SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Christian Hagen, Samuel Lieberherr and Dario Glauser, Walder Wyss Ltd
employees casting a vote are in favour of the sug - gested constitution of a works council. Participation Rights According to the Federal Participation Act, the man - agement must provide the works council with all the information necessary to carry out its tasks properly (at least once a year). In addition, the works coun - cil has special participation rights (such as specific information rights, consultation rights or even a right of co-decision) in connection with questions relat - ing to occupational safety and employee protection, transfers of undertakings, collective redundancies and selected topics in connection with occupational pen - sion funds. In the absence of a works council, the employees may exercise their rights individually. Far-Reaching Consequences of a Violation of Participation Rights The potential consequences of a violation of the afore - mentioned participation rights are not uniform but may, depending on the subject, be quite far-reach - ing (eg, pursuant to case law, the termination of an affiliation contract with an occupational pension fund without the necessary consent of the works council/ employees must be considered null and void). 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers Taxes Applicable to Employees Income tax Income tax is levied at the federal, cantonal and municipal levels on: • the worldwide income from all sources in case of a tax resident employee (so-called unlimited taxa - tion); or • income earned in Switzerland in case of a non-tax resident employee (limited taxation). Individuals are considered tax resident if they are: • a Swiss resident (ie, the centre of vital interests is in Switzerland);
• involved in gainful occupation and staying in Swit - zerland for at least 30 consecutive days; or • staying in Switzerland for at least 90 consecutive days (irrespective of any gainful occupation). Income from enterprises and permanent establish - ments outside Switzerland is exempt from unlimited taxation. Further exemptions from income tax may apply, for example, with regard to certain types of income (such as income from inheritance, gifts and matrimonial property rights, which may however be subject to gift or inheritance taxes), capital gains from the disposal of privately held movable assets (eg, shares; such movable assets are in principle exempt unless the taxpayer is deemed a professional deal - er) and gains from immovable assets (ie, real estate) located in Switzerland. Swiss income tax rates are progressive, with the mar - ginal income tax rates varying between approximately 20% and 41%. Reduced taxation applies for certain non-occupational income (such as dividend income in case of qualified participation of at least 10% of the nominal share capital). The applicable tax rates are determined based on the worldwide income, irrespec - tive of whether unlimited or limited taxation applies. Swiss domestic tax law and the aforementioned prin - ciples of Swiss income tax may be overruled if, in an international context, a double taxation treaty (DTT) applies. DTTs have been concluded by Switzerland with over 100 countries. Wealth tax Levied on a cantonal and municipal level only, the dis - tinction between unlimited and limited taxation also applies. In case of unlimited taxation, wealth tax will be levied on the worldwide wealth, excluding assets attributable to business operations, permanent establishments or real estate outside Switzerland (these assets are, however, considered in determining the applicable tax rate). Wealth tax rates vary significantly depending on the canton and municipality of residence, with top marginal wealth tax rates varying between approxi - mately 0.1% and 1.0% above a certain threshold, which is usually tax-free.
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