Switzerland Accounting & Tax Glossary

An AG (Société anonyme / Società anonima) is Switzerland's public limited company form. It requires a minimum share capital of CHF 100,000, of which at least 50% (minimum CHF 50,000) must be paid up on formation. Shares can be issued as registered shares (Namenaktien) or bearer shares (Inhaberaktien, now restricted). Governed by OR Articles 620–763.

A GmbH (Société à responsabilité limitée / Società a responsabilità limitata) is Switzerland's most common private limited company form. It requires a minimum share capital of CHF 20,000, all of which must be paid up on formation. Liability is limited to the company's assets. It is governed by the Swiss Code of Obligations (OR/CO), Articles 772–827.

AHV (Alters- und Hinterlassenenversicherung), IV (Invalidenversicherung), and EO (Erwerbsersatzordnung) are the three main Swiss federal social insurances. Together, they provide old-age/survivors pensions, disability insurance, and income replacement during military service or maternity leave. The combined contribution rate for employed persons is 10.6% employer + 10.6% employee = 21.2% of gross salary. Self-employed persons pay the full amount themselves at a slightly lower combined rate.

In Switzerland, dividends paid by a company are subject to Verrechnungssteuer (withholding tax) at 35% at source. Shareholders resident in Switzerland can reclaim the full 35% against their personal income tax (Einkommenssteuer). For qualifying corporate shareholders holding at least 10% of share capital (or participation worth CHF 1 million), a Beteiligungsabzug (participation deduction) effectively exempts most dividend income at the corporate level.

Gewinnausschüttung is the formal distribution of retained profits from a Swiss company to its shareholders, typically as a dividend (Dividende). Under Swiss company law, profit distributions from an AG or GmbH require a shareholder resolution at the annual general meeting, based on audited annual accounts. They trigger Verrechnungssteuer at 35% and personal income tax for the recipient shareholders.

Gewinnsteuer is Switzerland's corporate profit tax. At the federal level, the direct federal tax (direkte Bundessteuer) is levied at a flat rate of 8.5% on profit after tax, which equates to an effective rate of approximately 7.83% on pre-tax profit. Cantons levy their own Gewinnsteuer on top, meaning the combined federal and cantonal effective rate varies by canton.

Kapitalsteuer is a cantonal tax levied on a company's net equity (paid-in capital plus reserves plus retained earnings). It is a purely cantonal and communal tax — there is no federal Kapitalsteuer. Rates are low (typically 0.001 to 0.5% of net equity annually) but it is a recurring annual cost even in loss years.

Quellensteuer is Switzerland's withholding tax on employment income paid to foreign nationals who do not hold a C permit (permanent residence) or are not Swiss citizens. It is withheld by the employer from salary at source, at cantonal-specific rates, replacing the normal self-assessment income tax obligation for the affected employee.

Verrechnungssteuer is Switzerland's federal withholding tax, levied at 35% on dividends from Swiss companies, interest on Swiss bonds and bank deposits exceeding CHF 200 per year, and lottery winnings. It is a collection mechanism to ensure taxpayer compliance — Swiss residents can reclaim the full amount by declaring the income in their tax return.

The Saldosteuersatz is an optional simplified VAT accounting method in Switzerland where small businesses apply a sector-specific flat rate to their gross revenue instead of tracking individual input and output MWST. The flat rate is lower than the standard MWST rate and approximates the net VAT liability after typical input tax deductions for that industry.

MWST (Mehrwertsteuer in German, TVA in French, IVA in Italian) is Switzerland's value added tax. The standard rate is 8.1%, with a reduced rate of 2.6% for food, books, newspapers, medicines and certain agricultural goods, and a special rate of 3.8% for accommodation services. VAT registration is mandatory for businesses with annual turnover exceeding CHF 100,000.

OR-Rechnungslegung refers to the accounting and financial reporting requirements under the Swiss Code of Obligations (Obligationenrecht / OR). All Swiss companies must maintain proper books of account and prepare annual financial statements. For larger entities (revenue > CHF 40m, total assets > CHF 20m, or 250+ employees), additional reporting under Swiss GAAP FER or IFRS may be required.