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MAP: The best cantons for business in Switzerland

From tax rules to staffing, airport access and education - here's the latest ranking on which areas of Switzerland are the most attractive to businesses.

MAP: The best cantons for business in Switzerland

Switzerland is undoubtedly one of the major global hubs for business – its central European location, neutrality, and connections to international organisations make it a great place to do business.

But which cantons have it better and why?

The main measure cantons can take to attract businesses is to revise their tax rules, and tax reforms over the past few years have shown results in attractiveness to companies, according to Credit Suisse’s 2022 locational quality study.

READ ALSO: What is the average salary for (almost) every job in Switzerland?

The lender has assessed the tax burden based on its tax indices for legal entities and private individuals to see how attractive a region may be. Corporate taxes on profit and capital as well as taxes on income and wealth for private individuals are taken into consideration.

Additionally, the Swiss bank looked into the availability of specialist labour and highly qualified personnel, basing this index on the level of education of the residents, inbound commuters and cross-border commuters of a region.

How accessible the canton is to the population, workers, and commuters was also a factor taken into consideration.

READ ALSO: Cost of living: The most – and least – expensive cantons in Switzerland

What are the most attractive cantons?

Credit Suisse attached a locational quality indicator (LQI) to each Swiss canton, with the best being +2.5 and the worst being -2.0. The map visualisation makes it clear that there is a cluster of business-friendly cantons: in German-speaking Switzerland.

Geneva, in the French-speaking region, also scores high, which is not a surprise, as the canton is home to many international organisations.

Still, the most attractive canton for business is, for the second year in a row, Zug, ahead of Basel-City, Zurich and Geneva.

Canton Aargau has suffered the most significant ranking loss, dropping two places just behind Nidwalden and Schwyz in 7th place. On the other hand, the cantons of Schaffhausen and Valais, in particular, have become more attractive, each climbing one place.

READ ALSO: Why Switzerland is no longer the tax haven it used to be

Nidwalden, Zug, and Appenzell Innerrhoden are fiscally more attractive

Zug takes the overall top place for a combination of factors, but critical changes in tax policy have brought other cantons higher on the ranking - especially since tax reforms are easier to implement than measures to attract more qualified workers, for example.

Schaffhausen has reduced taxes significantly for private individuals, climbing six places in the Credit Suisse tax index for private individuals.

Also worthy of note is Schwyz, which has become more attractive for private individuals by reducing the cantonal tax multiple considerably from 150 to 120, closing the gap to first-placed Zug.

READ ALSO: EXPLAINED: How where you live in Switzerland impacts how much income tax you pay

As part of Switzerland’s corporate tax reform, a small number of cantons have once again reduced their corporate tax rates this year.

The most considerable reductions have been observed in the cantons of Valais and Jura, each climbing one place to 20th and 22nd respectively in the tax index for legal entities, which is based on the tax burden faced by companies with varying profit situations in all Swiss municipalities.

However, a number of other cantons remain more fiscally attractive: The top places remain unchanged, with Nidwalden leading the way, just in front of Zug and Appenzell Innerrhoden.

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TAXES

Do I have to pay tax on a ‘side’ job in Switzerland?

As the tax deadline in most Swiss cantons (March 31st) is fast approaching, you may be wondering whether you need to declare ‘side’ jobs on your tax declaration.

Do I have to pay tax on a ‘side’ job in Switzerland?

Much depends on what you mean by a ‘side’ and a ‘job’,

Say you did a favour for someone and that person expressed gratitude by giving you 100 francs.

If you are a hardcore law follower, then yes, you can include that 100 francs on your income tax return.

But if you don’t declare it, you are not a tax evader. After all, that 100 francs was not, for all intents and purposes’ an ‘income,’ so you are in the clear.

However, this leeway does not apply to money you earn from any actual work you perform, including second jobs (the one you may have in addition to your main employment) as well as freelance income.

This is how it works

In principle, you must pay tax on earnings from all employment in Switzerland.

If you are  a foreign citizen (for instance, a cross-border worker) subject to at-source taxation (withholding tax) — then you don’t have to worry about declaring your wages.

That’s because your company deducts the tax from your salary each month and sends this amount to cantonal authorities on your behalf.

But most people working in Switzerland (whether Swiss or foreign nationals) must include all their income (from work and other sources), as well as other assets may they have, on tax forms they fill out and send to tax authorities each year.

That includes income from all your jobs — that is primary, secondary, ‘and side’.

READ ALSO: Does your nationality determine how much taxes you will pay in Switzerland?

Will the ‘extra’ work you declare on your tax return raise your tax bracket?

It depends on how much income this side job generates, as well as the tax rate of your canton (which is the lowest in Zug and highest in Geneva).

READ ALSO: Why does the canton of Zug have Switzerland’s lowest taxes?

If you earn a significant amount, then, yes, you will have to pay more income tax. But if it is little money, then you shouldn’t worry about a dramatic jump.

This, by the way, applies not only to extra work, but to any job.

If you are a freelancer and earn little money (by Swiss standards) , then your tax burden will be quite low.

This income must, however, be declared, and you will have to pay self-employment tax on it, as a contribution to the social security scheme — at a maximum rate of  9.7 percent of your income.

You can also take out a second-pillar pension  with an insurance company, though, contrary to ‘regular’ workers, this is not required if you are self-employed.

If you need to know more about paying Swiss taxes as a freelancer, this article will help:

READ ALSO: What freelancers in Switzerland need to know about paying tax

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