Calculation of profit and capital tax
Taxation of profit
The profit tax is raised on the net profit which is determined by the balance of the profit and loss account, taking into account the balance carried forward from the previous year. Expenditures for expenses not justified by the business must also be added to this balance. The tax calculation basis is thus increased by:
- Costs for the acquisition, production or increase in value of fixed assets;
- Depreciation and provisions not justified by business reasons;
- Contributions to reserves;
- Payments into equity capital from funds of the legal entity, insofar as they are not made from reserves taxed as profit;
- Open and hidden profit distributions and donations to third parties that are not justified in business terms.
Income not credited to the income statement, including capital gains, revaluation gains and liquidation gains, is also included in the calculation basis.
Art. 58 DBG or Art. 24 para. 1 StHG contains a list of expenses justified on business grounds. These include in particular federal, cantonal and communal taxes, but not tax penalties, as well as contributions to pension funds for the benefit of staff.
Voluntary contributions of up to 20 percent of net profits to charitable organizations in Switzerland, as well as rebates, discounts and costs for the professional training and continuing education of the company's own staff, also qualify as business-related expenses
Particular caution is required with regard to the tax correction of hidden reserves, the tax correction of depreciation, provisions and hidden equity.
Certain transactions do not affect the income statement, i.e. no taxable profit is generated. This is the case in particular with capital contributions by members of corporations and cooperatives as well as the transfer of the registered office, the administration, a business operation or a permanent establishment within Switzerland, provided that no disposals or accounting expenses are made.
Capital gains from inheritance, bequests or gifts are neutral in terms of the profit tax as well, although they may be subject to inheritance or gift tax depending on the canton.
Summary: While the income tax is based on the entire income minus deductions, the profit tax is based on what remains at the end. For this purpose, certain items are added back to the net profit.
Taxation of capital
The capital tax for legal entities is the equivalent of the wealth tax for individuals. It is levied only by the cantons and varies greatly in its form. The general principles of capital taxation, to which each canton must adhere, are laid down in the StHG. Equity capital is taxed according to the reporting date principle.
However, the equity capital of companies is much more difficult to determine than the net assets of individuals. This is because equity is made up of share capital, reserves and hidden equity. The determination of each of these factors can be difficult depending on the size and structure of a company.