Cantons with the Lowest Taxes in Switzerland

Switzerland is composed of 26 cantons (including Aargau, Geneva, Zurich, Zug, Nidwalden, Uri, and others), each of which has the authority to define its own tax legislation in accordance with the country’s federal structure. This autonomy results in significant variation between cantons in terms of tax rates and regulatory obligations.

Each Swiss canton is entitled to collect taxes that are not exclusively under the jurisdiction of the Swiss Confederation. Therefore, the cantonal tax systems differ substantially from one region to another, influencing corporate decisions regarding where to establish or relocate a business.

Our team of experts in Swiss company formation can assist with choosing the most tax-efficient canton depending on your business type. Below is a list of cantons that currently offer the most competitive corporate tax rates in Switzerland.

The canton of Lucerne has long been one of the most attractive tax jurisdictions in Switzerland. After implementing a reform in 2020, it currently offers a combined corporate income tax rate of approximately 12.2%, making it one of the lowest in the country.

Lucerne has actively restructured its tax and administrative framework to attract international businesses. In addition to favorable tax rates, the canton provides reliable infrastructure, skilled labor, and transparent legal procedures. These elements contribute to its popularity among SMEs and large companies alike.

Nidwalden has become a leading destination for companies seeking to benefit from Switzerland’s patent box regime. The canton applies a preferential tax rate on income derived from intellectual property, reducing the effective tax burden to as low as 10.1% in some cases.

Nidwalden is especially suitable for innovation-driven businesses, including pharmaceutical, software, and engineering firms. The canton’s low base tax rate and emphasis on supporting research and development make it a strategic choice for long-term investment.

The neighboring canton of Obwalden also offers an attractive tax framework, with a combined effective corporate tax rate of around 12.6%. Its low tax burden is complemented by minimal bureaucratic procedures, fast registration timelines, and political stability.

Obwalden is ideal for businesses seeking cost efficiency, particularly in sectors such as consultancy, real estate, and international trade.

Appenzell Ausserrhoden is another canton with competitive taxation, offering a total corporate income tax rate of approximately 13.0%. In addition to corporate entities, this canton is also favorable for the establishment of Swiss Foundations, thanks to flexible incorporation rules and supportive tax treatment for philanthropic structures. It has introduced targeted tax reforms to attract foreign investors and holding companies.

The canton is well known for its business-friendly environment, straightforward incorporation procedures, and flexible accounting standards for small and medium-sized enterprises.

Appenzell Innerrhoden offers a modest but still competitive corporate tax rate of around 13.04%. While the canton is smaller and more rural, it maintains a stable economic environment and provides businesses with personalized administrative support.

This canton is attractive for entrepreneurs and family-owned companies seeking a simple and low-cost jurisdiction to register their operations.

Zug is internationally recognized as one of the most tax-friendly cantons in Switzerland. With a combined corporate income tax rate of approximately 11.85%, Zug consistently ranks at the top of business-friendly locations both for Swiss and foreign investors.

Its popularity is also due to the presence of a highly developed infrastructure, stable legal system, and access to global markets. Zug is especially known for attracting companies in the finance, blockchain, and technology sectors.

The canton of Uri maintains a corporate tax rate of roughly 12.35%, making it one of the most appealing locations in Central Switzerland. Though relatively small in population, Uri benefits from low living costs and a streamlined administrative system.

Uri is particularly suitable for consultancy firms, logistics providers, and SMEs looking for a lean setup.

With a corporate income tax rate around 11.8%, Schwyz stands out as one of the most favorable cantons for business taxation. It combines competitive rates with a pro-business policy and access to Switzerland’s central transport routes.

Companies incorporated in Schwyz also benefit from the canton’s low individual tax burden, which makes it attractive for owner-managed businesses and executives relocating to Switzerland.

The canton of Neuchâtel has become increasingly attractive following a series of tax reforms aimed at reducing the corporate tax burden. Its current combined tax rate is approximately 13.57%, competitive within the French-speaking part of Switzerland.

Neuchâtel supports industry diversification and offers assistance to businesses in high-tech, watchmaking, and precision engineering sectors.

Glarus maintains a corporate tax rate of around 12.2%, similar to Lucerne. Though smaller in size and less well-known internationally, Glarus has simplified regulatory procedures and a supportive cantonal administration that assists new businesses.

Glarus is often selected by manufacturers and consulting firms aiming to benefit from low costs and manageable administrative obligations.

Although Zurich is not among the cantons with the lowest corporate tax rates, it offers numerous strategic benefits. The combined tax rate sits at around 19.7%, depending on the municipality. However, Zurich remains a preferred destination due to its economic power, international connectivity, and access to skilled labor.

It is a strong choice for companies in finance, insurance, legal services, and multinational management, despite slightly higher taxes.

When selecting a canton in which to register a company, businesses should consider more than just corporate tax rates. Other important factors include:

A detailed tax and operational comparison can help identify the optimal canton for your company structure and growth strategy.

As of the most recent data, Zug remains the canton with the lowest overall corporate tax burden, with a combined effective rate of 11.85%. Other cantons, including Schwyz, Nidwalden, and Lucerne, offer comparably low rates depending on the municipality and business model.

Each case should be evaluated based on industry, ownership structure, and long-term business goals.

Foreign entrepreneurs can incorporate a company in Switzerland without holding local citizenship. Swiss law allows for full foreign ownership and equal treatment under tax rules.

In most cases, at least one director must be a Swiss resident, though this can be arranged through nominee services. Our firm provides professional Swiss Resident Director solutions, ensuring full legal compliance while maintaining flexibility for foreign ownership and management structures. Our team offers direct support with this process.

While tax rates are essential for business owners, the cost of living also plays a role in the decision to relocate. Cantons such as Uri, Glarus, and Obwalden are generally more affordable than urban cantons like Zurich or Geneva.

Real estate, insurance, and healthcare costs should be included in relocation and operational planning. Foreign residents considering full relocation may also wish to familiarize themselves with Switzerland gun laws, which govern private ownership, licensing, and safe storage requirements throughout the cantons.

Switzerland’s fiscal system is based on a model of decentralization. This means that each canton — and in many cases, each municipality — holds the right to set its own tax policies, within the limits set by federal legislation.

This fiscal sovereignty results in strong tax competition among cantons, incentivizing governments to maintain attractive rates and efficient services. Companies engaged in regulated financial services must also ensure compliance with the Financial Institutions Act, which governs licensing and conduct rules for asset managers, trustees, and portfolio managers in Switzerland.

Real estate income is taxable in Switzerland, both at the cantonal and federal levels. Income from rented property, as well as imputed rental income for owner-occupied properties, must be declared by residents.

Capital gains from real estate are usually taxed at the cantonal level, with rates and exemptions depending on the holding period and property use. Professional assistance is recommended for real estate investors.

Switzerland applies the lowest standard VAT rate in Europe, currently at 7.7%. A reduced rate of 2.5% applies to essential goods such as food and books, while a special rate of 3.7% is applied in the hotel sector.

This low VAT level significantly reduces the overall consumer and business tax burden, making Switzerland attractive for B2C and e-commerce companies. To operate effectively in any Swiss canton, businesses must open a Swiss bank account for handling VAT payments, payroll, and cross-border transactions under Swiss financial regulations.

Tax competition remains a core feature of the Swiss system. Cantons frequently adjust their rates to attract new residents and businesses.

This dynamic environment provides entrepreneurs with the opportunity to optimize their corporate structure and reduce long-term operational costs.

Our Swiss tax advisors assist with identifying optimal cantonal jurisdictions based on tax rates, business objectives, and personal factors. Contact us for a custom consultation.