“Flat Rate Tax” in the Canton of Obwalden – Natural persons
Obwalden was the first Swiss canton to introduce the “Flat Rate Tax”. Since 2008 Obwalden has been levying a uniform tax of 1.8 per cent on all income of natural persons. This rate of tax must be multiplied by the collection rate. The highest rate of tax on income is 24.1%; for dividends 13.2% and for capital assets 1.4 tenth of a per cent. Obwalden’s tax laws are family-friendly because their focus is on relieving the tax burden on married couples with a double income. Expenditure for childcare by third parties can be written-off completely against taxable income. In addition to this generous social security deductions are granted. More specifically, every taxpayer has, since 2008, been granted a fixed sum deduction of CHF 10 000.00.
Taxes on deeds of gift and inheritances in Obwalden
All voluntary allocations between living persons resulting in one individual benefitting from the assets of another without receiving a corresponding consideration are subject to the tax on gifts, including advances on inheritance and compensation in lieu of future inheritance.
All allocations based on legal inheritance law; instructions subsequent to decease or endowments on death are subject to inheritance tax.
Gifts and inheritances between spouses, relatives in ascendant or descendant generations including adopted and step-children and between siblings are exempted from tax. There is also no inheritance or gift tax on allocations which are not subject to a charge between cohabiting, registered partners who have lived in a joint household for at least five years.
The tax on gifts and inheritances is equivalent to 10 per cent of the value of the consideration for parents-in-law, son-in-law, daughter-in-law, uncle and aunt, nephew and niece and 20 per cent of the value of the consideration in all other cases.
After the gift has been made or the inheritance bequeathed the recipient must declare these assets in their income tax declaration for the year concerned under the section ‘List of assets’. For the rest, the correct taxes must be paid on assets and proceeds thereof.
The tax on gifts and inheritances is regulated by Sections 130 – 141 of the Obwalden Tax Law [Steuergesetz].
Attractive company taxation
With a rate of 12.66% (cantonal, parish and federal taxes) the Canton of Obwalden has one of Europe’s lowest rates of tax on earnings for legal entities. The rate of tax for holding companies is also very low. Capital tax for companies falling under standard and mixed assessment is 2 tenths of a per cent, 0.01 tenths of a per cent for holdings and purely domiciled companies. Entrepreneurs with a significant holding receive tax breaks since the commercial double burden is lessened. In Obwalden only one half of the dividends paid on shareholdings of 10 or more per cent are subject to tax.
Ambassador for the implementation of tax strategy
Thanks to his wide ranging network of contacts Dr.iur. Hans Hess has been appointed an “Ambassador for the implementation of tax strategy” by the financial authorities. His task is to win new natural persons and legal entities for the Canton of Obwalden and assist them in relocating to Obwalden.
Dr.iur. Hans Hess is at your service for further information.
Obwalden Tax Administration Department: www.steuern.ow.ch
Promotion of Obwalden: www.iow.ch