Swiss Canton Vaud Approves Tax Cuts

by Ulrika Lomas, Tax-News.com, Brussels

24 February 2009

Following a recent referendum, voters in the Swiss canton Vaud have approved a number of measures designed to alleviate the tax burden on the middle classes, to support businesses, and to prevent the exodus of further wealthy residents from the area.

Modifying both cantonal and municipal tax laws, the key changes – affecting 2009 tax – include:

• The introduction of a ceiling for individual taxation, covering both income and wealth taxes, at 60% of annual income.
• A reduction in dividend tax for shareholders with a minimum 10% participation in a company.
• For 2009, profits taxes act as a tax credit against capital tax.
• Capital gains tax can be rolled over in respect of the disposal and replacement of capital equipment, even if the new assets have a different purpose.
• The introduction of a new social deduction for families, designed to benefit married couples and single-parent families, and amounting to CHF1,300 per couple and CHF1,000 per child for annual incomes of up to CHF116,000. The amount reduces by CHF100 for every CHF2,000 increment above that income level.
• An increase in the maximum deduction for childcare costs – from CHF1,300 to CHF3,500 per child.
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