Tax Return for Legal Entities

Not only natural persons, but also legal entities have to pay taxes in Switzerland and fill out a tax return. Depending on the size of a company and the complexity of the transactions carried out, completing the tax return of legal entities can be a challenge.

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Taxation of profit and capital

Legal entities situated in Switzerland have to pay the profit tax which is levied on the net profit generated each year. The basis for the tax calculation is the balance sheet and profit and loss account prepared under commercial law as part of financial accounting. However, various corrections can or must be made. Particular care must be taken when declaring depreciation, hidden reserves and provisions. In addition to the profit tax, companies domiciled in Switzerland must also pay a capital tax. Said tax is the equivalent to the wealth tax for individuals.

Learn more about the taxation of legal entities in Switzerland.

Tax returns for legal entities vary from canton to canton

The level of taxation and the deductions allowed vary from canton to canton in Switzerland. While the ordinary profit tax rate in Appenzell Innerrhoden in 2020 was only 11.5 percent, companies based in Berne had to pay almost twice as much (21.6 percent). Accordingly, the tax return to be completed also varies from canton to canton.

Net profit, appropriation of profit and equity capital

As part of the tax return, legal entities must disclose the net profit they have achieved in the taxed financial year. The taxable net profit is calculated on the basis of the balance of the income statement. For this purpose, expenses charged to the income statement that are not deductible for tax purposes (e.g. contributions to reserves) must be added to the balance. In return, expenses that are not charged to the income statement but are deductible for tax purposes (e.g. pension payments) can be deducted. In addition, a taxable company must declare how the annual profit generated has been used. The share of dividends, bonuses, allocations to retained earnings, etc. must be disclosed. Last but not least, the amount of the company's equity capital, consisting of the share capital, the reserves and the profit carried forward, must be stated in the tax return.

What does a tax return for legal entities look like? Here you will find an example from the canton of Zurich.

Do you need help filling out the tax return for legal entities? The specialists at taxea are happy to assist you with their comprehensive expertise.