Taxes

Taxes in Switzerland vs Spain: Which should I pay?

Find out where it's better to live and declare your annual income taxes: Switzerland vs. Spain.

European countries are fixed destinations for any traveller, whether you want to ski in the Swiss Alps or enjoy a Michelin-starred Spanish paella. You might wish to board a plane and settle in any of them, but have you wondered how the tax system in Switzerland vs. Spain works?

Switzerland and Spain are countries with fairly high living costs, and it wouldn’t be a surprise if their taxes were similar. However, we tell you that both countries have varying tax burdens for businesses and individuals, and they may not be as harsh on your wallet as you might expect.

Stay with us as Holafly has prepared a guide to help you understand everything about taxes in Switzerland and Spain, the tax rates, variations, benefits, and deductions, so you can draw your own conclusions about where it’s best to pay taxes.

In this article

Tax System in Switzerland vs. Spain

The approach to taxes in Switzerland vs. Spain is different, both for financing public services and supporting economic development.

Switzerland’s taxes have a decentralised and competitive structure, although with more uniform taxes than Spain, whose system is progressive and aims for greater social equity. Both have specific implications for businesses and individuals.

Differences in the Tax System: Spain
Fiscal Progressiveness	Spain has a more progressive system, meaning high incomes pay a larger proportion. In contrast, Switzerland maintains more uniform and competitive rates.
Total Tax Burden	Switzerland has a lower overall tax burden for businesses and high-income individuals, while Spain tends to tax these groups more to redistribute wealth.
Regional Flexibility	Although both countries have fiscal autonomy, Switzerland’s autonomy is broader, allowing for greater regional variation.

Where is it better to pay taxes? Learn about the taxes in Switzerland and Spain @pixabay @unsplash

Taxes in Switzerland vs. Spain for Businesses

Businesses or legal entities face different tax structures in Switzerland vs. Spain. Here, we present the main taxes you must pay if you have a business and the benefits for businesses in both countries.

Corporate Tax

In Switzerland, corporate tax rates are competitive and range from 11% to 24%, depending on the canton.

Regions such as Zug and Lucerne have lower taxes to attract foreign investment.

Switzerland allows companies to benefit from international tax treaties and specific deductions for research and development activities (R&D)

In Spain, the corporate tax has a general rate of 25%. Notably, small and medium-sized enterprises (SMEs) and startups can access reduced rates or tax incentives, such as deductions for innovation and digitalisation.

Let’s look at some examples that illustrate this information better:

Switzerland	Spain
Let’s assume a company in Switzerland, located in the canton of Zug, has an annual profit of €500,000 ($544,000).	Let’s assume a company in Spain has annual revenue of €500,000 ($544,000).
In Zug, the combined tax rate (federal, cantonal, and municipal) is approximately 11.8%.	Applies the general corporate tax rate, which is 25%.
Therefore, the calculation of corporate tax would be around €59,000 ($64,000).	In this case, the corporate tax payable would be €125,000 ($136,000).

VAT (Value Added Tax)

VAT for businesses differs significantly:

In Switzerland, the standard rate is 7.7%, one of the lowest in Europe, which reduces operational costs for local and foreign businesses.
In Spain, the general rate is 21%, much higher compared to Switzerland, which can impact final prices and competitiveness.

Tax Benefits for New Companies

In Switzerland’s cantons, there are temporary tax exemptions for startups and businesses setting up in strategic sectors such as technology and innovation. Double taxation treaties even allow multinational companies to avoid additional tax burdens.

In Spain, there are incentives such as flat-rate schemes for the self-employed and deductions for tech startups, although the bureaucracy is often more complex than in Switzerland.

Where is it Better to Pay Taxes as a Legal Entity?

Learn about the tax types in Spain @unsplash

Based on the analysis of Switzerland vs. Spain taxes, Switzerland seems much more attractive for multinational companies or those focused on innovation, due to its low tax burden, investment incentives, and political stability.

If your business wants to minimise taxes and operate in an environment with competitive tax rates, Switzerland is the choice. On the other hand, Spain may be more suitable for businesses prioritising large markets and access to local talent.

Taxes in Switzerland vs. Spain for Individuals

When talking about individual taxation in Switzerland vs. Spain, both countries set various rates, exemptions, and progressive structures. Let’s look at the tax types to declare and their variations.

VAT in Switzerland vs. Spain

The VAT (Value Added Tax), applied to goods and services, is a key indicator for individuals:

In Switzerland, the standard VAT rate is 7.7%, with reductions of 3.7% for accommodation and 2.5% for essential goods and medicines. This benefits consumers and reduces the relative cost of living compared to other European countries.
In Spain, the general VAT rate is 21%, with reduced rates of 10% for sectors like tourism and food, and a further reduction of 4% for essential goods. Keep in mind, this high rate increases daily expenses for consumers.

Income Tax

Income tax in Switzerland varies across federal, cantonal, and municipal levels. The maximum federal rate is 11.5% and combined with cantonal rates, it can reach between 22% and 40%, depending on where you live.

In Spain, income tax is progressive, with rates ranging between 19% and 47%, where lower brackets benefit lower incomes and high-income levels are taxed more heavily, especially in autonomous communities.

Here’s a practical example to give you an idea of how much an individual taxes in Switzerland vs. Spain:

Switzerland	Spain
An individual resides in the canton of Zurich. At the federal level, a rate of 11.5% applies. With cantonal and municipal rates, the total burden ranges from 22% to 30%.	Here, the rate is progressive from 19% to 47%.
Annual income is €100,000 ($108,800).	For income of €100,000 ($108,800), the highest bracket would be 37%, on average.
Calculating an average rate of 25%, the total tax would be €25,000 ($27,200).	Calculating an average rate of 30%, the total tax would be €30,000 ($32,600).

Where is it Better to Pay Taxes as an Individual?

For individuals, Switzerland is more favourable for those with higher incomes due to its lower maximum rates and the ability to choose a canton with lower tax burdens. On the other hand, paying taxes in Spain might be beneficial for those seeking broader social benefits and specific deductions for medium and low-income earners.

In general, Switzerland attracts international professionals and expatriates with high incomes, while Spain offers opportunities for those who value a more robust social system.

Other Taxes in Switzerland and Spain

Pay taxes in Switzerland as a business or individual @unsplash

In addition to income tax, VAT, and corporate tax, Switzerland and Spain present notable differences in other types of taxes affecting both individuals and businesses. These taxes include property taxes, wealth taxes, inheritance, and donation taxes, as well as others specific to each country.

Property Taxes

In Switzerland

Property tax is low compared to other European countries. It is calculated at the cantonal and municipal level, with rates ranging between 0.1% and 0.3% of the property’s assessed value.
Ownership of real estate is not subject to a fixed annual federal tax, but income attributed to the property is added to the income tax calculation.
In general, the costs associated with property ownership in Switzerland are more competitive.

In Spain

There is the IBI (Property Tax), which is paid annually and varies by municipality, with rates between 0.4% and 1.1% of the assessed value.
The inheritance tax applies to property purchases with rates between 6% and 10%, depending on the autonomous community.
For large property estates, some regions apply additional taxes.

Wealth Taxes

In Switzerland

It is applied at the cantonal and municipal levels. Rates range between 0.1% and 1%, depending on the canton, and it is only applied to net wealth that exceeds certain thresholds.
This tax is less significant in Switzerland than in Spain, as the overall tax burden is lower.

In Spain

Wealth tax is higher and progressive, with rates ranging from 0.2% to 3.5% of net wealth, depending on the autonomous community.
Although there is an exemption threshold (usually €700,000 ($761,000)), some regions, such as Madrid, apply bonuses of up to 100%, while others, such as Catalonia, impose higher rates with fewer tax benefits.

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Inheritance and Donation Taxes

In Switzerland

These taxes are set at the cantonal level, and many cantons exempt direct heirs (children and spouses) entirely.
When applied, rates are low compared to Spain, and exemptions are generous.

In Spain

The inheritance and donation tax varies by autonomous community, with rates ranging from 7.65% to 34%.
Although there are significant reductions for direct family members in some regions (like Andalusia or Madrid), other communities, like Asturias, apply higher rates with fewer tax benefits.

Other Specific Levies

Switzerland

Motor vehicle taxes, which are calculated based on weight and CO2 emissions.
Stamp tax for financial transactions and insurance.

Spain

Special tax on hydrocarbons and electricity, which is higher than in Switzerland.
Local levies for economic activities or business openings.

Taxes in Switzerland vs. Spain: Where Do You Pay Less?

Live and pay your taxes in Switzerland @unsplash

When deciding between Switzerland vs. Spain, it is essential to analyse the fiscal differences based on the taxpayer’s profile and priorities. Both countries have well-structured tax systems, but the rates diverge significantly in the benefits and services provided.

In Switzerland, taxes are designed to favour high-income earners and large wealth holders.

On the other hand, Spain has a more progressive tax approach, with higher rates for high incomes but a greater number of deductions and exemptions for medium or low incomes.

Switzerland is better for those prioritising tax efficiency and savings on high income and wealth taxes, while Spain stands out for its social benefits and deductions for lower or middle incomes. Your choice will depend on your financial goals and desired lifestyle.

Tax Comparison Switzerland vs. Spain Spain

If your goal is to optimise your tax burden, consider your profile as a taxpayer and your priorities. Are you looking for stability and social redistribution, or lower rates and more independence?

To make it clearer and help you evaluate which tax system is more convenient for you, we summarised the information into two comparisons:

1. Tax Comparison Table for Individuals

Tax	Switzerland	Spain
VAT (Value Added Tax)	7.7% (general)	21% (general)
	3.7% (accommodation)	10% (tourism, food)
	2.5% (essential goods, medicines)	4% (essential goods)
Income Tax	11.5% (federal) + cantonal rates (22%-30%)	19% – 47% (progressive)
Tax on heritage	0.1% – 1% (cantonal)	0.2% – 3.5% (progressive)
Inheritance Tax	0% (direct heirs in many cantons)	7.65% – 34% (progressive)
Property Tax (IBI)	0.1% – 0.3% (cantonal)	0.4% – 1.1% (municipal)

Tax comparison for individuals Switzerland vs. Spain

2. Tax Comparison Table for Legal Entities (Companies)

Tax	Switzerland	Spain
Corporate Tax	11% – 24% (depending on the canton)	25% (general rate)
VAT (Value Added Tax)	7.7% (general)	21% (general)
	3.7% (accommodation)	10% (tourism, food)
Tax Benefits for New Companies	Exemptions in specific cantons (e.g., Zug)	Incentives for SMEs and startups
Tax on heritage	0.1% – 1% (cantonal)	0.2% – 3.5% (progressive)
Inheritance Tax	0% (direct heirs in many cantons)	7.65% – 34% (progressive)
Property Tax (IBI)	0.1% – 0.3% (cantonal)	0.4% – 1.1% (municipal)

Tax comparison for legal entities Switzerland vs. Spain

Remember, in Switzerland, depending on your place of residence, you can benefit from different tax burdens, and you can choose where it’s more convenient for you to live. In Spain, for example, your taxes will be calculated based on your income level, so if you earn above the threshold, your tax burden might be significant for your finances.