SWITZERLAND Law and Practice Contributed by: Philippe Nordmann, Marion Bähler, Dario Glauser, Christian Hagen and Samuel Lieberherr, Walder Wyss Ltd
topics in connection with occupational pension 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 aforementioned participation rights are not uniform but may, depending on the subject, be quite far-reaching (eg, pursuant to case law, the termination of an affiliation contract with an occupational pension fund without the neces - sary 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 taxation); 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 inter - ests is in Switzerland); • involved in gainful occupation and staying in Switzerland for at least 30 consecutive days; or • staying in Switzerland for at least 90 consec - utive days (irrespective of any gainful occupa - tion).
Income from enterprises and permanent estab - lishments outside of 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 inherit - ance 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 dealer) and gains from immovable assets (ie, real estate) located in Switzerland. Swiss income tax rates are progressive, with the marginal income tax rates varying between approximately 20% and 41%. Reduced taxa - tion 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, irrespective of whether unlimited or limited taxation applies. Swiss domestic tax law and the aforementioned principles 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 distinction 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 of Switzer- land (these assets are, however, considered in determining the applicable tax rate). Wealth tax rates vary significantly depending on the canton
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