income tax switzerland usa russia germany france singapore andorra uae netherlands

Income Tax in Switzerland: How It Compares to Other Countries

Swiss, like nearly everyone else in the world, are not overjoyed about having to pay taxes. Turning over thousands of your hard-earned francs every year can be an eye-watering experience, but do Swiss residents really have anything to grumble about?

Many people in Switzerland feel that the taxes are higher than necessary. Then there are those who feel that taxes are too low, and push for high, centrally controlled taxes similar to those imposed in many European Union member countries.

Here, moneyland.ch compares Swiss income tax rates with those of other countries around the world to help add some perspective to the argument.

It's important to understand that aside from income taxes, many other possible taxes and social security contributions may apply. These vary greatly depending on the country you live in (or even the region or municipality) as well as your income levels, wealth, age, residence status, property, employment status and many other factors. To accurately compare the entire tax burden carried by residents of different countries, all obligatory contributions must be taken into account.

1. Germany

Marginal income tax rates in Germany range between 14% and 45%, depending on how much you earn. Taxes are levied primarily on a federal level, but states and municipalities also levy taxes, and because of this, the taxes you pay can vary depending on which part of Germany you reside in. For an individual earning the equivalent of a 70,000-franc annual income (approximately 60,300 euros as per November 2017), for example, an income tax rate of 41% applies to income in excess of 54,058 euros. Those earning a more realistic German income of 47,809 euros annually are subject to a marginal income tax rate of 19%, according to the Taxing Wages 2017 report by the OECD. German residents also pay a "solidarity tax" equal to 5.5% of personal income tax.

2. Russian Federation

Russian citizens and resident foreigners pay a 13% flat rate applies regardless of how much they earn. Russia became one of the first European countries to institute a flat-rate income tax in 2001.

3. France

France is known for its relatively high income taxes, particularly for high income earners. Marginal income tax rates range between 14% and 45%. The income tax rate for income between 26,818 euros and 71,878 euros is 30%. Individuals earning a more typical French income of 38,049 euros per annum pay approximately 14.7% of their income as income tax according to OECD estimates.

4. Singapore

The highest tax bracket in Singapore commands a marginal income tax rate of 22%. The Inland Revenue Authority of Singapore (IRAS) lists the income tax rate for a person earning the equivalent of 70,000 Swiss francs (approximately S$ 95,600 as per November 2017) at 7% for the first S$ 80,000 and 11.5% for the remaining amount. Singaporeans earning a more average income of S$ 40,000 per year pay 0% income tax on the first S$ 20,000, 2% on the next S$ 10,000 and 3.5% on the remaining S$ 10,000.

5. South Africa

Marginal income tax rates in South Africa range between 18% and 45%. At over 1 million rand (around 1,017,953 rand as per November 2017), the equivalent of a 70,000-Swiss-franc annual income would put you in South Africa’s second-highest income tax bracket. In 2018, a resident earning that amount could expect to pay 209,032 rand of income tax for the portion of their income below 708,311, plus 41% tax on the portion of their income in excess of that amount. If you have a more typical South African income of between 296,541 – 410,460 rand per year (approximately 20,340 – 28,150 Swiss francs, as per November 2017), you will pay around 61,910 rand in income tax on the first 296,541 rand, plus 31% income tax on the portion of your income which exceeds that threshold.

6. Denmark

Denmark is one of the few European countries which boasts a similar per-capita income to that of Switzerland. But while income levels may be relatively high, income taxes more than compensate. The OECD Taxing Wages 2017 report placed the average income tax rate in Denmark for an annual income of 412,555 kroner (just over 64,000 Swiss francs) at 36.2%. The highest marginal income tax rate applied in Denmark is 51.95%.

7. Netherlands

Marginal income tax rates in the Netherlands range between 8.9% and 52%. Residents of Holland earning over 67,072 euros fall into the highest tax bracket, and pay 52% on the portion of their income which exceeds the 67,072 threshold. The OECD places the 2016 average rate paid by Dutch residents with a more typical income of 50,853 euros per annum at 16.9%.

8. United Arab Emirates

Dubai and Abu Dhabi might be great vacation spots, but one of the United Arab Emirates’ biggest draws is the fact that the government does not levy any income tax at all. Nearby Qatar, Bahrain Kuwait and Oman also do not impose income taxes. Saudi Arabia does not levy an income tax, although capital gains taxes do apply.

9. Andorra

Until 2015, Andorra was one of the few European countries which did not enforce any income tax on its residents. However, the government bowed to pressure from the European Union and imposed an income tax in 2016. Any resident earning 40,000 euros or more now has to pay a 10% income tax on the portion of income in excess of that threshold. However, the government has reiterated the point that this is a nominal tax which has only been put in place to enable tax agreements in compliance with OECD standards.

10. United States

Taxes in the United States are levied on both State and Federal levels, so there are major differences in the income taxes paid in different parts of the country. Federal income tax rates range between 10% and 39.6%. Depending on which state you live in, you pay an additional state income tax ranging from 0% (no state income tax) in Texas, Florida, South Dakota, Washington, Wyoming, Alaska and Nevada to a whopping 13.3% (highest marginal tax rate) in California. The OECD’s Taxing Wages 2017 report lists the average income tax rate paid by Americans with an income of US$ 87,747 at 23.7%.

11. Switzerland

In Switzerland, income taxes are levied on federal, cantonal and municipal levels. So the amount you pay depends on which canton and even more specifically, which municipality you reside in. The OECD Taxing Wages 2017 report places the average income tax level for a Swiss resident earning an annual income of 85,536 francs at 10.7%. That is substantially less than the average paid by individuals with similar incomes living in many other countries. The average resident of Switzerland spends 10.7% of their income on income tax according to OECD estimates. For the sake of comparison, income tax eats up 14.8% of the average French income, 16.9% of an average Dutch income, 18.3% of the average U.S. resident’s income, 19% of the average German’s income, and 36.2% of the income earned by the average resident of Denmark.

Last update: November 2017

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The moneyland.ch magazine provides accurate, unbiased information on topics related to finance and money. In addition to research and expert interviews, the magazine contains numerous financial guides.