisted companies valued?
The valuation of participations in unlisted companies (closely held companies limited by shares, limited liability companies) for tax purposes is carried out according to STC Circular No. 28 of the Swiss Tax Conference, which provides for a method combining yield value (based on capitalised profit) and asset value (value of net assets). The weighting between these two methods varies depending on whether the company is active or a holding company. This tax value may deviate significantly from the actual market value, upward or downward. PBM Avocats can assist you in challenging an excessive valuation or advising you on structures to optimise the tax value of your participations.
Can debts be deducted from taxable assets?
Yes. Taxable assets are net assets, that is, the difference between all assets and attested debts (art. 13 TAHA). All actual debts are deductible: mortgages, bank loans, documented private debts, outstanding tax debts, etc. Future or conditional debts are generally not admitted, however. Cantons also grant flat-rate social deductions (amount per taxpayer, spouse, dependent child) which reduce net assets before the schedule is applied. In Geneva and Vaud, these deductions are codified in the respective cantonal tax laws.