1 Foundations and Organization, Public Levies » 17 Public Levies » 172 Cantonal Taxes (STG)

1. Subject Matter of the Act

1 This Act governs

a) income and wealth taxes of natural persons;

b) profit and minimum taxes of legal persons;

c) withholding taxes of certain natural and legal persons;

d) real estate capital gains tax of natural and legal persons.

2 Personal designations refer equally to members of both sexes.

2. Tax Sovereignty and Tax Collection

1. The real estate gains tax is levied by the Canton; the other taxes mentioned in § 1 are levied by the Canton, districts, municipalities, and church communities.

2. The same assessment applies to all public entities.

3. Neither an inheritance tax nor a gift tax is levied.

3. Simple Tax and Tax Rate

1 The tax calculated according to the tax rates of this law is considered the

simple tax.

2 For income, wealth, profit, and minimal taxes, the Canton, districts, municipalities,

and church municipalities annually determine the tax rate in percentages of

the simple tax.

3 Withholding tax, real estate capital gains tax, gambling winnings tax under § 39,

and tax for small employment income under § 39a are only levied as simple taxes.

4 The tariffs and tax rates applicable at the end of the tax period shall apply.

II. Taxation of Natural Persons

A. Tax Liability

1. Personal Affiliation

1 Natural persons are liable to tax on the basis of personal affiliation

if they have their tax domicile or tax residence in the canton.

2 A person has a tax domicile in the canton if they

reside here with the intention of permanent stay or if federal law

assigns a special statutory domicile to them here.

3 A person has a tax residence in the canton if they

reside here, irrespective of temporary interruptions, while exercising gainful activity

for at least 30 days, or without exercising gainful activity

for at least 90 days.

4 A person who has their domicile in another canton or abroad and

resides in the canton merely for attending an educational institution or for care in a sanatorium

does not establish a tax domicile or tax residence.

## 2. Economic Affiliation

1 Natural persons without tax residence or stay in the canton are taxable due to economic affiliation if they

a) maintain businesses or permanent establishments in the canton;

b) own property, have usufructuary rights or personal rights of use economically equivalent thereto, in real estate located in the canton, or trade in such real estate.

2 Natural persons without tax residence or stay in Switzerland are furthermore taxable if they

a) carry out an gainful activity in the canton;

b) carry out a dependent gainful activity for an employer with a seat, actual management, or permanent establishment in the canton and Switzerland is granted a right to tax the gainful activity carried out abroad under the applicable international agreement in the tax sphere with the respective neighboring state;

c) as members of the administration or management of legal entities with a seat or permanent establishment in the canton, receive tantiemes, meeting fees, fixed remuneration, employee participation or similar compensation;

d) are creditors or usufructuaries of claims secured by real estate or chattel mortgages on real estate in the canton;

e) mediate real estate located in the canton;

f) receive pensions, retirement benefits or other benefits that are paid out by an employer or a provident institution with a seat in the canton on the basis of a former public-law employment relationship;

g) receive benefits from Swiss private-law institutions of occupational pension schemes or from recognized forms of tied private pension schemes with a seat or permanent establishment in the canton;

h) receive wages or other compensation for work in international transport aboard a ship or an aircraft or during road transport from an employer with a seat, actual management, or permanent establishment in the canton; taxation of seafarers for gainful activity aboard a seagoing vessel operated under the Swiss flag by such an employer remains excluded.

3 If the compensation does not accrue to the persons mentioned, but to third parties, these third parties are taxable for it.

4 In international relations, a permanent establishment is what can be covered as a permanent establishment based on the respective double taxation agreement. If no double taxation agreement exists, the concept of permanent establishment of the OECD Model Convention is decisive.

3. Scope of Tax Liability

1 In the case of personal affiliation, the tax liability is unlimited; however, it does

not extend to businesses, permanent establishments, and real estate outside

the canton.

2 In the case of economic affiliation, the tax liability is limited to those parts of

income and wealth for which a tax liability exists in the canton.

4. Tax Allocation

1 Tax allocation for businesses, permanent establishments, and real estate is carried out in relation to other cantons and abroad, as well as between individual districts, municipalities, and church communities, in accordance with the principles of federal law concerning the prohibition of intercantonal double taxation. Paragraphs 2 to 5 remain reserved.

2 If a Schwyz-based enterprise has offset losses from a foreign permanent establishment against domestic profits but records profits from this permanent establishment within the following seven years, a revision of the original assessment shall be undertaken to the extent of the profits that are creditable in the state of the permanent establishment; in this case, the losses from this permanent establishment shall subsequently only be taken into account in the canton for the determination of the tax rate. In all other cases, foreign losses shall only be taken into account for the determination of the tax rate. Regulations contained in double taxation agreements remain reserved.

3 Taxpayers without tax domicile or residence in Switzerland must pay tax on the income earned and the assets located in the canton for businesses, permanent establishments, and real estate.

4 Tax allocation for different church communities shall only be carried out to the extent that such an allocation must be made for the political communities. Where only different church communities within a single political municipality are affected, church tax shall be paid solely at the primary tax domicile.

5 Income and assets from individual properties such as reeds, cattle pastures, and other land parcels that are considered an integral part of the main agricultural enterprise are taxed in intercommunal relations at the location of the main property.

5. Tax Calculation in Case of Partial Tax Liability

1 Taxpayers who are liable to tax in the canton for only a part of their income and assets shall pay taxes on the values taxable in the canton at the tax rate corresponding to their total income. Social deductions from income and assets shall be granted proportionally. Paragraph 2 remains reserved.

2 Taxpayers without a tax domicile or residence in Switzerland shall pay taxes on business operations, permanent establishments, and real estate in the canton at least at the tax rate corresponding to the income generated in Switzerland.

6. Married Couples and Children under Parental Authority

1 The income and assets of taxpayers living in legally and factually undivided

marriage are aggregated without regard to the matrimonial property regime.

2 If only one spouse resides in the canton, they are subject to tax on their entire

income and assets. The tax liability does not extend to businesses, permanent

establishments, and real estate outside the canton. For the tax rate, the entire

marital income and assets shall be taken into account, applying §§ 35 para. 1

and 36 para. 2.

3 The income and assets of children under parental authority are attributed to

the holders of parental authority until the beginning of the year in which they

reach the age of majority. Reserved are earned income and substitute income

for which the minor child is taxed independently.

4 If not all persons subject to family taxation belong to the same cantonal church,

church taxes shall be paid proportionally according to the number of members

belonging to each. The circumstances at the end of the tax period are decisive.

6a. Registered Partnership

The position of registered partners within the meaning of the Federal Act on Registered Partnerships corresponds to that of spouses in this Act and its implementing provisions.

7. Taxation of Partnerships and Collective Investment Schemes

a) Simple Partnerships, General and Limited Partnerships; Foreign

Commercial Companies and Other Foreign Partnerships

1 Simple partnerships, general partnerships, and limited partnerships are not

taxable as such; their income and assets are proportionally attributed to the

partners and limited partners. If the participation ratios are uncertain, the

income and assets as a whole are taxed according to the rules applicable

to natural persons.

2 Foreign commercial companies and other foreign partnerships without legal

personality, which are subject to tax on the basis of economic affiliation,

pay taxes according to the provisions for legal entities. However, the share

of income and assets or profit and capital attributable to persons domiciled

or resident in Switzerland must be personally taxed by them.

b) Communities of Heirs

1 Communities of heirs are not taxable as such; their income and

assets are attributed proportionally.

2 If the entitlement to the estate is unclear, the community of heirs as

a whole is taxed according to the provisions applicable to natural persons at the last

domicile of the deceased person. Church tax is determined by

the denomination of the deceased person.

c) Collective Investment Schemes

Income and assets of collective investment schemes according to the Collective Investment Schemes Act of June 23, 2006 (CISA) are proportionally attributed to the investors; collective investment schemes with direct real estate holdings are exempt from this.

8. Commencement and Termination of Tax Liability

1 Tax liability commences on the day on which taxpayers take up tax domicile

or residence in the canton or acquire taxable assets here. In the case of

moving from another canton, tax liability commences, subject to federal law,

with the current tax period.

2 Tax liability ends with the death or departure of the taxpayers from the canton

or with the cessation of taxable assets in the canton. In the case of moving

to another canton, tax liability continues, subject to federal law, until the end

of the current tax period.

2a In the case of economic affiliation in the canton and tax domicile in another

canton, tax liability in the canton exists for the duration of the entire tax period,

even if the economic affiliation is established, changed, or abolished during the

year.

3 Taxpayers who withdraw from a cantonal church must pay church tax until the

day on which their written, personally signed declaration of withdrawal is received

by the church parish of their main tax domicile. For married couples and family

members, the church tax must be adjusted as of the time of withdrawal in

accordance with § 9 para. 4 sentence 1.

4 In the event of a change of domicile or residence within the canton, tax liability

based on personal affiliation is determined by the tax domicile at the end of the

tax period. Capital benefits according to § 38 are, however, taxed at the domicile

or place of residence at the time the benefit becomes due.

9. Tax Succession

1 Upon the death of taxpayers, their heirs succeed to their rights and obligations. They are jointly and severally liable for the taxes owed by the deceased up to the amount of their inheritance shares, including advance inheritances.

2 The surviving spouse is liable with their inheritance share and the amount they receive under matrimonial property law from the surplus or joint property beyond the statutory share under Swiss law.

3 The surviving registered partners are liable with their inheritance share and the amount they have received on the basis of a property agreement within the meaning of the Federal Act on Registered Partnerships.

10. Liability

1 Married persons living in a legally and factually undivided marriage are

jointly and severally liable for the total tax. Both are liable for their share of the

total tax if one of them is insolvent. In the case of a separated marriage,

joint and several liability ceases, even for all outstanding tax debts. Unlim-

ited joint and several liability exists for that part of the total tax that is attributable

to the attributed child's income and assets.

2 The following persons are jointly and severally liable with the taxpayers

a) children under their parental care, up to the amount of their share of the

total tax;

b) partners residing in Switzerland of a simple partnership,

general partnership or limited partnership, up to the amount of their partnership

shares, for the taxes of partners residing abroad;

c) the party to a purchase agreement for a property located in the canton,

up to 3 percent of the purchase price, for the taxes owed by an intermediary

person engaged by that party for this activity, provided that this person

does not have a tax domicile in Switzerland;

d) persons who dissolve businesses or permanent establishments in the canton

or sell or realize real estate located in the canton or claims secured by such

property, up to the amount of the net proceeds, if the

taxable person does not have a tax domicile in Switzerland.

3 Liability according to paragraph 2 letter d lapses if the liable person proves

that they have exercised all due diligence required by the circumstances.

11. Taxation Based on Expenditure

a) Prerequisites

1 The Cantonal Government may grant natural persons the right to pay a tax based on expenditure instead of income and wealth tax, if they

a) do not have Swiss citizenship;

b) are unlimitedly liable to tax (§ 4) for the first time or after an interruption of at least ten years; and

c) do not pursue any gainful activity in Switzerland.

2 Spouses living in legally and factually undivided marriage must both fulfil the prerequisites according to para. 1.

b) Assessment and Calculation

1 The tax, which replaces income tax, is assessed based on the annual living

expenses incurred by the taxable person and persons maintained by them,

domestically and abroad, during the assessment period, but at least

based on the highest of the following amounts

a) 600,000 Swiss francs;

b) for taxpayers with their own household: seven times the annual

rent or rental value according to § 22 para. 1 lit. b;

c) for other taxpayers: three times the annual board and lodging

price at the place of residence according to § 4.

2 The tax is calculated according to the ordinary tax tariff.

3 The lump-sum wealth tax, which is calculated according to the ordinary tax

tariff, shall apply at least to the assets mentioned in para. 4. The assessment

basis shall be at least twenty times the assessment basis for the lump-sum

income tax.

4 The expenditure-based tax must be at least as high as the sum of the income

and wealth taxes calculated according to the ordinary tariffs on the entire

gross amount of

a) immovable property located in Switzerland and its income;

b) movable property located in Switzerland and its income;

c) movable capital invested in Switzerland, including claims secured by

mortgage, and its income;

d) copyrights, patents and similar rights exploited in Switzerland and their

income;

e) pensions, annuities, and retirement benefits flowing from Swiss sources;

f) income for which the taxable person claims full or partial relief from foreign

taxes pursuant to an agreement concluded by Switzerland for the avoidance

of double taxation.

5 If income from a state is only relieved from its taxes if Switzerland taxes this

income alone or with other income at the rate of the total income, then the

tax is assessed not only on the income specified in para. 4, but also on all

components of income from the source state allocated to Switzerland

under the relevant double taxation agreement.

6 The Government Council may provide for a tax assessment and calculation

deviating from para. 1 and 4 if this is necessary to enable taxpayers

mentioned in § 15 para. 1 to obtain relief from the taxes of a foreign state

with which Switzerland has concluded a double taxation agreement.

12. Tax Relief for Businesses

1 For newly established partnerships serving the economic interests of the Canton, the Cantonal Government, after hearing the opinion of the competent municipality, may grant appropriate tax relief for the year of establishment and the nine subsequent years. A significant change in business activity is deemed equivalent to a new establishment.

2 The granting of tax relief is subject to conditions and obligations.

13. Tax Exemption

Beneficiaries according to Article 2, paragraph 2 of the Host State Act of

June 22, 2007 (HSA) shall not be taxed to the extent that federal law

provides for a tax exemption.

B. Income Tax

1. Taxable Income

a) General

1 All recurring and one-off income is subject to income tax.

2 Income also includes benefits in kind of all kinds, particularly free board and lodging, as well as the value of self-consumed products and goods from one's own business.

3 Capital gains from the sale of movable private assets are tax-exempt.

b) Dependent Employment / Non-Self-Employed Activity

aa) Principle

1 All income from private or public employment, including ancillary income such as compensation for special services, commissions, allowances, long-service and anniversary gifts, gratuities, tips, royalties, monetary benefits from employee shareholdings, and other monetary benefits, is taxable.

2 Costs of occupation-oriented education and training, including retraining costs, borne by the employer are not considered other monetary benefits, regardless of their amount.

bb) Employee Share Schemes

1 The following are considered true employee share schemes

a) shares, dividend-right certificates, participation certificates, cooperative shares or

participations of another kind, which the employer, its parent company

or another group company issues to employees;

b) options to acquire participations according to lit. a.

2 Entitlements to mere cash settlements are considered fictitious employee share schemes.

cc) Income from genuine employee share ownership plans

1 Monetary benefits from genuine employee share ownership plans, with the exception of restricted or unlisted options, are taxable as income from dependent employment at the time of acquisition. The taxable benefit corresponds to their fair market value less any acquisition price.

2 For employee shares, lock-up periods are to be taken into account for the calculation of the taxable benefit with a discount of 6 percent per lock-up year on their fair market value. This discount applies for a maximum of ten years.

3 Monetary benefits from restricted or unlisted employee options are taxed at the time of exercise. The taxable benefit corresponds to the fair market value of the share at the time of exercise less the exercise price.

dd) Income from Non-Genuine Employee Participations

Monetary benefits from non-genuine employee participations are taxable at the time of their inflow.

ee) Proportional Taxation

If the taxpayer did not have tax residence or a stay in Switzerland during the entire period between the acquisition and the creation of the right to exercise the blocked employee options in accordance with § 18b para. 3, then the monetary benefits arising therefrom will be taxed proportionally, in relation to the total period versus the period spent in Switzerland.

c) Self-Employment

aa) Principle

1 All income from self-employment is taxable.

2 Income from self-employment also includes all capital gains from the sale,

realization, or book revaluation of business assets. The transfer of business

assets to private assets or to foreign businesses or permanent establishments

is treated as equivalent to a sale. Business assets are all assets that are used

wholly or predominantly for self-employment. The same applies to participations

of at least 20 percent in the share capital of a corporation or cooperative, provided

they are declared by the taxpayers as business assets at the time of acquisition.

3 For taxpayers who keep proper accounts, § 64 applies mutatis mutandis.

4 Furthermore, the following are taxable as income

a) Gains on real estate that is part of business assets, to the extent that

depreciations have been allowed;

b) Partial sales losses claimed under § 119 para. 2, if they have been taken

into account as tax-reducing for the real estate gains tax.

bb) Restructuring

1 Hidden reserves of a sole proprietorship or partnership (sole proprietorship,

partnership) are not taxed during restructurings, particularly in the case of

merger, demerger or conversion, as long as tax liability in Switzerland

continues to exist and the values previously decisive for income tax are

adopted

a) upon the transfer of assets to another sole proprietorship or partnership;

b) upon the transfer of an enterprise or a part of an enterprise to a legal

entity;

c) upon the exchange of equity or membership rights in connection with

restructurings within the meaning of § 67 para. 1 or merger-like

combinations.

2 In the case of a restructuring according to para. 1 lit. b, the transferred hidden

reserves are subsequently taxed in proceedings according to §§ 175 to 177,

insofar as equity or membership rights are sold within the five years

following the restructuring for a price exceeding the transferred tax equity;

in this case, the legal entity can claim corresponding hidden reserves taxed

as profit.

cc) Further Deferral Grounds

1 The leasing out of a business operation shall only be considered as a transfer

to private assets upon application by the taxpayer.

2 If, in the case of an inheritance partition, the business operation is not continued

by all heirs, the taxation of the hidden reserves shall be deferred, upon request

of the heirs taking over the business, until a later realization, provided that

these heirs adopt the previous values relevant for income tax purposes.

dd) Partial taxation of income from business assets

1 Dividends, profit shares, liquidation surpluses and monetary benefits from

shares, interests in limited liability companies, cooperative shares and participation

certificates, as well as gains from the sale of such participation rights, are taxable

to the extent of 50 percent after deduction of attributable expenses, provided

that these participation rights represent at least 10 percent of the share or

member capital of a corporation or cooperative.

2 The partial taxation on capital gains is only granted if the disposed participation

rights were held by the taxpayer or the sole proprietorship for at least one year.

d) Income from movable assets

aa) Principle

1 All income from movable assets is taxable, in particular

a) Interest from deposits, including disbursed income from redeemable

capital insurance policies with single premiums upon survival or

repurchase, unless these capital insurance policies serve for pension provision.

Payment of the insurance benefit from the completed 60th year of age of the insured person, based on a

contractual relationship of at least five years, established before the completion of the 66th

year of age, is considered to serve for pension provision. In this case, the benefit is tax-exempt;

b) Income from the sale or repayment of bonds with predominantly single-payment interest (global interest bonds, discount bonds) accruing to the holder;

c) Dividends, profit shares, liquidation surpluses, and pecuniary benefits from participations of all kinds (including bonus shares, bonus nominal value increases, and the like). A liquidation surplus realised upon the return of participation rights is considered realised in the year in which the withholding tax claim arises;

d) Income from the rental, leasing, usufruct, or other use of movable property or usable rights;

e) Income from units in collective investment schemes, to the extent that the total income exceeds the income from direct real estate;

f) Income from intangible assets.

1a Dividends, profit shares, liquidation surpluses, and pecuniary benefits from shares, shares in limited liability companies, cooperative shares, and participation certificates (including bonus shares, bonus nominal value increases, and the like) are taxable to the extent of 50 percent if these participation rights represent at least 10 percent of the share capital or capital stock of a corporation or cooperative.

2 The proceeds from subscription rights are not considered asset income, provided they belong to the private assets of the taxpayer.

bb) Capital Contribution Principle

1 Repayment of contributions, agios, and subsidies (reserves from capital

contributions) made by holders of participation rights after December 31,

1996, shall be treated in the same way as the repayment of share capital or

ordinary share capital. This applies to contributions and agios made within

the scope of a capital band according to Art. 653s et seq. of the Swiss Code

of Obligations (OR) only to the extent that they exceed the repayments of

reserves within this capital band.

2 If a corporation or cooperative listed on a Swiss stock exchange does not

distribute other reserves to at least the same extent as the repayment of

reserves from capital contributions according to para. 1, then the repayment

is taxable to the extent of half the difference between the repayment and the

distribution of other reserves, but at most to the extent of the other reserves

available in the company that are distributable under commercial law.

3 Para. 2 is not applicable to reserves from capital contributions

a) which arose after February 24, 2008, from merger-like combinations by

contributing participation and membership rights in a foreign corporation or

cooperative according to § 67 para. 1 lit. c or by a cross-border transfer to

a domestic subsidiary according to § 67 para. 1 lit. d;

b) which were already present in a foreign corporation or cooperative at the time

of a cross-border merger or restructuring according to § 67 para. 1 lit. b

and para. 3 or the relocation of the registered office or effective management

after February 24, 2008;

c) in the case of liquidation of the corporation or cooperative.

4 Paras. 2 and 3 apply mutatis mutandis also to reserves from capital

contributions that are used for the issuance of bonus shares or for bonus

nominal value increases.

5 If, upon the return of participation rights in a corporation or cooperative listed

on a Swiss stock exchange, the repayment of reserves from capital

contributions does not correspond to at least half of the liquidation surplus

received, the taxable portion of this liquidation surplus shall be reduced by

half the difference between this portion and the repayment, but at most by the

amount of reserves from capital contributions available in the company that

are attributable to these participation rights.

cc) Special Cases

1 Income from movable property within the meaning of Article 21 paragraph 1 letter c

also includes

a) the proceeds from the sale of a participation of at least 20 percent in the

share capital or equity capital of a company limited by shares or a cooperative

from private assets to the business assets of another natural

or legal person, insofar as within five years after the

sale, with the cooperation of the seller, non-essential substance is distributed

which was already in existence at the time of the sale

and distributable under commercial law; this applies mutatis mutandis also

if within five years several participants jointly sell such a participation

or participations totalling at least 20 percent are sold; distributed substance will

be subsequently taxed at the seller's end, if applicable, in proceedings under

Articles 175 to 177;

b) the proceeds from the transfer of a participation in the share capital

or equity capital of a company limited by shares or a cooperative from private assets to

the business assets of a sole proprietorship or a legal

person in which the transferor or contributor holds at least 50 percent of the capital

after the transfer, insofar as the total consideration received

exceeds the sum of the nominal value of the transferred participation

and the reserves from capital contributions according to Article 21a; this applies

mutatis mutandis also if several participants jointly carry out the transfer.

2 Cooperation within the meaning of paragraph 1 letter a exists if the seller knows or

must know that funds were withdrawn from the company for the purpose of financing

the purchase price and not repaid.

e) Income from Immovable Property

1 All income from immovable property is taxable, in particular

a) all income from lease, tenancy, usufruct or other use;

b) the rental value of properties or parts of properties that are available to the

taxpayers for their own use on the basis of ownership or gratuitous rights of use;

c) income from building lease agreements, with the exception of one-off compensations

for constructions;

d) income from the exploitation of gravel, sand and other components of the soil, insofar

as the exploitation does not lead to a market value below the cost of production.

2 The imputed rental values for self-occupied properties are determined with the aim of

capturing 65 percent of the market rental value, taking into account local conditions. The

imputed rental value for the normal agricultural housing requirement is assessed on an

agricultural basis. Persistent under-occupancy will be taken into account upon request.

3 The Cantonal Council determines the essential valuation bases, regulates the procedure

and decides on the timing and extent of general and periodic adjustments.

f) Income from Pensions

1 All income from old-age, survivors' and disability insurance, from occupational

pension schemes and from recognised forms of restricted private provision,

including capital lump sums and repayments of deposits, premiums and contribu-

tions, are taxable.

2 Income from occupational pension schemes includes, in particular, benefits from

pension funds, from savings and group insurance policies, and from vested bene-

fits policies.

3 Capital lump sums from a pension scheme linked to an employment relationship

or similar capital lump sums from the employer are taxed according to § 38.

4 Life annuity insurance policies as well as life annuity and maintenance agree-

ments are taxable to the extent of their income share. This is determined as follows

a) For guaranteed benefits from life annuity insurance policies subject to the

Federal Act on Insurance Contracts of 2 April 1908 (ICA), the maximum

technical interest rate (m) determined at the time of contract conclusion on

the basis of Art. 36 para. 1 of the Federal Act on the Supervision of Insurance

Companies of 17 December 2004 (ISA) is decisive for the entire contract

duration

1. If this interest rate is greater than zero, the income share, rounded up or

down to the nearest whole percentage point, is calculated as follows

Income share =

2. If this interest rate is negative or zero, the income share is zero percent.

b) For surplus benefits from life annuity insurance policies subject to the ICA,

the income share corresponds to 70 percent of these benefits.

c) For benefits from foreign life annuity insurance policies, from life annuity

and from maintenance agreements, the annualised yield of ten-year federal

bonds (r), increased by 0.5 percentage points, during the relevant tax year and

the nine preceding years, is decisive

1. If this yield is greater than zero, the income share, rounded up or down to

the nearest whole percentage point, is calculated as follows

Income share =

2. If this yield is negative or zero, the income share is zero percent.

g) Other Income

The following are also taxable

a) all other income that replaces income from gainful employment;

b) lump-sum or recurring payments upon death, as well as for permanent physical or health disadvantages;

c) compensation for the relinquishment or non-exercise of an activity;

d) compensation for the non-exercise of a right;

e) maintenance contributions received by taxpayers for themselves in the event of divorce, judicial or de facto separation, as well as maintenance contributions received by a parent for children under their parental care or custody.

2. Tax-Exempt Income

The following are not subject to income tax

a) the acquisition of assets by way of inheritance, legacy, gift or matrimonial

property settlement;

b) the acquisition of assets from redeemable private capital insurance,

with the exception of vested benefits policies. § 21 para. 1 lit. a remains reserved;

c) capital payments made by employers or by

occupational benefit institutions upon a change of employment, provided they are used within

one year to purchase into an occupational benefit institution or

to acquire a vested benefits policy;

d) support payments from public or private funds;

e) benefits in fulfillment of family law obligations, with the exception

of maintenance contributions according to § 24 lit. e;

f) the pay of militia firefighters up to the amount applicable for direct federal tax

for services in connection with the fulfillment of the core tasks of the fire brigade (drills, standby duties, courses, inspections

and emergency deployments for rescue, firefighting, general

disaster relief, elemental damage management and the like); excluded

are flat-rate allowances for cadres, functional allowances, as well as compensation

for administrative work and for services voluntarily

rendered by the fire brigade;

g) the pay for military and civil protection service, as well as pocket money for civilian service;

h) the payment of satisfaction sums and integrity compensation;

i) income based on federal legislation on supplementary benefits

to old-age, survivors' and disability insurance;

j) the following winnings from money games permitted under the Federal Act on Money

Games of 29 September 2017 (FMG)

1. winnings from casino games, provided they do not stem from self-employed

activity;

2. individual winnings up to an amount of 1 million francs from

participation in large games and from online participation in casino

games;

3. winnings from small games.

k) individual winnings from lotteries and skill games for sales promotion,

which are excluded from the scope of the FMG according to Art. 1 para. 2 lit. d and e,

provided the limit of 1000 francs is not exceeded;

l) income based on the Federal Act on Bridging Benefits for Older Unemployed Persons

of 19 June 2020 (ÜLG).

3. Determination of Net Income

a) Principle

To determine net income, the necessary expenses (§§ 27 to 32) incurred in

generating them, and general deductions (§ 33), are subtracted from the total

taxable income.

b) Dependent Employment

aa) Indirect Professional Expenses

1 The following are deductible as professional expenses

a) the necessary costs for travel between home and workplace up to a maximum of 8,000 Swiss francs;

b) the necessary additional costs for meals outside the home and for shift work;

c) the necessary additional costs for weekly stays away from home, whereby the deduction for travel costs between the accommodation away from home and the tax domicile, and between the accommodation away from home and the workplace, shall not exceed 8,000 Swiss francs.

2 The Government Council shall issue the implementing provisions required for the determination and assessment of these expenses and shall set lump-sum deductions.

3 For married couples living in an undivided marriage, the deductions are granted separately to each dependently employed person.

bb) Direct Professional Expenses

1 Furthermore, other costs necessary for the exercise of a profession may be

deducted as professional expenses. Article 33 para. 3 lit. g remains reserved.

2 Direct professional expenses not reimbursed by the employer, namely

expenditures for professional tools and professional clothing, professional

literature, private study and strenuous work, as well as for minor expenses

that are difficult to prove, such as parking and telephone fees, may be

deducted for tax purposes with a lump-sum deduction for expenses incurred

in earning income. The deduction amounts to 20 percent of the net salary

confirmed by the salary statement, maximum 6900 Swiss francs.

3 Direct professional expenses reimbursed by the employer with lump sums

are not offset as components of income, provided that, together with the

deduction under para. 2, they do not exceed 10 percent of the net salary

confirmed by the salary statement, maximum 11 100 Swiss francs. If the

taxable net salary exceeds 111 000 Swiss francs, a further deduction of 5

percent on the portion of the salary exceeding 111 000 Swiss francs is also

permissible, but maximum 5600 Swiss francs.

4 The Department of Finance may, in derogation from paras. 2 and 3

a) issue different lump-sum rates for specific professional groups;

b) approve expense regulations of companies.

5 Instead of the lump sums according to paras. 2 and 4, the necessary actual

direct professional expenses may be claimed, provided that proof thereof is

furnished.

6 For married couples living in an undivided marriage, the deductions accrue to

each employed person separately.

c) Self-Employment

aa) General

1 In the case of self-employment, business or professional expenses are deductible.

2 These include in particular

a) depreciation of business assets;

b) provisions for liabilities whose amount is still uncertain, or for imminent

risks of loss;

c) contributions to pension schemes for the benefit of own personnel, provided

that any improper use is excluded;

d) interest on business debts as well as interest attributable to participations

according to § 19 para. 2, but not construction loan interest for real estate in

business assets;

e) reserves for future research and development contracts with third parties up

to 10 percent of the taxable business income, but in total not exceeding

1 million Swiss francs;

f) costs of vocational education and training, including retraining costs;

g) profit-stripping sanctions, insofar as they do not have a punitive purpose.

3 Business-justified depreciation of assets is permissible, provided it is shown in

the books or, in the case of simplified accounting according to Art. 957 para. 2

OR, in special depreciation tables. Immediate depreciation to one franc is permissible

for intangible rights (patent, company, publishing, concession, and

license rights) as well as movable operating equipment of self-employed

persons (machinery, furniture, vehicles, IT).

4 For the additional deduction of research and development expenses, § 65a is

analogously applicable.

5 For income from patents and comparable rights, §§ 65b ff. are analogously

applicable.

6 Not deductible are in particular

a) payments of bribes within the meaning of Swiss criminal law;

b) expenses to enable criminal acts or as consideration for the commission of

criminal acts;

c) fines and monetary penalties;

d) financial administrative sanctions, insofar as they have a punitive purpose.

7 If sanctions according to para. 6 lit. c and d have been imposed by a foreign

criminal or administrative authority, they are deductible if

a) the sanction violates Swiss public policy, or

b) the taxpayer credibly demonstrates that they have taken all reasonable

steps to comply with the law.

bb) Replacement Acquisitions

1 If items of operationally necessary fixed assets are replaced,

the hidden reserves can be transferred to the replacement fixed assets acquired,

provided these are also operationally necessary and are located in

Switzerland. Taxation upon the replacement of real estate

with movable assets remains reserved.

2 If the replacement acquisition does not take place in the same business year, a reserve

can be formed to the extent of the hidden reserves. This must be used within

a reasonable period for depreciation on the replacement asset or

dissolved in favour of the profit and loss account.

3 Only fixed assets that directly serve the operation are considered operationally necessary;

specifically excluded are assets that serve the company

only as an investment or only through their yield.

cc) Losses

1 Losses from the seven business years preceding the tax period may be deducted, to the extent that they could not be taken into account when calculating the taxable income of these years.

2 Losses incurred in earlier business years and not yet offset against income may also be offset against third-party contributions made to compensate for an underbalance within the scope of a restructuring.

d) Private Assets

1 For movable private assets, the costs of administration by third parties and foreign withholding taxes that are neither refundable nor creditable are deductible.

2 For real estate in private assets, the following are deductible

a) maintenance costs, costs of restoration of newly acquired real estate, insurance premiums, and costs of administration by third parties. Investments serving energy saving and environmental protection are equated with maintenance costs, insofar as they are deductible for federal direct tax purposes, as are demolition costs in view of a replacement new building. The deductible investment and demolition costs are deductible in the two subsequent tax periods, insofar as they cannot be fully taken into account for tax purposes in the current tax period in which the expenses were incurred;

b) ground rent interest opposing income from real estate;

c) costs of monument preservation work undertaken by taxpayers based on legal provisions, in agreement with the authorities, or at their behest, insofar as these works are not subsidized.

3 The Government Council regulates flat-rate deductions that replace actual costs

a) for the costs of ordinary administration of securities and receivables;

b) for deductible real estate costs.

e) General Deductions

1 The following shall be deducted from income

a) private debt interest up to the amount of taxable asset income under §§ 21, 21a and 22, and a further 50,000 Swiss francs. Debt interest on loans granted by a corporation to a natural person who has a significant interest in its capital or is otherwise closely related to it, under conditions that deviate substantially from those customary in business transactions among third parties, is not deductible;

b) permanent burdens and the income share of payments from annuity and usufruct contracts in accordance with § 23 para. 4 lit. c;

c) maintenance contributions to a divorced spouse, a spouse living separately by court order or in fact, and maintenance contributions to a parent for children under their parental care or custody, but not payments in fulfillment of other family law maintenance or support obligations;

d) deposits, premiums, and contributions paid in accordance with law, articles of association, or regulations to old-age, survivors', and disability insurance, and to institutions for occupational pensions;

e) deposits, premiums, and contributions for the acquisition of contractual claims from recognized forms of restricted private provision (Gebundene Selbstvorsorge) within the meaning and scope of Art. 82 BVG (Federal Law on Occupational Old-Age, Survivors' and Disability Provision);

f) premiums and contributions for the income compensation scheme, unemployment insurance, and mandatory accident insurance;

g) deposits, premiums, and contributions for life insurance, health insurance, and accident insurance not falling under lit. f, as well as interest on savings capital of taxpayers and persons maintained by them, up to a total amount of 8,400 Swiss francs for taxpayers living in undivided marriage and 4,200 Swiss francs for other taxpayers. For taxpayers who make no contributions to occupational pensions or restricted private provision, these amounts shall be increased by half. In addition, these deductions shall be increased by 500 Swiss francs for each child for whom the taxpayers can claim a deduction in accordance with § 35 para. 1.

2 If married persons live in legally and actually undivided marriage, 2,100 Swiss francs shall be deducted from the earned income that one party earns independently of the profession, business, or trade of the other; a similar deduction is permissible for significant cooperation by a married person in the profession, business, or trade of the other spouse.

3 Furthermore, the following shall be deducted

a) illness and accident costs of taxpayers and persons maintained by them, to the extent that the taxpayers bear these costs themselves and they exceed 3 percent of the taxable income reduced by the expenses according to §§ 27 to 33 para. 2;

b) disability-related costs of taxpayers and persons with disabilities maintained by them, within the meaning of the Federal Act on the Equalization of Persons with Disabilities, to the extent that the taxpayers bear these costs themselves;

c) voluntary payments of money and other assets to legal entities domiciled in Switzerland that are exempt from tax on account of their public or charitable purposes (§ 61 para. 1 lit. f), provided that these payments amount to 100 Swiss francs in the tax year and do not exceed 20 percent of the income reduced by the expenses according to §§ 27 to 33 para. 3 lit. b. Corresponding voluntary payments to the Confederation, cantons, districts, municipalities, church communities, cantonal churches, and their institutions (§ 61 para. 1 lit. a to c) are deductible to the same extent.

d) membership fees and contributions up to a total amount of 6,000 Swiss francs to political parties that

1. are registered in the party register according to Art. 76a of the Federal Law on Political Rights of December 17, 1976,

2. are represented in a cantonal parliament, or

3. have achieved at least 3 percent of the votes in a canton in the last elections to the cantonal parliament;

e) proven costs for third-party childcare for each child who has not yet reached the age of 14 and lives in the same household as the taxpayer providing for its maintenance, to the extent that these costs are in direct causal connection with the gainful employment, training, or inability to work of the taxpayer, up to a maximum of 8,000 Swiss francs;

f) stakes in the amount of 5 percent of individual winnings from games of chance that are not tax-exempt under § 25 lit. j and k, up to a maximum of 5,000 Swiss francs; the stakes debited from the online player account in the tax year for individual winnings from online participation in casino games under § 25 lit. j no. 2, up to a maximum of 25,000 Swiss francs;

g) costs of career-oriented education and further training, including retraining costs, up to a total amount of 16,000 Swiss francs, provided that

1. a first qualification at secondary level II has been obtained, or

2. the age of 20 has been reached and it does not concern training costs up to the first qualification at secondary level II.

f) Non-deductible Costs and Expenses

The remaining costs and expenses are not deductible, in particular

a) expenses for the maintenance of the taxpayer and their family, as well as private expenses incurred due to the taxpayer's professional position;

b) expenses for debt repayment;

c) expenses for the acquisition, production, or enhancement in value of assets;

d) income, real estate gains, property transfer, wealth, inheritance, and gift taxes of the Confederation, cantons, municipalities, and church communities, as well as similar foreign taxes.

4. Social Deductions

1 For the calculation of tax, the following amounts shall be deducted from net income

a) CHF 8,400 for married couples living together in an undivided marriage;

b) CHF 4,200 for other taxpayers;

c) CHF 10,000 for each minor child under the parental care or custody of the

taxpayers;

d) CHF 12,000 for each adult child up to the age of 28, who is in education

or further training and whose maintenance is primarily borne by the

taxpayers;

e) CHF 7,800 additionally for a single parent, as long as a child is not yet an

adult;

f) 20 percent of the difference between CHF 60,000 and net income, but

not more than CHF 4,000, for single taxpayers, provided they are over

65 years of age or receive a full pension from the federal disability

insurance; the same deduction is granted to each taxpayer living in an

undivided marriage who meets these conditions, whereby only half of the

marital net income is decisive for the calculation.

1a All taxpayers are entitled to a relief deduction from net income. It amounts

to 30 percent of the relevant assessment basis, which is calculated as follows

a) for married couples living together in an undivided marriage, from the

difference between CHF 70,000 and net income;

b) for other taxpayers, from the difference between CHF 35,000 and net

income;

c) for each child for whom a deduction can be claimed according to para. 1

lit. c and d, it increases by CHF 25,000;

d) for all taxpayers, it decreases by 10 percent of the net assets.

2 Social deductions shall be determined based on the circumstances at the end

of the tax period or tax liability.

3 If the tax liability exists only for a part of the tax period, the social deductions

shall be granted proportionally; for the determination of the tax rate, they shall be

fully taken into account.

5. Tax Calculation

a) Tax Rate

aa) Rate for Districts, Municipalities, and Church Municipalities

1 The income tax amounts to

0.25 percent for the first 1,500 francs

0.50 percent for the next 1,300 francs

0.75 percent for the next 1,100 francs

1.00 percent for the next 1,000 francs

1.25 percent for the next 1,000 francs

1.50 percent for the next 1,100 francs

1.75 percent for the next 1,300 francs

2.00 percent for the next 1,800 francs

2.25 percent for the next 2,400 francs

2.50 percent for the next 3,600 francs

2.75 percent for the next 5,900 francs

3.00 percent for the next 8,200 francs

3.25 percent for the next 10,500 francs

3.50 percent for the next 11,600 francs

3.65 percent for the next 9,300 francs

3.90 percent for the next 197,200 francs

For taxable incomes exceeding 258,800 francs, the simple tax rate for the entire income is 3.65 percent.

2 For married couples subject to joint taxation, the tax rate is determined by dividing the taxable income by the divisor 1.9.

3 For tax calculation purposes, the taxable income is rounded down to the nearest hundred francs.

bb) Cantonal Tariff

Article 36 also applies to the cantonal tax. In addition, there is an additional tariff step of 7 percent for the subsequent 174,700 francs. For taxable incomes exceeding 433,500 francs, the simple tax for the entire income is 5 percent.

b) Special cases

aa) Capital Redemptions for Recurring Benefits

If capital redemptions for recurring benefits are part of the income, the income tax shall be calculated, taking into account other income, at the tax rate that would result if, instead of the one-time payment, a corresponding annual payment were made.

bb) Special Capital Benefits

1 Capital benefits in accordance with § 23, as well as payments upon death and for permanent physical or health disadvantages, shall be taxed separately at the tax rate that would apply if, instead of a lump-sum payment, an annual payment of 1/25 of the capital benefit were made. The simple tax shall not exceed 1.5 percent.

2 The social deductions in accordance with § 35 shall not be granted.

cc) Winnings from games of chance

Winnings from games of chance according to § 25 letters j and k, which are not tax-exempt, shall be taxed separately at an income tax rate of 15 percent.

dd) Small Earned Income

1 For small earned income from dependent employment, tax shall be levied at a

rate of 4.5 percent, without regard to other income, any professional expenses,

and social deductions. A prerequisite is that the employer pays the tax within

the scope of the simplified settlement procedure according to Articles 2 and 3 of

the Federal Act against Undeclared Work of June 17, 2005 (BGSA). This covers

the income taxes of the canton, district, municipality, and church parish.

2 The employer is obligated to periodically remit the taxes to the competent

AHV compensation fund. The latter shall issue the employee (taxable person)

a statement or confirmation of the tax deduction. The AHV compensation fund

transfers the tax amounts to the cantonal tax administration and receives a

collection commission. The provisions of § 92 para. 1 lit. a and para. 3 sentence 1

apply mutatis mutandis.

3 The Government Council shall regulate the details, in particular the distribution

of tax revenues among the participating municipalities.

ee) Liquidation Gains

1 If self-employment is definitively given up after reaching the age of 55

or due to inability to continue the activity as a result of invalidity, then the sum of the

hidden reserves realised in the last two business years shall be taxed separately

from other income. Buy-in contributions according to § 33 para. 1 letter d are

deductible. If no such buy-ins are made, the tax on the amount of the realised

hidden reserves for which the taxpayer proves the admissibility of a buy-in

according to § 33 para. 1 letter d shall be levied in the same way as for capital

payments under § 38. For the remaining amount of the realised hidden reserves,

the tax shall also be determined according to § 38, whereby the simple tax shall be a

minimum of 1 percent and a maximum of 3 percent.

2 Paragraph 1 also applies to the surviving spouse, other heirs, and legatees,

provided they do not continue the acquired enterprise; the tax settlement shall take

place no later than five calendar years after the end of the testator’s year of death.

C. Wealth Tax

1. Subject of Tax

1 The entire net wealth is subject to wealth tax.

2 Usufruct assets are attributed to the usufructuaries.

3 In the case of shares in collective investment schemes with direct real estate, the

difference in value between the total assets of the collective investment scheme and

its direct real estate is taxable.

4 Household effects and personal use items are not taxed.

2. Valuation

a) Principle

1 Unless the following provisions stipulate otherwise,

assets shall be valued at their fair market value. The capitalized earnings value may be

appropriately considered.

2 The Government Council shall regulate the valuation principles and procedures.

Paragraph 42, Section 3 remains reserved.

b) Real Estate

1 Real estate includes properties recorded in the land register, independent and permanent rights, mines, co-ownership shares in real estate, items and rights permanently connected with real estate, as well as buildings and installations on third-party land.

2 Real estate used for agricultural or forestry purposes, including necessary buildings, is valued at its capitalized earnings value. Undeveloped real estate in building zones is taxed, regardless of any agricultural use, taking into account its development status.

3 The Cantonal Council determines the essential valuation bases, regulates the procedure, and decides on the timing and extent of general and periodic adjustments.

c) Business Assets

1 Intangible assets and movable property belonging to the business assets of

the taxpayer are valued at the amount relevant for income tax.

2 The value of livestock is determined according to its unitary value.

d) Securities and Claims

1 For claims and equity rights with a market value, this value shall apply for taxation.

2 For claims and equity rights without a market value, the tax value shall be estimated, whereby for equity rights, the income and intrinsic value of the company must be appropriately taken into account.

3 When valuing disputed or uncertain rights and claims, the degree of probability of loss must be taken into account.

e) Employee Share Schemes

1 Employee share schemes under Art. 18b para. 1 are taxable at market value.

Any lock-up periods must be considered in accordance with Art. 18b para. 2.

2 Employee share schemes under Art. 18b para. 3 and Art. 18c are to be declared

upon allocation without a tax value.

f) Life Insurance

Life insurance policies are subject to wealth tax at their surrender value.

3. Deduction of Debts

Debts for which the taxable person is solely liable shall be deducted in full; other debts, such as joint and several debts and suretyship debts, shall only be deducted to the extent that they are to be borne by the taxable person.

4. Tax Calculation

a) Social Deductions

1 For the calculation of taxable assets, the following amounts are deducted from

net assets

a) for married couples living in an undivided marriage: 250,000 Swiss Francs;

b) for other taxpayers: 125,000 Swiss Francs;

c) for each child for whom a child deduction can be claimed according to § 35

para. 1: 30,000 Swiss Francs.

2 Social deductions are determined based on the circumstances at the end of the

tax period or the tax liability.

b) Tax Rate

1 The wealth tax amounts to 0.6 per mille of the taxable wealth.

2 The taxable wealth is rounded down to the nearest thousand Swiss Francs for tax calculation.

D. Compensation for Cold Progression

1. The Cantonal Government shall offset the effects of bracket creep by adjusting the tax brackets for income tax (Art. 36 f.), the deductions, allowances, and thresholds specified in Swiss franc amounts (Art. 25, 28, 33 and 35), and the minimum amount for expenditure-based taxation (Art. 15a para. 1 lit. a) to the National Consumer Price Index.

2. The adjustment shall take place every three years at the beginning of a new tax period. The Cantonal Government shall set the adjustments in an ordinance at least six months before the beginning of this tax period.

3. Bracket creep shall be fully offset. The index level at the end of March of the respective preceding year shall be decisive for the amount of the adjustment (basis December 2005 = 100). Amounts shall be rounded up or down to the nearest 100 Swiss francs. The unrounded amount shall serve as the baseline for calculating the next adjustment.

4. An adjustment is excluded in the event of a negative inflation trend. The adjustment following a negative inflation shall be based on the last adjustment.

E. Temporal Assessment

1. Tax Period

1 Income and wealth taxes are assessed and levied for each tax period.

2 The calendar year is considered the tax period.

3 If tax liability exists only for part of the tax period, the tax is levied on the income

earned during this period. In this case, the tax rate for regularly flowing income is

determined based on the income calculated for twelve months; income not flowing

regularly is not converted for the purpose of determining the rate.

4 Paragraph 3 applies mutatis mutandis to deductions.

2. Assessment of Income

1 Taxable income is assessed based on the income earned during the tax period.

2 For the determination of income from self-employment, the result of the financial statements falling within the tax period is authoritative.

3 Taxpayers engaged in self-employment must prepare financial statements in each tax period and at the end of their tax liability. No financial statement needs to be prepared if the self-employment commences only in the second half of the tax period.

3. Assessment of Wealth

1 Taxable wealth is assessed based on its status at the end of the tax period or tax liability.

2 For taxpayers with self-employment whose business year does not coincide with the calendar year, the taxable business wealth is determined by the equity at the end of the business year concluded in the tax period.

3 If tax liability exists only for part of the tax period, tax corresponding to this period shall be levied. Article 12 para. 2a remains reserved.

4 If taxpayers inherit wealth during the tax period, paragraph 3 applies mutatis mutandis.

4. Establishment and Dissolution of Marriage

1 Upon marriage, spouses are taxed jointly for the entire tax period.

2 In the event of divorce, legal separation, or actual separation, each spouse is taxed separately for the entire tax period.

3 In the event of the death of a spouse, the spouses are taxed jointly up to the date of death. The death is considered the termination of the joint tax liability and the commencement of the tax liability of the surviving spouse.

III. Taxation of Legal Entities

A. Tax Liability

1. Concept of Legal Entity

1 The following are taxed as legal entities

a) capital companies (companies limited by shares, limited partnerships with

shares, limited liability companies) and cooperatives;

b) associations, foundations, and other legal entities.

2 Collective investment schemes with direct real estate holdings under Articles 58 or 118a of the Federal Act on Collective Investment Schemes of June 23, 2006 (CISA) are equated with other legal entities. Investment companies with fixed capital under Article 110 CISA are taxed like capital companies.

3 Foreign legal entities, as well as foreign commercial companies and other foreign unincorporated associations liable to taxation under Section 10 para. 2, are treated equally to domestic legal entities that they most closely resemble legally or factually.

2. Tax Affiliation

a) Personal Affiliation

Legal entities are subject to taxation based on personal affiliation if their registered office or actual place of management is located in the canton.

b) Economic Affiliation

1 Legal entities with their registered office or effective management outside

the canton are subject to tax based on economic affiliation if

they

a) maintain businesses or permanent establishments in the canton;

b) own property, possess usufructuary rights (dingliche Rechte), or have personal usage rights economically equivalent to these, concerning real estate located in the canton, or trade in such real estate.

2 Legal entities with their registered office and effective management abroad

are additionally subject to tax if they

a) are creditors or beneficiaries of claims secured by real estate in the canton through mortgage or chattel mortgage (Faustpfand);

b) broker real estate located in the canton.

3 In international relations, a permanent establishment is defined as what can be considered a permanent establishment according to the relevant double taxation agreement. If a double taxation agreement is absent, the concept of permanent establishment as defined in the OECD Model Tax Convention shall apply.

c) Scope of Tax Liability

1 For personal affiliation, tax liability is unlimited; however, it does not extend to business enterprises, permanent establishments, and real estate located outside the canton.

2 For economic affiliation, tax liability is limited to those parts of the profit and capital for which a tax liability exists in the canton.

d) Tax Allocation

1 The tax allocation for business operations, permanent establishments, and real

estate is carried out in relation to other cantons and to foreign countries, as well

as between individual districts, municipalities, and church communities, in

accordance with the principles of federal law concerning the prohibition of

intercantonal double taxation. Paragraphs 2 to 5 remain reserved.

2 A company with its registered office or actual place of management in the

canton may offset losses from a foreign permanent establishment against domestic

profits, to the extent that these losses have not already been taken into

account in the state of the permanent establishment. If this permanent

establishment records profits within the following seven financial years, a

taxation will occur in these financial years to the extent of the loss carry-forwards

offset in the state of the permanent establishment. Losses from foreign real

estate can only be taken into account if a permanent establishment is also

maintained in the respective country. Regulations contained in double taxation

treaties remain reserved.

3 Taxpayers without a registered office or actual place of management in

Switzerland must pay tax on the profit generated in the canton for business

operations, permanent establishments, and real estate, or, in the case of minimum

tax, on the capital located in the canton.

4 A tax allocation for different church communities is only carried out insofar

as such an allocation must be made for the political communities. Where only

different church communities within a political municipality are affected, the

church tax is to be paid solely at the main tax domicile.

5 The following special provisions apply to corporations (Korporationen)

a) 20 percent of the profits of the corporations are provisionally allocated to the

municipality in which the registered office of the corporation's management is

located.

b) For the remainder of the profit and the capital, the tax allocation is to be made

to the districts, municipalities, and church communities in proportion to the

real estate located in their territory.

3. Commencement and Termination of Tax Liability

1 Tax liability commences with the incorporation of the legal entity, with the

relocation of its registered office or effective management to the canton,

or with the acquisition of assets taxable in the canton. In the case of relocation of the

registered office or effective management from another canton, tax liability

commences with the current tax period.

2 Tax liability terminates upon completion of liquidation, upon relocation

of the registered office and effective management outside the canton, or

upon the cessation of assets taxable in the canton. In the case of relocation of the registered office and

effective management to another canton, tax liability continues

until the end of the current tax period.

2a In the event of economic affiliation in the canton and personal affiliation in

another canton, tax liability in the canton exists for the duration of the

entire tax period, even if the economic affiliation is established, altered, or terminated

during the tax period.

3 In the case of relocations of the registered office within the canton, tax liability

based on personal affiliation is determined by the tax domicile at the end of the

tax period.

4 If a legal entity transfers assets and liabilities to another legal

entity, the taxes owed by it are to be paid by the acquiring

legal entity.

4. Joint and Several Liability

1 If the tax liability of a legal entity ceases, the persons entrusted with its man-

agement and its liquidation are jointly and severally liable for the taxes owed

by it up to the amount of the liquidation proceeds or, if the legal entity transfers

its registered office or actual management abroad, up to the amount of the

legal entity's net assets.

2 For the taxes of a legal entity subject to tax based on economic affiliation,

the following persons are jointly and severally liable up to the amount of the

net proceeds

a) persons who dissolve businesses or permanent establishments in the canton;

b) persons who dispose of or realize real estate in the canton or claims secured

by such real estate.

3 The liability under paragraphs 1 and 2 lapses if the liable person proves that

they have exercised all due diligence required by the circumstances.

4 A party to a purchase agreement concerning a property located in the canton

is jointly and severally liable for the tax owed from the mediation activity up to

3 percent of the purchase price, provided that the legal entity that mediated

the property and was engaged by the party has neither its registered office

nor its actual management in Switzerland.

5 For taxes of foreign commercial companies and other foreign associations of

persons without legal personality, the partners are jointly and severally liable.

5. Exceptions to Tax Liability

The following are exempt from tax liability

a) the Confederation and its institutions, in accordance with federal law;

b) the Canton and its institutions;

c) the districts, municipalities, church congregations, and cantonal churches of Schwyz, as well as their institutions;

d) occupational pension schemes of enterprises with residence, domicile, or permanent establishment in Switzerland, and of affiliated enterprises, provided that the assets of the scheme are permanently and exclusively used for personnel welfare;

e) domestic social insurance and equalization funds in accordance with federal legislation, in particular unemployment, health insurance, old-age, disability, and survivors' insurance funds, with the exception of concessionary insurance companies;

f) legal entities that pursue public or charitable purposes, for the profit and capital exclusively and irrevocably dedicated to these purposes. Entrepreneurial purposes are generally not charitable. The acquisition and management of significant capital participations in enterprises are considered charitable if the interest in the preservation of the enterprise is subordinated to the charitable purpose and no management activities are exercised;

g) legal entities that pursue religious purposes in the Canton or throughout Switzerland, for the profit and capital exclusively and irrevocably dedicated to these purposes;

h) foreign states for their domestic real estate exclusively intended for the direct use of diplomatic and consular representations, as well as institutional beneficiaries exempt from tax liability under Art. 2 para. 1 of the Host State Act (GSG) for real estate owned by the institutional beneficiaries and used by their services;

i) collective investment schemes with direct real estate ownership, provided that their investors are exclusively tax-exempt occupational pension schemes according to letter d) or tax-exempt domestic social insurance and equalization funds according to letter e);

j) transport and infrastructure companies licensed by the Confederation that receive remuneration for this activity or are required to maintain a year-round operation of national importance due to their concession. The tax exemption also extends to profits from the licensed activity that are freely available. Ancillary businesses and real estate that have no necessary connection to the licensed activity are excluded from the tax exemption.

6. Tax Relief for Businesses

1 For businesses newly established and serving the economic interests of the Canton, the Cantonal Government, after hearing the opinion of the competent municipality, may grant appropriate tax relief for the year of establishment and the nine subsequent years. A significant change in business activity is considered equivalent to a new establishment.

2 The granting of tax relief is subject to conditions and obligations.

B. Profit Tax

1. Taxable Subject

a) Principle

The object of the profit tax is net profit.

b) Calculation of Net Profit

aa) General

1 The taxable net profit consists of

a) the balance of the profit and loss account;

b) all parts of the business result excluded before the calculation of the balance

of the profit and loss account that are not used to cover business-related

expenses, such as in particular

- costs for the acquisition, production, or value enhancement of fixed

assets;

- depreciation, value adjustments, and provisions not justified by business

reasons;

- allocations to reserves;

- payments into equity from the funds of the legal entity, to the extent

that they do not originate from reserves taxed as profit;

- open and hidden profit distributions and payments to third parties not

justified by business reasons;

c) income not credited to the profit and loss account, including capital,

revaluation, and liquidation gains, subject to § 68. The relocation of the

registered office, management, a business operation, or a permanent

establishment abroad is equivalent to liquidation;

d) interest on hidden equity (§ 80);

e) no longer justified depreciation and value adjustments on the acquisition

costs of participations of at least 10 percent.

2 The taxable net profit of legal entities that do not prepare a profit and loss

account shall be determined mutatis mutandis according to paragraph 1.

3 Furthermore, the following are taxable as net profit

a) gains on real estate to the extent that depreciation has been allowed;

b) partial disposal losses claimed under § 119 para. 2, if they have been

considered tax-reducing for real estate gains tax purposes.

bb) **Commercially Justified Expenses**

1 Commercially justified expenses also include

a) taxes, but not tax fines and real estate transfer taxes;

b) contributions to provident institutions for the benefit of their own personnel, provided that any misappropriation is excluded;

c) voluntary payments of money and other assets up to 20 percent of net profit to legal entities domiciled in Switzerland that are exempt from tax liability due to their public or charitable purposes (§ 61 para. 1 lit. f), as well as to the Confederation, cantons, municipalities, districts, church parishes, cantonal churches and their institutions (§ 61 para. 1 lit. a to c);

d) discounts, cash discounts, sales bonuses and refunds on the consideration for deliveries and services, as well as surpluses of insurance companies intended for distribution to policyholders;

e) immediate write-downs to one franc on intangible rights (patent, trade name, publishing, concession, and license rights) as well as movable operating equipment (machinery, furniture, vehicles, IT);

f) provisions for future research and development contracts to third parties up to 10 percent of taxable profit, but in total no more than 1 million Swiss francs;

g) costs of professional education and training, including retraining costs, for their own personnel;

h) profit-skimming sanctions, insofar as they do not serve a punitive purpose.

2 Commercially justified expenses explicitly do not include

a) payments of bribes within the meaning of Swiss criminal law;

b) expenses to enable criminal acts or as consideration for the commission of criminal acts;

c) fines;

d) financial administrative sanctions, insofar as they serve a punitive purpose.

3 If sanctions according to para. 2 lit. c and d have been imposed by a foreign criminal or administrative authority, they are deductible if

a) the sanction violates Swiss public policy or

b) the taxpayer credibly demonstrates that they undertook all reasonable measures to comply with the law.

cc) Additional Deduction for Research and Development Expenses

1 Research and development expenses incurred by the legal entity directly

or indirectly through third parties in Switzerland shall, upon application, be

admitted for an additional deduction of 50 percent beyond the commercially justified

research and development expenses.

2 Research and development are defined as scientific research and

science-based innovation in accordance with Art. 2 of the Federal Act on the

Promotion of Research and Innovation of December 14, 2012 (FIFG).

3 An increased deduction is permissible on

a) directly attributable personnel expenses for research and development,

plus a surcharge of 35 percent of these personnel expenses,

but at most up to the total expenses of the legal entity;

b) 80 percent of the expenses for research and development invoiced by third parties.

4 If the contracting entity for the research and development is entitled to a deduction,

the contractor shall not be entitled to a deduction for it.

dd) Net Profit from Patents and Comparable Rights

1 The net profit from patents and comparable rights shall, upon application by the

legal entity, be included in the calculation of taxable net profit (patent box)

with a reduction of 90 percent, in proportion to the qualifying research and

development expenditure to the total research and development expenditure per

patent or comparable right (nexus ratio).

2 The net profit from patents and comparable rights contained in products shall

be determined by reducing the net profit from these products by 6 percent of

the costs allocated to these products and by the trademark royalty, respectively.

3 The reduced taxation of net profit from patents and comparable rights shall

only occur after these rights have been introduced into the patent box, insofar

as this profit exceeds the total research and development expenditure for these

rights incurred and tax-effectively deducted until their introduction, as well as

any deduction under § 65a, to the extent effectively deductible.

4 In the fifth year after entry into the patent box, the unrecovered research and

development expenditure and any deduction under § 65a shall be subject to

profit tax, provided that the taxpayer applies for reduced taxation under para. 1

in the following year.

5 The taxpayer has the right to add the unrecovered research and development

expenditure to the taxable net profit at any time. To the extent of the added

amount, a taxed hidden reserve shall be formed. Para. 6 remains reserved.

6 If a taxpayer taxed under para. 3 relocates its seat or effective management to

another canton within five years after entry into the patent box, and that canton

provides for a taxation deviating from para. 3, the unrecovered research and

development expenditure and the unrecovered deduction under § 65a shall be

added to the taxable net profit in the year of relocation.

7 The federal implementing provisions apply mutatis mutandis, in particular for

a) the calculation of the reduced taxable net profit from patents and

comparable rights, specifically for the nexus ratio;

b) the application of the regulation to products that show only minor

differences from each other and are based on the same patents and

comparable rights;

c) the documentation obligations;

d) the beginning and end of the reduced taxation;

e) the treatment of losses from patents and comparable rights.

ee) Qualifying Patents and Comparable Rights

1 The following are considered patents within the meaning of § 65b

a) Patents under the European Patent Convention of October 5, 1973, in its revised version of November 29, 2000 (EPC 2000), designating Switzerland;

b) Patents under the Federal Act on Patentable Inventions of June 25, 1954 (PatG);

c) Foreign patents corresponding to patents under letters a or b.

2 The following are considered comparable rights within the meaning of § 65b

a) Supplementary protection certificates under the PatG and their extensions;

b) Topographies protected under the Federal Act on the Protection of Topographies and Semiconductor Products of October 9, 1992 (ToG);

c) Plant varieties protected under the Federal Act on the Protection of Plant Varieties of March 20, 1975 (Plant Variety Protection Act);

d) Documentation protected under the Federal Act on Medicinal Products and Medical Devices of December 15, 2000 (HMG);

e) Reports for which report protection exists based on implementing provisions of the Federal Act on Agriculture of April 29, 1998 (Agricultural Act);

f) Foreign rights corresponding to the rights under letters a–d.

ff) Relief Limitation

1 The total tax reduction under Sections 65a, 65b para. 1 and 2, and 250g

para. 3, may not exceed 70 percent of the taxable profit before loss

offsetting under Section 70, whereby the net participation income under

Section 74 is excluded, and before deduction of the reductions made.

2 Neither the individual reductions nor the total tax reduction may result in

loss carry-forwards.

gg) Tax-Neutral Transactions

No taxable profit arises from

a) Capital contributions by members of capital companies and cooperatives, including agios and contributions à fonds perdu;

b) Relocation of the seat, management, a business operation or a permanent establishment within Switzerland, provided that no sales or book-value revaluations are made;

c) Capital growth from inheritance, legacy, or gift.

hh) Restructurings

1 Hidden reserves of a legal entity are not taxed during restructurings, in par-

ticular in the case of merger, demerger or conversion, as long as the tax liability

continues to exist in Switzerland and the values previously decisive for profit tax

are maintained

a) upon conversion into a sole proprietorship or into another legal entity;

b) upon spin-off or split-off of a legal entity, provided that one or more businesses

or parts of businesses are transferred and to the extent that the legal entities

existing after the demerger continue to operate a business or part of a business;

c) upon the exchange of participation rights or membership rights in the event

of restructurings or merger-like combinations;

d) upon the transfer of businesses or parts of businesses as well as assets of

the operational fixed assets to a domestic subsidiary. A subsidiary is defined

as a corporation or cooperative in whose share capital the transferring

corporation or cooperative holds a participation of at least 20 percent.

2 In the case of a transfer to a subsidiary according to paragraph 1 letter d, the

transferred hidden reserves are subsequently taxed in proceedings according to

§§ 175 to 177, to the extent that the transferred assets or participation rights or

membership rights in the subsidiary are sold within five years following the

restructuring; in this case, the subsidiary can claim corresponding hidden

reserves taxed as profit.

3 Between domestic corporations and cooperatives which, according to the

overall picture of the actual circumstances, are combined under the unified

management of a corporation or cooperative by a majority of votes or in another

manner, directly or indirectly held participations of at least 20 percent in the

share capital of another corporation or cooperative, businesses or parts of

businesses, as well as assets of the operational fixed assets, can be transferred

at the values previously decisive for profit tax. The transfer to a subsidiary

according to paragraph 1 letter d remains reserved.

4 If, in the case of a transfer according to paragraph 3, the transferred assets

are sold within the following five years, or if the unified management is

abandoned during this period, the transferred hidden reserves are subsequently

taxed in proceedings according to §§ 175 to 177. In this case, the favored legal

entity can claim corresponding hidden reserves taxed as profit. The domestic

corporations and cooperatives combined under unified management at the time

of the violation of the blocking period are jointly and severally liable for the

subsequent tax.

5 If, through the assumption of the assets and liabilities of a corporation or a

cooperative whose participation rights belong to the acquiring corporation or

cooperative, a book loss on the participation arises, this cannot be deducted for

tax purposes; any book profit on the participation will be taxed.

ii) Replacement Acquisitions

1 If items of operationally necessary fixed assets are replaced, the hidden

reserves can be transferred to the replacement fixed assets acquired,

provided these are also operationally necessary and are located in

Switzerland. Taxation upon the replacement of real estate with items of

movable assets remains reserved.

1a In the case of replacement of participations, the hidden reserves can be

transferred to a new participation, provided the sold participation accounts for

at least 10 percent of the share capital or basic capital or at least 10 percent of

the profit and reserves of the other company, and this participation has been

held by the corporation or cooperative for at least one year.

2 If the replacement acquisition does not take place in the same financial year, a

reserve can be formed to the extent of the hidden reserves. This must be used

for depreciation on the replacement object within a reasonable period or

dissolved in favour of the income statement.

3 Only fixed assets that directly serve the operation are considered operationally

necessary; excluded are, in particular, asset components that serve the company

only as a capital investment or only through their income.

jj) Recognition of Hidden Reserves at the Commencement of Tax Liability

1 If the legal entity recognizes hidden reserves, including internally generated

value, at the commencement of tax liability, these are not subject to profit tax.

Hidden reserves of a corporation or cooperative from participations of at least

10 percent in the share or nominal capital or in the profit and reserves of

another company may not be recognized.

2 Commencement of tax liability is considered to be

a) the transfer of assets, businesses, parts of businesses, or functions from

abroad to a domestic business operation or to a domestic permanent

establishment;

b) the end of a tax exemption according to § 61;

c) the transfer of the registered office or the actual management to Switzerland.

3 The recognized hidden reserves shall be written off annually at the rate that

is tax-deductible for depreciation on the respective assets.

4 The recognized internally generated value shall be written off within ten years.

kk) Taxation of hidden reserves at the end of tax liability

1 If the tax liability of a legal entity ends, the untaxed hidden reserves

existing at that time, including self-created added value, shall be taxed.

2 The end of tax liability is considered to be

a) the transfer of assets, businesses, parts of businesses, or functions from

Switzerland to a foreign business operation or a foreign permanent

establishment;

b) the transition to a tax exemption according to § 61;

c) the transfer of the seat or actual administration abroad.

ll) Profits of Associations, Foundations, and Collective Investment Schemes

1 Membership fees paid to associations and contributions to the assets of foundations are not included in taxable profit.

2 From the taxable income of associations, expenses necessary to generate that income may be fully deducted; other expenses may be deducted only to the extent that they exceed membership fees.

3 Collective investment schemes are subject to profit tax for income derived from direct real estate.

mm) Losses

1 Losses from the seven financial years preceding the tax period can be deducted, insofar as they could not be taken into account when calculating the taxable net profit for those years.

2 Losses from businesses that have been acquired during a restructuring are also eligible for offset within the meaning of paragraph 1.

3 Losses incurred in previous financial years and not yet offset against profits can also be offset against third-party contributions provided to compensate for a balance sheet deficit within the framework of a reorganization, which are not capital contributions according to § 66 letter a.

2. Tax Calculation

a) Corporations and Cooperatives

1 The profit tax for corporations and cooperatives amounts to

1.95 percent of the taxable net profit.

2 Profits of corporations and cooperatives with ideal purposes are not taxed,

provided they do not exceed 20,000 Swiss francs and are exclusively

and irrevocably dedicated to these purposes.

3 For the purpose of tax calculation, the taxable net profit shall be rounded

down to the nearest hundred francs.

4 In cross-border situations, particularly for corporations or cooperatives

belonging to an international group, the tax rate shall be increased to

the minimum tax rate accepted by the foreign state, taking into account

the direct federal tax.

b) Associations, Foundations and other Legal Entities

1 The profit tax for associations, foundations and other legal entities

amounts to 1.95 percent of the taxable net profit.

2 Profits that, calculated on an annual basis, do not reach 20,000 Swiss Francs,

are not taxed.

3 For tax calculation purposes, the taxable net profit shall be rounded down to the nearest

hundred Swiss Francs.

c) Collective Investment Schemes

The profit tax for collective investment schemes with direct real estate ownership shall be calculated in accordance with Article 71.

3. Companies with Participations

1 If a corporation or cooperative holds at least 10 percent of the share capital

or equity capital, or of the profit and reserves of another company, or if its

participation rights have a fair market value of at least one million Swiss

francs, the profit tax is reduced in proportion to the net income from the

participation rights to the total net profit.

2 The net income from participations corresponds to the income from participations,

reduced by the proportionate administrative costs of 5 percent or by the actual

administrative costs, as well as by the proportionate financing costs. Capital

gains on these participations and the proceeds from related subscription rights

also belong to the income from participations. Section 243 remains reserved.

3 Income that constitutes business-related expenses for the contributing

corporation or cooperative is not considered participation income.

4 The income from a participation is only considered in the calculation of the

reduction insofar as no depreciation is made on the same participation at the

expense of the taxable net profit, which is related to this income.

5 Capital gains are only considered in the calculation of the reduction

a) to the extent that the sales proceeds exceed the acquisition costs;

b) if the sold participation amounted to at least 10 percent of the share capital

or equity capital of another company or established a claim to at least 10

percent of the profit and reserves of another company and was held by the

selling corporation or cooperative for at least one year; if the participation

rate falls below 10 percent due to a partial sale, the reduction for any

subsequent sales gain can only be claimed if the participation rights had a fair

market value of at least one million Swiss francs at the end of the tax year

before the sale.

6 Transactions that lead to an unjustified tax saving within the group result in an

adjustment of the taxable net profit or a reduction of the relief. An unjustified

tax saving exists when capital gains and capital losses or depreciations on

participations are causally related.

7 For group parent companies of systemically important banks according to Art. 7

Para. 1 of the Federal Act on Banks and Savings Banks of November 8, 1934

(BankA), for the calculation of the net income according to Para. 2, the financing

expenses and the claim in the balance sheet from intercompany re-lent funds

are not taken into account if these funds originate from third-party capital

instruments according to Art. 11 Para. 4 or 30b Para. 6 or 7 Letter b BankA,

which have been approved by the Swiss Financial Market Supervisory Authority

(FINMA) with regard to meeting regulatory requirements.

C. Minimalsteuer

1. Prerequisite and Assessment

Legal entities shall pay a minimum tax instead of profit tax if the minimum

tax exceeds the profit tax calculated according to §§ 71 to 74. The minimum

tax shall be assessed based on equity.

2. Calculation of Equity

a) Corporations and Cooperatives

aa) General

1 For corporations and cooperatives, equity consists of the paid-in share capital, the disclosed reserves, and the hidden reserves formed from taxed profits. Excluded are reserves within the meaning of § 68 para. 2.

2 At a minimum, the paid-in share capital is authoritative.

bb) Disguised Equity

The equity of corporations and cooperatives is increased by that part of the debt capital which economically has the significance of equity.

b) Associations, Foundations and other Legal Entities

1 As own capital is considered for

a) collective investment schemes, the portion of net assets attributable to direct real estate;

b) associations, foundations and other legal entities, their net assets.

2 The assets are valued according to the principles applicable to the wealth tax of natural persons.

3. Tax Calculation

a) Principle

1 The minimum tax is 0.03 per mille of the taxable equity, but at least 100 Swiss francs.

2 The minimum amount is fully owed even in cases of economic affiliation in the canton according to Section 56, and for commencements and cessations of tax liability during the tax period. In the cases of paragraphs 3 and 4 sentence 1, no minimum amount is owed.

3 For associations, 300,000 Swiss francs are tax-exempt.

4 Foundations and other legal entities with equity of less than 300,000 Swiss francs are not taxed. Collective investment schemes are excluded.

5 For the purpose of tax calculation, the taxable equity is rounded down to the nearest thousand Swiss francs.

D. Temporal Assessment

1. Tax Period

1 The taxes on net profit and equity are assessed and levied for each tax period.

2 The business year is considered the tax period.

3 In every calendar year, except for the year of foundation, financial statements with a balance sheet and income statement must be prepared. Furthermore, financial statements are required upon the relocation of the seat, management, a business operation, or a permanent establishment abroad, as well as upon the conclusion of liquidation.

2. Assessment of Net Profit

1 The taxable net profit is assessed based on the result of the tax period.

2 If the financial statements are denominated in a foreign currency, the taxable net

profit must be converted into Swiss francs. The average exchange rate (selling)

for the tax period is decisive.

3 If a legal entity is dissolved or relocates its domicile, management, a business

operation, or a permanent establishment abroad, the undisclosed reserves formed

from untaxed profits are taxed together with the net profit of the last financial year.

3. Assessment of Equity Capital

1 The relevant equity capital is assessed based on the balance at the end of the tax period.

2 If the financial statements are denominated in a foreign currency, the taxable equity capital must be converted into Swiss Francs. The relevant exchange rate is the foreign exchange selling rate at the end of the tax period.

3 For financial statements covering periods longer or shorter than a year, the amount of the minimum tax is determined according to the duration of the financial year.

IV. Withholding Taxes for Natural and Legal Persons

A. Natural Persons with Tax Domicile or Residence in the Canton

1. Employees Subject to Withholding Tax

1 Employees without a settlement permit who, however, have tax domicile or

residence in the canton are subject to a withholding tax on their income from

dependent employment. Excluded from this are incomes that are subject to

taxation under the simplified billing procedure pursuant to § 39a.

2 Spouses living in a legally and factually undivided marriage are not subject to

withholding tax if one spouse holds Swiss citizenship or a settlement permit.

2. Taxable Services

1 The withholding tax is calculated on the gross income.

2 Taxable are

a) income from dependent employment according to § 87 para. 1,

ancillary income such as monetary benefits from employee participations as

well as benefits in kind, but not the costs of job-related education and training

borne by the employer according to § 18 para. 2, and

b) substitute income.

3 Benefits in kind and tips are generally valued according to the rates applicable

to the federal old-age and survivors' insurance.

3. Withholding Tax Deduction

a) Basis

The amount of the withholding tax deduction for the canton, districts, municipalities, and church

parishes is determined by the income tax rates applicable to natural persons

and the weighted average of tax rates in the canton. The direct federal tax is incorporated into the tariffs.

b) Design

1. In calculating the withholding tax deduction, flat-rate amounts for professional expenses (Articles 27 and 28) and for insurance premiums (Article 33 para. 1 lit. d, f and g), as well as deductions for family burdens (Article 35), shall be taken into account. The flat-rate amounts shall be published by the cantonal tax administration.

2. The withholding tax deduction for spouses living in a legally and factually undivided marriage, both of whom are gainfully employed, shall be based on the rates that take into account their total income (Article 9 para. 1), the flat-rate amounts and deductions according to para. 1, as well as the deduction for gainful employment of both spouses (Article 33 para. 2).

3. The consideration of a 13th monthly salary, gratuities, irregular employment, hourly wage earners, part-time or secondary employment, and rate-determining elements, as well as the procedure for tariff changes, retroactive salary adjustments and corrections, and benefits before the start and after the end of employment, shall be governed by the regulations of the Federal Tax Administration.

5. Duties of the Debtor of the Taxable Service

1 The debtor of the taxable service is obliged

a) to withhold the tax due for monetary benefits when they become due and,

for other benefits (in particular benefits in kind and tips), to collect the tax

due from the taxable persons;

b) to issue the taxable persons a statement or confirmation of the tax

deduction;

c) to remit the taxes periodically to the competent authority, to account for

them using the official form or electronically via the channel provided for

this purpose, and to grant the tax authorities access to all documents for

the control of tax collection;

d) to pay the proportionate taxes on employee stock options exercised abroad;

the employer also owes the proportionate tax even if the monetary benefit is

provided by a foreign group company.

2 The withholding tax deduction must also be made if the taxable person is

resident or has a stay in another canton.

3 The debtor of the taxable service is liable for the payment of the withholding

tax. They receive a collection commission of 1 to 2 percent of the total

withholding tax amount, which is determined by the cantonal government (Regierungsrat).

6. Subsequent Ordinary Assessment

a) Ex officio

1 Persons liable to withholding tax according to Art. 87 para. 1 shall be subsequently assessed in the ordinary procedure if

a) their gross income in a tax year reaches at least the amount set by the Federal Department of Finance, or

b) they possess assets and income that are not subject to withholding tax, whereby Art. 8 para. 1 applies mutatis mutandis for the tax rate.

2 Any person living in a legally and de facto undivided marriage with a person according to para. 1 shall also be subject to subsequent ordinary assessment.

3 Persons according to para. 1 lit. b must request the tax return form from the competent authority by March 31 of the year following the tax year.

b) Upon request

1 Individuals subject to withholding tax under Article 87 para. 1, who do not fulfil

any of the conditions under Article 93 para. 1, shall be subject to a subsequent

ordinary assessment upon request.

2 The request also extends to the spouse who lives with the applicant in a legally

and actually undivided marriage.

3 The request must be submitted by March 31 of the year following the tax year.

In the case of departure from Switzerland, the request must be submitted no later

than the time of deregistration.

c) Relationship to Withholding Tax

1 Subsequent ordinary assessment applies until the end of the withholding tax

obligation.

2 The tax deducted at source is credited without interest.

3 If no subsequent ordinary assessment is performed upon request, the withholding

tax replaces the taxes to be assessed in the ordinary procedure for the

Confederation, the canton, the district, the municipality, and the church municipality

on earned income. No additional deductions are granted.

B. Natural Persons without Tax Domicile or Residence and Legal Persons without Seat or Actual Administration in Switzerland

1. Employees

1 The following are subject to tax deduction at source according to §§ 87 to 90

a) employees resident abroad for their income from dependent employment and

the substitute income replacing it, if they are employed for a short period,

as cross-border commuters or weekly residents, or as senior executives for an

employer with domicile, seat, actual administration, or permanent establishment

in the canton;

b) employees resident in a neighbouring state for their income from dependent

employment earned abroad for an employer with seat, actual administration,

or permanent establishment in the canton, provided that Switzerland is granted

a right to taxation concerning the employment carried out abroad under the

applicable international tax treaty with the respective neighbouring state;

c) employees resident abroad who receive wages or other remuneration for work

in international transport on board a ship or an aircraft or during road transport

from an employer with domicile, seat, actual administration, or permanent

establishment in the canton.

2 Exempt from this are income

a) which is subject to taxation under the simplified accounting procedure according

to § 39a;

b) of seafarers for employment on board a seagoing vessel operated under Swiss

flag by an employer.

2. Artists, Athletes and Lecturers

1 Artists residing abroad, such as stage, film, radio or television artists, musicians and entertainers, as well as athletes and lecturers, are subject to tax at source for income derived from their personal activities carried out in the canton and for other related remuneration. This also applies to income and remuneration that does not accrue directly to the artist, athlete or lecturer themselves, but to a third party who has organised their activity.

2 The tax amounts to

a) for daily income up to 200 Swiss francs, 7 percent;

b) for daily income from 201 to 1000 Swiss francs, 9 percent;

c) for daily income from 1001 to 3000 Swiss francs, 11 percent;

d) for daily income over 3000 Swiss francs, 13 percent.

3 Daily income refers to gross income, including all allowances, fringe benefits and benefits in kind, after deduction of expenses incurred to generate the income. This deduction amounts to

a) 50 percent of gross income for artists;

b) 20 percent of gross income for athletes and lecturers.

4 The organiser commissioned with the arrangement of the performance is jointly and severally liable for the tax.

3. Organs of Legal Entities

1 Members of the administration or management of legal entities with their registered office or actual management in the canton, who reside abroad, are subject to source taxation on their director's fees, attendance fees, fixed remunerations, employee participations, and similar payments. This also applies if these payments accrue to a third party.

2 Members of the administration or management of foreign enterprises that maintain permanent establishments in the canton, who reside abroad, are subject to source taxation on their director's fees, attendance fees, fixed remunerations, employee participations, and similar payments paid to them at the expense of these permanent establishments.

3 The tax amounts to 15 percent of the gross income, including all allowances and ancillary benefits, as well as remunerations that accrue not to the taxpayer themselves but to third parties.

4. Mortgage Creditors

1 Creditors or beneficiaries of claims resident abroad, which are secured by

mortgages or pledges on real estate in the canton, are subject to a withholding

tax at source on the interest paid to them.

2 The tax amounts to 10 percent of the gross income. This also includes interest

that accrues not to the taxpayer themselves, but to third parties.

5. Recipients of Pension Benefits

1 Taxpayers residing abroad who receive pensions, capital benefits, or other remunerations based on a former public-law employment relationship from an employer or a pension fund with a registered office or permanent establishment in the canton, or from private-law occupational pension schemes, or from recognized forms of restricted private provision with a registered office or permanent establishment in the canton, are subject to a withholding tax on these benefits.

2 The tax rate is 5 percent for pensions and 2.5 percent for capital benefits of the gross income.

6. Recipients of Employee Participations

1 Persons who are resident abroad at the time of the flow of monetary benefits

from blocked employee options according to § 18b para. 3 will be

proportionately taxed at source for the monetary benefit according to § 18d.

2 The tax amounts to 15 percent of the monetary benefit.

7. Subsequent Ordinary Assessment

a) Ex officio

In cases of objectionable circumstances, particularly concerning the lump-sum deductions included in the withholding tax rate, a subsequent ordinary assessment can be carried out ex officio, either in favour of or to the detriment of the taxpayer, under the conditions stipulated by the Federal Department of Finance.

b) Upon Request

Persons subject to withholding tax under Article 94 may, under conditions

stipulated by the Federal Department of Finance, apply for a subsequent

ordinary assessment for each tax period until March 31 of the year following the

tax year, if

a) the predominant part of their worldwide income, including the income of

their spouse, is taxable in Switzerland;

b) their situation is comparable to that of a taxable person resident in

Switzerland; or

c) such an assessment is necessary to claim deductions provided for in a double

taxation agreement.

c) Relationship to Withholding Tax

1 The tax withheld at source shall be credited without interest.

2 If no subsequent ordinary assessment is carried out, the withholding tax shall

replace the federal, cantonal, district, municipal, and church tax on earned

income that would be assessed in the ordinary procedure. No additional

deductions shall be granted.

3 For dual-income married couples, a correction of the rate-determining earned

income for the spouse may be provided for.

8. Obligations of the Debtor of the Taxable Service

1 The provisions of § 92 paras 1 and 3 apply *mutatis mutandis*.

2 For capital benefits, the collection commission amounts to 1 percent of the total withholding tax amount, but a maximum of 50 Swiss francs per capital benefit for the withholding tax of the Confederation, canton, district, municipality, and church parish.

C. Territorial Jurisdiction and Intercantonal Relationship

1. Withholding Tax

1 The debtor of the taxable benefit calculates and levies the withholding tax in

accordance with this Act in the following cases

a) for employees according to § 87 who, at the time the taxable benefit becomes due,

have their tax domicile or residence in the canton;

b) for employees according to § 94 who, at the time the taxable benefit becomes due,

have their weekly residence in the canton;

c) for persons according to §§ 94 and 96 to 98a, if, at the time the taxable benefit

becomes due, the debtor has their tax domicile or residence or their seat or

management in the canton; if the taxable benefit is paid by a permanent establishment

in another canton or by the permanent establishment of an enterprise without a seat or

actual management in Switzerland, the law of the canton in which the permanent

establishment is located applies to the calculation and levying of the withholding tax;

d) for persons according to § 95 who carry out their activity in the canton.

2 The debtor of the taxable benefit remits the withholding tax to the competent

collection authority of the Canton of Schwyz. Paragraph 1 letter c, second sentence,

remains reserved.

2. Subsequent Ordinary Assessment

1 The assessment authority under this Act is competent for subsequent ordinary assessment in the following cases

a) for employees according to § 102 para. 1 lit. a, who had their tax domicile or residence in the canton at the end of the tax period or tax liability;

b) for employees according to § 102 para. 1 lit. b, who had their weekly residence in the canton at the end of the tax period or tax liability;

c) for persons according to § 102 para. 1 lit. c, who were gainfully employed in the canton at the end of the tax period or tax liability.

2 In the cases referred to in paragraph 1, the Canton of Schwyz is entitled to any withholding tax amounts transferred to other cantons in the calendar year. Overpaid taxes shall be refunded to the employee or the gainfully employed person, and underpaid taxes shall be subsequently claimed.

3 The cantonal tax administration shall provide gratuitous administrative and legal assistance to other Swiss tax authorities in the collection of withholding tax.

**V. Real Estate Capital Gains Tax**

1. Object of the Tax

1 The real estate gains tax is levied on gains from the alienation of real estate

located in the Canton and belonging to private or business assets, or shares thereof.

2 Excluded from the real estate gains tax are book profits subject to income tax or

profit tax (§ 19 para. 4 lit. a and § 64 para. 3 lit. a).

2. Real Estate

Real estate comprises the properties, the independent and permanent rights recorded in the land register, mines, co-ownership shares in land, things and rights firmly connected with the land, as well as buildings and installations on third-party land.

3. Dispositions

a) Tax-triggering Dispositions

1 The tax liability is triggered by every disposition that transfers ownership of

real estate or shares thereof.

2 The real estate gains tax also applies to

a) Legal transactions which, in terms of control over real estate, have an

economic effect similar to a disposition (chain transactions, transfers of

controlling interests in real estate companies, etc.);

b) the encumbrance of real estate with private-law servitudes or public-law

restrictions on ownership, if these permanently and substantially impair

the unrestricted management or the market value of the real estate and

consideration is paid for them.

b) Tax-Deferring Dispositions

Taxation shall be deferred in the case of

a) Change of ownership due to inheritance (succession, division of an estate, legacy), advance inheritance, or gift;

b) Change of ownership between married persons in connection with matrimonial property law, as well as for the compensation of extraordinary contributions by one spouse to the maintenance of the family (Art. 165 Swiss Civil Code) and claims arising from divorce law, provided both spouses agree;

c) Land consolidation for the purpose of land reallocation, neighbourhood planning, boundary adjustment, rounding off agricultural homesteads, and land consolidation in expropriation proceedings or in view of impending expropriation;

d) Change of ownership due to restructuring within the meaning of §§ 20 para. 1 and 67 para. 1 and 3. Deferred taxation shall be subsequently levied in the event of a violation of the blocking period, by analogous application of § 20 para. 2 and § 67 para. 2 and 4, whereby tax assessment shall be governed by §§ 113 et seq. and the duration of ownership by § 121.

c) Replacement Acquisitions

aa) Business Assets

1 Taxation shall be deferred upon request of the taxpayer

a) in the event of a complete or partial alienation of real estate belonging to the

operationally necessary fixed assets within the meaning of §§ 30 para. 3 or 68 para. 3,

to the extent that the proceeds from the alienation are used within a reasonable period

for the acquisition of new replacement real estate or for the improvement of own replacement

real estate in Switzerland;

b) in the event of a complete or partial alienation of agricultural or forestry real

estate, to the extent that the proceeds from the alienation are used within a reasonable period

for the acquisition of self-managed replacement real estate or

for the improvement of own, self-managed agricultural or forestry real estate

in Switzerland;

c) in the event of a replacement acquisition of participations within the meaning of § 68 para. 1a. The

period according to lit. a applies mutatis mutandis.

2 In the case of advance acquisition, the deferral shall be granted mutatis mutandis.

bb) Residential Property

1 The taxation shall be deferred upon request by the taxpayer

upon the alienation of a residential property permanently and exclusively used

by the owner, to the extent that the alienation proceeds are used within a reasonable period

for the acquisition or construction of an equivalent replacement property in Switzerland.

The reasonable period is generally four years before or after the

alienation.

2 Paragraph 1 is not applicable to holiday and secondary residences.

4. Taxable Subject

1 The selling person is liable to tax. Spouses and children are taxed separately.

2 Multiple taxpayers must pay the tax according to their respective shares. They are jointly and severally liable.

5. Tax Exemptions

Exempt from real estate capital gains tax are

a) the Confederation and its institutions in accordance with federal law;

b) the Canton, its institutions and enterprises;

c) the districts, municipalities, parish communities, and cantonal churches of Schwyz,

as well as their institutions;

d) natural persons and institutional beneficiaries favored under Art. 2 RECG,

to the extent that federal law provides for a tax exemption.

6. Tax Assessment

a) Real Estate Profit

1 The real estate profit corresponds to the amount by which the sale proceeds

exceed the acquisition costs (purchase price and expenses).

2 For the purpose of assessing the profit from the sale of a property acquired under tax deferral

in the sense of § 107, reference must be made to the last sale that did not

result in a tax deferral.

3 For the purpose of assessing the profit from the sale of a property acquired through replacement procurement

in the sense of §§ 108 or 109 or a corresponding provision of another

canton, reference must be made to its acquisition, whereby the untaxed profit of the property

sold during the replacement procurement must be taken into account.

b) Disposal Proceeds

1 The disposal proceeds are understood to be the sale price including all other benefits. Benefits in kind are calculated at their market value, and recurring benefits at their present value.

2 If no price is agreed upon or in the case of an exchange, the market value at the time of disposal shall be considered the sale price.

3 Compensation for demonstrable inconveniences in expropriation proceedings or in the voluntary transfer of land for which a right of expropriation exists, is not included in the disposal proceeds.

c) Acquisition Costs

aa) Purchase Price

1 The purchase price corresponds to the purchase price and all other payments. Payments made to evade tax liability will not be taken into account.

2 If the purchase price cannot be determined, the market value at the time of acquisition shall apply instead. If the time of acquisition cannot be determined, the tax assessment value applicable 25 years prior to the sale, without deduction, shall be considered the purchase price.

3 Losses incurred by the selling person upon the acquisition of the property in foreclosure proceedings arising from a pledge or guarantee agreement may be offset.

bb) Expenses

1 The following expenses are deductible, provided they were incurred during the relevant period of ownership

a) Expenditure that has increased the value of the property, such as costs for constructions, alterations, and land improvements;

b) Owner's own services, to the extent they have been or will be taxed as income or earnings in Switzerland;

c) Property owner contributions for the construction and correction of roads, sewers, land improvements, hydraulic engineering, and similar works;

d) Costs and fees directly associated with the acquisition and disposal of the property, including commissions to third parties, to the extent they are customary;

e) Interest on borrowed capital, to the extent it qualifies as investment costs;

f) the real estate gains tax for legal entities trading commercially in real estate, provided they waive its consideration for income tax purposes;

g) paid value-added contributions in accordance with §§ 36d et seq. of the Planning and Building Act of May 14, 1987.

1a Further expenses to be considered under intercantonal law remain reserved. They may also be claimed by intra-cantonal real estate dealers.

2 Expenses that have already been deducted for tax purposes are not deductible again.

3 Payments from third parties, in particular insurance benefits and contributions from public bodies, for which the disposing person is not obliged to provide compensation or reimbursement, shall be deducted from the investment costs.

cc) In cases of replacement acquisitions

In the event of the sale of a property, where upon its acquisition, construction, or improvement, the taxation of the property sold in a replacement acquisition was deferred in accordance with §§ 108 or 109 or a corresponding provision of another canton, the untaxed gain will be deducted from the investment costs.

d) Partial Sale

1 When a sale is made parcel by parcel, the total acquisition price shall be apportioned according to the value ratio at the time of acquisition.

2 Expenses not attributable to a specific parcel shall be apportioned accordingly.

e) Set-off of Losses

1 Assessed losses can be set off proportionally against the assessed profits for the

same calendar year.

2 A loss remaining from a partial disposal after para. 1 can be set off

proportionally against profits remaining from a partial disposal after para. 1

from other calendar years.

3 The set-off of losses must be carried out in accordance with § 173.

4 Further possibilities for the set-off of losses under intercantonal law remain

reserved and also apply within the canton.

7. Tax Calculation

a) Tariff

1 The tax for the entire real estate capital gain achieved in the calendar year, reduced by CHF 2,000, amounts to (basic tariff)

8 percent for the first CHF 3,000

12 percent for the next CHF 5,000

16 percent for the next CHF 7,000

20 percent for the next CHF 10,000

25 percent for the next CHF 15,000

30 percent for profit shares exceeding CHF 40,000

2 The real estate capital gains tax calculated in accordance with para. 1 increases for a creditable ownership period

of less than 1 year by 40 percent

of less than 2 years by 30 percent

of less than 3 years by 20 percent

of less than 4 years by 10 percent

3 The real estate capital gains tax calculated in accordance with para. 1 decreases for a creditable ownership period of

full 5 years by 10 percent

full 6 years by 13 percent

full 7 years by 16 percent

full 8 years by 19 percent

full 9 years by 22 percent

full 10 years by 25 percent

full 11 years by 28 percent

full 12 years by 31 percent

full 13 years by 34 percent

full 14 years by 37 percent

full 15 years by 40 percent

full 16 years by 43 percent

full 17 years by 46 percent

full 18 years by 49 percent

full 19 years by 52 percent

full 20 years by 55 percent

full 21 years by 58 percent

full 22 years by 61 percent

full 23 years by 64 percent

full 24 years by 67 percent

full 25 years by 70 percent

b) Duration of Possession

1 The beginning and end of the duration of possession are determined by the date of the

land register entry or, in the absence thereof, by the time of the

transfer of the power of disposal or of the participation rights.

2 The last alienation is decisive for calculating the duration of possession.

3 If the property was acquired from a tax-deferred alienation, the

last tax-triggering alienation shall be used for calculating the duration of possession. In the case of acquisition of the property through replacement procurement,

the duration of possession of the property alienated during the

replacement procurement shall be credited only for the untaxed gain.

VI. Organization and Procedure

A. Authorities

1. Supervision

1 The enforcement of this Act is subject to the supervision of the Government Council.

2 The Government Council issues the implementing provisions.

2. Enforcement

a) Principle

The Cantonal Tax Administration shall enforce this Act, unless otherwise provided.

b) Assessment Authority

1 The Cantonal Tax Administration ensures the correct and uniform assessment of the taxes regulated in this law. It takes the necessary measures and issues instructions for this purpose.

2 The municipalities, notarial offices, and land registries must cooperate in the implementation of this law and in the preparation of assessments.

c) Collecting Authority

1 The collection of taxes and fines is incumbent upon the Department of Finance and the

municipalities in accordance with the Ordinance.

2 The cantonal tax administration issues liability orders based on this

law and decides on tax remission applications.

3 Special tasks, such as enforcement proceedings, may, with the approval

of the competent department, also be transferred to third parties.

### 3. Case Law

a) Objection Authority

1 The objection authority is the cantonal Tax Commission.

2 It is appointed by the Government Council and consists of the head of the tax

administration as president and eight other members, who may not belong to the

administration. In case of absence, the president is represented by a substitute member

from the administration.

3 The Tax Commission makes decisions in divisions of three members each.

4 The secretary participates in the deliberations and discussions of the Tax Com-

mission with an advisory vote and the right to make proposals.

b) Appellate Authority

The cantonal appellate authority is the Administrative Court.

B. General Procedural Principles

1. Application of the Administrative Justice Act

The provisions of the Administrative Justice Act are applicable to tax proceedings, unless this Act or its implementing provisions deviate therefrom.

2. Electronic Procedure

1 Submissions by the taxpayer to the tax authorities can be filed electronically, even if a different form is prescribed in this Act. If a personal signature is legally required, the taxpayer must confirm their information electronically.

2 The tax authorities may deliver documents to the taxpayer in electronic form with their consent.

3 The Government Council shall regulate the assurance of authenticity and integrity of the transmitted data and further details.

3. Electronic Tax Files

1 The cantonal tax administration may electronically capture and store all files submitted by taxpayers or third parties.

2 If the authenticity and integrity of electronically captured and stored files are guaranteed, they shall have the same evidential value as files submitted in paper form.

3 Files submitted in paper form may be destroyed after electronic capture.

4. Official Duties

a) Recusal

1 Anyone who has to decide a matter or participate in a decree or decision in a

material position during the execution of this law is obliged to recuse themselves if they

a) have a personal interest in the matter;

b) are related by blood or marriage in the direct line or up to the third degree

in the collateral line with a party, or are connected to a party by marriage or

registered partnership, or live in a de facto cohabitation with them;

c) represent a party or have acted for a party in the same matter;

d) could be biased in the matter for other reasons.

2 The ground for recusal may be invoked by anyone involved in the proceedings.

3 If a ground for recusal is disputed, the superior authority shall decide; in the

case of members of collegiate bodies, the collegiate body shall decide.

b) Duty of Confidentiality

1 Anyone entrusted with the enforcement of this Act or called upon to assist in

its enforcement must maintain secrecy regarding facts that come to their

knowledge in the exercise of their function, and regarding deliberations

within the authorities, and must deny third parties access to official files.

2 Information, including the disclosure of files, is permissible if there is an

express legal basis for it in federal or cantonal law. Disclosures to authorities

pursuant to § 131a remain reserved.

c) Mutual Assistance among Tax Authorities

The tax authorities shall provide other Swiss tax authorities, free of charge, with the necessary information, grant them access to official files upon request, and transmit data that may be useful for the performance of their duties.

d) Administrative Assistance to Other Authorities

1 The tax authorities shall provide administrative authorities, criminal investiga-

tion authorities, and courts with the information required for the fulfillment of their

statutory duties.

2 The provision of information requires an express legal basis in federal or

cantonal law. Without such a basis, it is only permissible insofar as it is dictated

by public interest. The Department of Finance shall decide on corresponding re-

quests generally or in individual cases.

e) Administrative Assistance from Other Authorities

1 Administrative authorities, criminal investigation authorities, and courts must,

upon request and free of charge, provide information, grant access to files, and

disclose data to the tax authorities, regardless of any potential duty of secrecy, if

such information may be relevant for the implementation of this Act. The authorities

and courts must, on their own initiative, notify the tax authorities if, based on their

observations during their official activities, an incomplete taxation is probable.

2 The same duty of administrative assistance applies to organs of public corporations

and institutions, insofar as they perform public administration tasks.

f) Form of Administrative Assistance

1 Files and data shall be transmitted to the tax authorities and other authorities individually, on lists, or electronically. They may also be made accessible via a retrieval procedure.

2 The Government Council shall regulate the prerequisites for the retrieval procedure for administrative assistance in accordance with §§ 131 et seq.

5. Procedural Legal Position of Married Persons

1 Persons who live in a legally and de facto undivided marriage and who are to be

jointly assessed exercise the procedural rights and obligations accruing to taxpayers

under this law jointly.

2 They sign the tax return jointly. If the tax return is not signed by both spouses,

the non-signing person will be granted a deadline, upon the unused expiry of which

the contractual representation between spouses will be assumed.

3 In the case of further actions by a married person or an authorized third party, the

consent of the other spouse is presumed. Legal remedies and other submissions are

deemed to be filed on time if one spouse acts within the deadline.

6. Inspection of Files

1 Taxable persons may inspect files submitted or signed by them. Spouses subject

to joint assessment have a mutual right to inspect files.

2 Other files are open to taxable persons for inspection, provided that the investigation

of the facts has been concluded and insofar as no public or private interests

preclude it.

3 File inspection may also be granted electronically if the taxable person agrees.

4 If a taxable person is denied inspection of a file document, it may only be used to

their detriment if the authority has verbally or in writing informed them of the

essential content for the matter and has also given them an opportunity to

comment and to indicate counter-evidence.

5 Upon request of the taxable person, the authority shall issue a decision that can be

contested by appeal to the Administrative Court.

7. Ascertainment of the Facts

1 Evidence offered by the taxpayer must be taken, to the extent that it is suitable for establishing the facts relevant for the assessment.

2 The tax authorities shall freely assess the evidence.

3 Stricter requirements apply to the substantiation of tax-reducing facts, the real economic background of which is difficult to verify due to foreign relations.

8. Representation

1 The taxpayer may be represented by contract before the authorities entrusted

with the enforcement of this Act, unless their personal cooperation is not

necessary.

2 Taxpayers domiciled or resident abroad must designate a representative or

a delivery address in Switzerland.

3 The taxpayer may request the service of procedural documents, with the

exception of the tax return and tax bill, or the service of all procedural

documents to a representative.

9. Notification of Rulings and Decisions

1 Rulings and decisions shall be notified in writing, with reasons and information

on the right of appeal.

2 If the whereabouts of a taxpayer are unknown, or if they are abroad without

a domicile for service or a representative in Switzerland, a ruling or decision

can be validly notified to them by publication in the Official Gazette.

3 If the taxpayer with unknown whereabouts, or domiciled or resident abroad, fails

to designate a service address or a representative in Switzerland upon request,

a ruling or decision can be validly notified by placing it in the files, without

publication in the Official Gazette. Tax criminal matters are exempt from this.

10. Time Limits

1 Statutory time limits cannot be extended. Court holidays do not apply.

2 A time limit set by an authority shall be extended if sufficient grounds exist and the request for extension was submitted within the time limit.

11. Statute of Limitations

a) Assessment Limitation Period

1 The right to assess a tax expires five years after the end of the tax period, or, in the case of non-periodic taxes, five years after the taxable event occurs. Articles 176 and 209 remain reserved.

2 The statute of limitations does not begin or is suspended

a) during an objection, appeal, or revision procedure;

b) as long as the tax claim is secured or deferred;

c) as long as neither the taxpayer nor the jointly liable person has a tax domicile or residence in Switzerland.

3 The statute of limitations recommences with

a) any official act aimed at determining or asserting the tax claim that is brought to the attention of a taxpayer or jointly liable person;

b) any express acknowledgement of the tax claim by the taxpayer or the jointly liable person;

c) the submission of a request for remission;

d) the initiation of criminal proceedings due to completed tax evasion or a tax offense.

4 The right to assess a tax is, in any case, time-barred 15 years after the end of the tax period, or, in the case of non-periodic taxes, after the taxable event occurs.

b) Statute of Limitations for Collection

1 Tax claims become time-barred five years after the assessment has become legally binding.

2 The suspension and interruption of the statute of limitations are governed by § 139 paras. 2 and 3.

3 The statute of limitations shall in any case enter into force ten years after the end of the year in which the taxes were legally assessed.

4 The effects of the certificate of loss remain reserved.

C. Assessment in Ordinary Procedure

1. Procedural Duties

a) Tasks of the Tax Assessment Authority

1 The tax assessment authority ascertains, together with the taxable person, the factual and legal circumstances decisive for a complete and correct taxation.

2 It may, in particular, engage experts, carry out inspections (site visits), inspect business books and vouchers on site, and question witnesses. The costs arising therefrom may be fully or partially imposed on the taxable person or any other person obliged to provide information, who has made these costs necessary through a culpable breach of procedural duties.

3 Legally protected professional secrets remain reserved.

b) Procedural Obligations of Taxable Persons

aa) Tax Return

1 Taxable persons must annually submit a tax return for the preceding tax period. The premature submission of the tax return upon termination of tax liability, in accordance with the Ordinance, remains reserved.

2 Taxable persons are invited, either publicly or personally, to submit the tax return. The absence of a personal invitation does not relieve them of the obligation to submit.

3 Taxable persons must complete the official tax return truthfully and completely, sign it personally, and submit it, together with the prescribed attachments, to the cantonal tax administration within the deadline.

4 The tax return, including attachments, may also be submitted electronically via the channel provided for this purpose. Instead of a personal signature, the taxable person must electronically confirm that their information is truthful and complete.

5 Taxable persons who fail to submit the tax return or submit it incompletely will be requested to rectify the omission within a reasonable period.

6 If this request is not complied with, the deadline can only be reinstated upon application by the taxable person if they can demonstrably prove that they were prevented from timely submission due to military or civil service, illness, absence from the country, or other significant reasons, and have rectified the omission within 30 days after the cessation of the impediment.

bb) Attachments to the Tax Return and Report

1 Natural persons must attach to the tax return, in particular

a) Salary statements for all income from dependent employment;

b) Statements of remuneration as a member of the administration or another body of a legal person;

c) Inventories of all securities, claims, and debts.

2 Natural persons with income from self-employment and legal persons must attach to the tax return the signed annual financial statements for the tax period or, in the case of simplified accounting according to Art. 957 para. 2 OR, statements of assets and liabilities, income and expenses, as well as private withdrawals and private deposits.

3 The cantonal tax administration shall report to the Commercial Register of the Canton of Schwyz if a legal person fails to submit annual financial statements according to para. 2 within three months after the expiry of the relevant deadline.

cc) Further duties of cooperation

1 The taxable person must do everything to enable a complete and correct

assessment.

2 At the request of the tax authority, they must in particular provide information orally or in writing and submit documents and other certificates as well as business books and deeds concerning business transactions.

3 Natural persons with income from self-employment and legal entities must keep business books, statements according to Article 143 para. 2, and other documents related to their activity for ten years. The manner of keeping and storing them is governed by the provisions of the Code of Obligations.

c) Obligation of Third Parties to Issue Certificates

1 The following persons are obligated to issue written certificates to the taxpayer

a) Employers regarding their payments to employees, as well as the type and amount

of contributions deducted from wages for first and second pillar institutions;

b) The previous employer regarding dependent employment in the event

of an employee's departure during the year according to § 94 para. 1 lit. a and

b, to the extent that the information is necessary for the implementation of the

applicable international tax agreement and provided that the employee

requests the certificate; this must be issued at the time the employment

relationship ends;

c) Insurance institutions regarding the surrender value of insurance policies and

regarding benefits paid out or owed from the insurance relationship;

d) Insurance institutions regarding the surrender value of insurance policies and

regarding benefits paid out or owed from the insurance relationship; for life annuity

insurance policies subject to the VVG, they must additionally

state the year of conclusion, the amount of the guaranteed life annuity,

the total taxable income share according to § 23 para. 4, as well as the

surplus payments and the income share from these payments according to § 23

para. 4 lit. b;

e) Trustees, asset managers, pledgees, agents and other

persons who hold or have held assets of the taxpayer in their possession or

under their management, regarding these assets and their income;

f) Persons who conduct or have conducted business with the taxpayer,

regarding mutual claims and benefits.

2 If the taxpayer fails to submit the necessary certificates despite a reminder,

the assessment authority may demand them from the third party.

Legally protected professional secrets remain reserved.

d) Obligation of Third Parties to Provide Information

Shareholders, co-owners, and joint owners must, upon request, provide the tax authorities with information concerning their legal relationship to taxable persons, particularly regarding their shares, claims, and emoluments.

e) Reporting Obligation of Third Parties

1 For each tax period, the assessment authorities must be provided with a certificate by

a) legal entities, regarding services rendered to members of the management and

other bodies; foundations must additionally submit a certificate regarding services

rendered to their beneficiaries;

b) occupational and restricted private pension schemes, regarding services rendered

to policyholders or beneficiaries; the notification of capital payments must be made

at least 30 days before the disbursement;

c) unemployment funds, regarding benefits paid to insured persons;

d) simple partnerships and partnerships, regarding all circumstances relevant for the

assessment of the partners, in particular their share in the income and assets of

the partnership;

e) collective investment schemes with direct real estate, regarding all circumstances

material for the taxation of the direct real estate and its income;

f) employers, regarding all necessary information for the assessment of employee

participations granted to their employees. The provisions issued by the Federal Council

pursuant to Art. 129 para. 1 lit. d of the Federal Act on Direct Federal Tax of

14 December 1990 (DBG) apply *mutatis mutandis*;

g) employers, regarding salary data for employees under § 94 para. 1 lit. a and b, for

whom an international tax agreement provides for the automatic exchange of

information concerning this data.

2 A duplicate of the certificate must be sent to the taxpayers.

2. Tax Register

1 The Cantonal Tax Administration maintains a register of natural and legal persons

subject to limited or unlimited tax liability in the canton, as well as of real

estate located in the canton.

2 The municipalities, notaries, and land registry offices report the data necessary

for maintaining the register to the Cantonal Tax Administration. If required, the

notaries and land registry offices make the data accessible to the Cantonal Tax

Administration via retrieval procedures.

3 The municipalities verify the completeness of the tax register.

4 The tax register is not public.

3. Assessment

a) Execution

1 The assessment authority examines the tax return and carries out the necessary investigations.

2 If the taxpayer has failed to fulfill their procedural obligations despite a reminder, or if the tax factors cannot be determined without doubt due to a lack of reliable documents, the assessment authority will make the assessment based on a discretionary estimate. In doing so, it may particularly consider empirical data, asset development, and living expenses of the taxpayer.

b) Commencement / Opening

1 The assessment authority determines the tax factors, the basic tax, and, if

necessary, the tax allocation in the assessment decision. Tax factors are the

taxable income and assets, the taxable net profit, and the equity capital relevant

for the minimum tax.

2 Any deviations from the tax return must be communicated to the taxpayer no

later than at the commencement of the assessment decision.

4. Objection

a) Deadline and Conditions

1 The taxpayer may lodge a written objection against the assessment decision within

30 days of its delivery. The involved districts, municipalities, and church municipalities have a right to object insofar as their tax sovereignty or tax apportionment is disputed. The objection should contain a substantiation.

2 If the objection is directed against a decision that is extensively reasoned, it can, with the agreement of the parties involved in the objection procedure, be forwarded as an appeal to the Administrative Court.

3 An assessment made according to due discretion can only be contested on grounds of manifest inaccuracy. The objection must be substantiated and must name any evidence.

4 Late objections will only be entertained if the taxpayer proves that they were prevented from submitting it on time due to military or civilian service, illness, absence from the country, or other significant reasons, and that the objection was submitted within 30 days after the cessation of the impediment.

b) Procedural Principles

1 The same principles apply to the objection procedure as to the assessment

procedure.

2 A withdrawal of the objection will not be given effect if there are indications

that the assessment was obviously incorrect.

c) Preliminary Proceedings

1 Before an objection is processed by the Tax Commission, the challenged decision

is reviewed by the issuing department and its management.

2 Upon request in the notice of objection, an opportunity for an oral hearing

shall be granted.

3 If the objection is found to be justified, or if an agreement can be reached,

an amended assessment that is no longer contestable in terms of its content

will be issued, without cost or compensation consequences. Otherwise, the

objection will be referred to the Tax Commission for processing.

d) Decision

1 Based on its investigation, the tax commission decides on the objection as

well as the cost and compensation consequences of the objection procedure.

It may redetermine all tax factors and, after hearing the taxpayer, may also

amend the assessment to their disadvantage.

2 The decision must be reasoned and communicated to the parties in writing,

with reference to the right of appeal. If the objection is upheld, or if the

taxpayer agrees in writing, a statement of reasons may be dispensed with.

D. Special Procedural Provisions

1. Valuation of Real Estate

1 The cantonal tax administration determines the imputed rental values (Article 22) and the wealth tax values of real properties (Article 42) in the form of autonomously appealable decisions.

2 The determined values remain unchanged until a new valuation.

2. Collection of Withholding Tax

a) Procedural Obligations

1 Taxable persons and debtors of the taxable benefit must provide the competent tax authorities, upon request, with oral or written information regarding the circumstances relevant for the collection of withholding tax. Sections 141 to 147 apply mutatis mutandis.

2 The same duty to provide information applies to taxable persons vis-à-vis the debtors of the taxable benefit.

3 Persons who request a subsequent ordinary assessment under Section 99a must submit the required documents and designate a delivery address in Switzerland. If no delivery address is designated or if the delivery address loses its validity during the assessment procedure, the competent authority shall grant the taxable person a reasonable period for designating a valid delivery address. If this period expires unused, the withholding tax shall replace the tax on earned income to be assessed in the ordinary procedure. Section 151 para. 4 applies mutatis mutandis.

b) Ruling

1 The debtor of the taxable benefit may request a ruling from the assessment authority regarding the existence and scope of the tax liability by March 31 of the tax year following the due date of the benefit.

2 The taxable person may request such a ruling if they

a) do not agree with the withholding tax deduction as per the certificate under § 92 para. 1 lit. b or § 101 para. 1, or

b) have not received it from the employer.

3 The debtor of the taxable benefit remains obligated to levy the withholding tax until a legally binding decision is made.

c) Subsequent Levy, Reimbursement, and Direct Collection

1 If the debtor of the taxable benefit has not or insufficiently withheld the tax, the

assessment authority shall oblige him to make a subsequent payment. The debtor's

right of recourse against the taxpayer remains reserved.

2 If the debtor of the taxable benefit has withheld too much tax, he must reimburse

the difference to the taxpayer. Excessively remitted withholding taxes shall be

reimbursed to the taxpayer or transferred to the competent tax collection authorities

for offset against tax liabilities.

3 The taxpayer shall be obliged by the assessment authority to make a subsequent

payment of the withholding tax owed by him if the disbursed taxable benefit has

not been reduced, or not fully reduced, by the withholding tax and a subsequent

collection from the debtor of the taxable benefit is not possible.

d) Objection

Affected parties may lodge an objection against a withholding tax order in accordance with § 151.

e) Threshold Limit

Withholding tax shall not be levied if the taxable gross income does not reach a minimum to be determined by the Government Council.

3. Levy of Real Estate Gains Tax

a) Procedural Obligations of Taxable Persons

1 Taxable persons must submit a tax return to the assessment authority within

30 days of the sale. This deadline is extendable.

2 Taxable persons must provide all information and submit all documents that

are necessary for the assessment and calculation of the tax.

b) Cooperation of the Land Registry Offices

The Land Registry Offices must report every disposal of real estate to the tax assessment authority as instructed.

c) Assessment and Statute of Limitations

1 The provisions concerning assessment in ordinary proceedings apply mutatis mutandis.

2 The right to assess the real estate gains tax prescribes five years after the disposal. For the rest, Articles 139 and 140 apply mutatis mutandis.

d) Replacement Acquisition

The tax assessment authority generally determines the untaxed profit in the case of a replacement acquisition within the meaning of §§ 108 or 109 by means of an appealable ruling.

4. Tax Exemptions and Advance Rulings

1 Applications for tax exemption or for advance rulings concerning subjective

tax liability must be submitted to the assessment authority.

2 The assessment authority issues an appealable decision. In the event of

rejection of an application or non-admission, costs may be imposed.

3 Furthermore, there is no general entitlement to appealable advance rulings.

4 The assessment authority can review in each tax period whether the

conditions for tax exemption are still met.

E. Appeal Procedure

1. Before the Administrative Court

a) Deadline and Conditions

1 The parties entitled to object, as well as the tax assessment authority, may lodge a written appeal against the objection decision within 30 days of service. § 151 para. 2 remains reserved.

2 The appeal must contain a request and a statement of grounds. The evidence should be enclosed with the appeal brief or, if this is not possible, precisely specified.

3 All defects of the challenged decision and of the preceding procedure may be invoked.

4 § 151 para. 4 applies mutatis mutandis.

b) Decision

1 The appellate authority is not bound by the requests of the parties in its decision.

2 It may amend the contested decision to the detriment of the appellant party after hearing them.

3 The appellate authority has the same powers as the tax assessment authorities.

2. Before the Federal Supreme Court

Taxpayers, the assessment authority, the Federal Tax Administration, and, in withholding tax proceedings, the debtors of the taxable benefit may file an appeal in public law matters with the Federal Supreme Court against the decision of the Administrative Court.

F. Amendment of legally binding orders and decisions

1. Revision

a) Grounds

1 A legally binding ruling or decision may be revised upon application or ex officio in favor of the taxpayer

a) if significant facts or decisive evidence are discovered;

b) if the authority disregarded significant facts or decisive evidence that were known or should have been known to it, or otherwise violated essential procedural principles;

c) if a crime or an offense influenced the ruling or decision;

d) if the canton must restrict its right to taxation due to intercantonal or international double taxation law.

2 Revision is excluded if the applicant raises as a ground for revision what could have been asserted in the ordinary procedure with the diligence reasonably expected of them.

b) Time Limit

The request for revision must be submitted within 90 days of the discovery of the grounds for revision, but no later than ten years after the announcement of the order or decision.

c) Request for Revision

1 The request for revision must be submitted in writing to the authority that

issued the ruling or decision.

2 The request for revision must contain

a) the precise designation of the individual grounds for revision;

b) a petition stating to what extent the ruling or decision should be

revoked and how the new decision should be rendered.

3 The evidence for the grounds for revision and for compliance with the deadline

should be enclosed with the request for revision or, if this is not possible,

precisely specified.

4 The request for revision does not have suspensive effect, unless the

revising authority orders otherwise.

d) Procedure and Decision

1 If the request for revision is well-founded, the authority shall revoke its order or

decision and issue a new order or decision.

2 The same legal remedies as were available against the previous order or

decision may be lodged against the rejection of the request for revision and against the new order

or decision.

3 Costs may be imposed upon rejection of the application and upon non-consideration of the merits.

Otherwise, the provisions concerning the procedure in which

the previous order or decision was rendered shall apply.

2. Adjustment in Cases of Replacement Acquisition and Loss Offsetting

1 Upon application by the taxpayer, the cantonal tax administration shall make an adjustment to a legally binding real estate gains tax assessment

a) in the case of subsequent replacement acquisition in accordance with §§ 108 et seq., if the application is submitted no later than 90 days after the acquisition of the replacement property or after the start of construction or improvement of the replacement property that was not acquired within the period specified in §§ 108 et seq. This provision applies mutatis mutandis also to the acquisition of participations within the meaning of § 108 para. 1 lit. c.

b) in the case of losses from sales within the meaning of § 119 para. 1, if the application is submitted within 90 days after the end of the calendar year of the sales or no later than 90 days after the legal force of the last assessment relevant for offsetting.

c) in the case of losses from partial sales within the meaning of § 119 para. 2, if the application is submitted, in the case of a complete sale, no later than one year after the last partial sale, or in the case of a partial sale, no earlier than ten and no later than eleven years after the first partial sale.

2 Interest on refunds in accordance with para. 1 is due only after 30 days from the submission of the application, but no earlier than 30 days after the fulfillment of the substantive and temporal conditions.

3. Correction of Calculation Errors and Clerical Mistakes

1 Calculation errors and clerical mistakes in legally binding orders and decisions may be corrected, upon application or *ex officio*, within five years of their notification, by the authority that made them.

2 The same legal remedies are available against the correction or its refusal as against the order or decision itself.

4. Subsequent Tax Assessments

a) Ordinary Subsequent Tax Assessment

1 If, on the basis of facts or evidence previously unknown to the tax authority, it

is found that an assessment was wrongly omitted or a legally binding assessment

is incomplete, or if an omitted or incomplete assessment is due to a felony or

misdemeanor against the tax authority, the uncollected tax, together with interest,

shall be claimed as a subsequent tax assessment.

2 If the taxpayer has fully and accurately declared income, assets, net profit, or

equity in their tax return and the bases required for valuation were known to the

tax authority, no subsequent tax assessment can be levied, even if the valuation

was insufficient.

b) Forfeiture

1 The right to initiate a supplementary tax procedure expires ten years after

the end of the tax period for which an assessment was wrongly omitted or

a legally final assessment is incomplete.

2 The self-declaration and the opening of criminal prosecution for tax evasion

or tax offense are simultaneously considered as the initiation of the supplementary tax

procedure.

3 The right to assess the supplementary tax expires 15 years after the end of the

tax period to which it relates.

4 For non-periodic taxes, the periods begin at the time the taxable event occurs.

c) Procedure

1 The supplementary tax procedure shall be carried out by the assessment authority.

2 The initiation of a supplementary tax procedure shall be communicated to the taxpayer in writing. Article 176 para. 2 remains reserved.

2a If a supplementary tax procedure is initiated, the taxpayer shall be informed of the possibility of a subsequent initiation of criminal proceedings for tax evasion. This notification may be omitted if criminal proceedings are excluded from the outset.

3 The procedure, which has not yet been initiated or concluded at the time of the taxpayer's death, shall be initiated or continued against the heirs.

4 The costs of the supplementary tax procedure shall be imposed on the taxpayer or the heirs if the procedure became necessary due to a culpable breach of procedural duties.

5 For the rest, the provisions concerning liability, procedural principles, the assessment procedure, and the appeals procedure shall apply mutatis mutandis.

d) Simplified Subsequent Taxation of Heirs

1 All heirs are entitled, independently of one another, to a simplified subsequent

taxation of previously undeclared assets and income components of the deceased, if

a) the undeclared asset and income elements are unknown to any tax authority;

b) they unreservedly assist the tax authorities in determining the undeclared

asset and income elements; and

c) they genuinely endeavor to pay the subsequent tax owed.

2 The subsequent tax is calculated for the last three tax periods preceding the year

of death, according to the provisions on ordinary assessment, and is levied together

with default interest.

3 Simplified subsequent taxation is excluded if the estate is liquidated officially or

by bankruptcy proceedings.

4 The executor or the estate administrator may also request simplified subsequent

taxation.

G. Inventory

1. Duty to Take Inventory

1 Upon the death of a taxable person, an official inventory shall be taken.

2 The taking of inventory may be dispensed with if it can be assumed that there are no assets.

2. Subject Matter

1 The inventory shall include the assets existing on the date of death of the deceased person, the person living with them in an undivided marital community, and the minor children under their care.

2 Facts relevant for tax assessment shall be determined and noted in the inventory.

3. Procedure

a) Securing the Inventory Recording

1 The heirs and the persons who manage or hold the estate assets may dispose of these

assets before the inventory is recorded only with the consent of the inventory authority.

2 To secure the inventory, the inventory authority or the cantonal tax administration

may carry out immediate sealing.

b) Duties to cooperate

1 The heirs, the legal representatives of heirs, the estate administrators, and

the executors are obliged to

a) truthfully provide information on all circumstances that may be relevant for the

assessment of the tax factors of the deceased person;

b) present all books, documents, certificates, and records that can provide information

about the estate;

c) open all premises and receptacles that were at the disposal of the deceased person.

2 Heirs and legal representatives of heirs who lived in the same household with the

deceased person or who held or managed their assets must also allow access to their

premises and receptacles.

3 If an heir, a legal representative of heirs, an estate administrator, or an executor

gains knowledge of estate assets not recorded in the inventory after the inventory has

been drawn up, they must report these to the inventory authority within 10 days.

4 At least one heir with legal capacity and the legal representatives of minor heirs or

heirs under comprehensive guardianship, or the agent designated in a precautionary

mandate for heirs lacking capacity for judgment, must attend the inventory taking.

c) Obligation to Provide Information and Certification

1 Third parties who held or administered assets of the deceased person, or against

whom the deceased person had pecuniary rights or claims, are obliged to provide

the heirs, for the attention of the inventory authority, with all related information

in writing upon request.

2 If important reasons prevent the fulfillment of this obligation to provide

information, the third party may provide the requested information directly to the

inventory authority.

3 In other respects, §§ 145 and 146 apply mutatis mutandis.

4. Authorities

1 The inventory authorities of the district in which the deceased person had their last tax domicile or residence, or possessed taxable assets, are responsible for the inventory taking and sealing.

2 The cantonal tax administration may participate in the inventory taking. It issues the necessary instructions.

3 The inventory authority may adopt a civil law inventory and supplement it if necessary.

4 In the event of death, the civil registry offices shall immediately inform the tax authority at the last tax domicile or residence of the deceased person.

H. Tax Collection and Tax Remission

1. Tax Collection

a) Periodic Taxes

aa) Due Date and Provisional Collection

1 Periodic taxes become due on November 30 of the calendar year in which the tax year ends. Upon termination of the tax liability, the taxes become due immediately.

2 Interest may be levied on invoiced tax amounts that remain outstanding 30 days after the due date.

3 As of June 1, a provisional invoice will be issued for the tax period ending in the calendar year. A discount will be granted for payment within 30 days.

4 The basis for the provisional invoice is the tax factors from the last tax return or the last assessment, or the estimated tax amount for the current tax period.

5 The provisional invoice for periodic income and wealth taxes can be divided into installments.

bb) Order Regarding Provisional Invoices

1 For taxpayers who have not yet paid the provisional invoice by March 31 of

the following year, the amount of the provisional invoice to be paid can be

determined in an order. The assessment authority is responsible for issuing

the order upon application by the collection authority.

2 The order may be challenged by objection and appeal. In doing so, only the

tax liability can be disputed, or it can be made credible that the estimated tax

amount is obviously lower than the provisional tax claim invoiced.

3 In the objection procedure, the President of the Cantonal Tax Commission

decides; in the appeal procedure, the President of the Administrative Court or a

judge designated by the Administrative Court decides definitively as a single

judge. Otherwise, the provisions concerning the objection and appeal procedures

apply mutatis mutandis.

cc) Final Account

1 Upon completion of the assessment, the final account is opened. It can be

combined with the opening of the assessment.

2 Underpaid amounts will be reclaimed. Overpaid amounts will be

refunded, unless they are offset. For refunds, the limitation periods of § 140 apply mutatis mutandis.

3 In the final account, the discount granted pursuant to § 184 para. 3 is

adjusted to the effectively owed tax amount if this amount is lower

than the provisionally invoiced tax amount. Furthermore, interest may be charged

in favour of and against the taxpayer.

4 If the assessment decision is contested, the final account is considered a

provisional account. A new final account will be delivered after the legally binding

decision on the assessment.

b) Non-periodic Taxes and Withholding Taxes

1 The due dates and payment deadlines for non-periodic taxes, withholding

taxes, and fines are determined by ordinance.

2 Interest compensation is granted for early payments and on refunds of assessed

taxes. Withholding taxes are exempt from this.

3 Default interest is levied for late payments.

c) Competence of the Government Council

The Government Council regulates the details of tax collection. In particular, it determines the amount of interest and discounts. It also determines the extent to which tax amounts may be waived due to insignificance, and interest may be waived both in favour of and to the detriment of taxpayers.

d) Payment Facilities

1 If the payment of the tax, interest and costs or a fine within the prescribed

period would cause a significant hardship for the person liable to pay, the

collecting authority may extend the payment period or approve payment by

instalments. It may waive the calculation of interest for such a deferment of

payment.

2 Payment facilities may be made dependent on appropriate security.

3 Payment facilities shall be revoked if their conditions cease to exist or if the

conditions to which they are linked are not met.

e) Objection and Appeal against Liability Orders

Affected persons may file an objection pursuant to § 151 and an appeal pursuant to § 166 against liability orders within the meaning of § 125 para. 2.

f) Tax Refunds

aa) To Persons Living in Undissolved Marriage

1 In the case of tax refunds to jointly assessed persons living in factually and legally undissolved marriage, each spouse is considered entitled to receive payments.

2 Tax refunds can also be offset against provisional invoices or final invoices.

bb) To Divorced or Separated Spouses

1 If spouses have been divorced or have legally or de facto separated, and if, consequently, tax amounts are to be refunded that were paid based on provisional assessments or final assessments issued to both spouses, the refund shall be made to both spouses, each for one half.

2 Such tax refunds may also be offset

a) either against provisional assessments or final assessments issued to both spouses;

b) or, each for one half, against provisional assessments or final assessments issued to each spouse individually.

g) Reimbursement after Adjustment of a Final Assessment

1 A paid tax amount that has been determined by a final assessment can be reclaimed with interest if the tax has been reduced in a revision or correction procedure.

2 The right to reclaim expires five years after the end of the calendar year in which the payment was made. If the claim is determined by revision or correction only in the last year of this period or after its expiry, it can still be asserted within one year.

3 Tax reimbursements can also be made by set-off.

2. Tax Remission

a) Principle

1 Taxable persons for whom, as a result of an emergency, the payment of tax, interest, a fine for infringement, or costs would represent a great hardship, may have the amounts owed fully or partially remitted upon application.

2 The tax remission aims to contribute to the permanent rehabilitation of the economic situation of the taxable person. It must benefit the taxable person themselves and not their creditors.

3 Fines and back taxes are remitted only in exceptionally justified cases.

b) Grounds for Refusal

The tax remission may be refused, in particular, if the taxable person

a) has seriously or repeatedly violated their obligations in the assessment

procedure, making it impossible to evaluate the financial situation in the

relevant tax period;

b) has failed to make provisions despite available means, starting from the tax

period to which the remission request relates;

c) has failed to make payments despite available means at the time the tax

claim became due;

d) has grossly negligently caused the inability to pay through voluntary

renunciation of income or assets without a valid reason, through excessive

living expenses, or similar conduct;

e) has preferentially treated other creditors during the assessment period.

c) Request for Remission

1 The written request for remission must contain the necessary evidence. The

request must set out the financial hardship which would render the payment of the tax, interest,

fine, or costs a significant burden.

2 The request for remission must be submitted to the cantonal tax administration (remission authority).

The authority obtains the opinion of the municipality and decides

on the request.

3 The remission authority will only entertain requests submitted before the service of the order to pay (Art. 38 para. 2 SchKG). The submission of a

request for remission does not suspend collection.

4 In withholding tax cases, only the taxpayer or their representative may submit a request for remission.

d) Procedure

1 The applicant has the procedural rights and obligations under this Act. They must provide the issuing authority with comprehensive information about their economic circumstances.

2 If the applicant, despite request and warning, refuses the necessary and reasonable cooperation, the issuing authority will not consider the application.

3 The issuing authority has all investigatory powers under this Act.

4 The procedure is free of charge. In the case of manifestly unfounded applications, costs may be levied.

e) Legal Remedies

An appeal against the decision of the issuing authority may be lodged with the Government Council in accordance with the Administrative Justice Act.

3. Tax Security

a) Provision of Security

1 If the taxable person has no domicile in Switzerland, or if the payment of the tax owed by them appears to be at risk, the collecting authority may, even before the tax amount has been finally assessed, at any time demand the provision of security. The security order specifies the amount to be secured and is immediately enforceable. In debt collection proceedings, it has the same effects as an enforceable court judgment.

2 The security must be provided in cash, by depositing secure, marketable securities, or by an irrevocable and open-ended bank guarantee or a similar joint and several bank suretyship.

3 The taxpayer may appeal against the security order to the Administrative Court within 30 days of its service.

4 The appeal does not suspend the enforcement of the security order.

b) Arrest

1 The securing order is considered an arrest warrant within the meaning of Article 274 of the Debt Enforcement and Bankruptcy Act (DEBA). The arrest is executed by the competent debt enforcement office.

2 An objection against the arrest warrant under Article 278 DEBA is not permissible.

c) Securing the Real Estate Gains Tax

1 The provisional tax amount calculated by the cantonal tax administration must

be deposited at the latest at the time of disposal, or secured by an irrevocable

and unlimited bank guarantee or an equally solidary bank suretyship.

2 If the taxpayer becomes insolvent or cannot be prosecuted in Switzerland, the

acquiring person is liable

a) for the provisional tax amount, to the extent that the required security

was not provided;

b) for the tax amount, if the disposal was not reported to the assessment

authority and no security could be requested.

3 In the case of disposals with land register entry, the notary and land registry

office shall inform the acquiring person in writing before the conclusion of the

purchase contract about the provision of security or about any legal consequences

and the amount, if it was not deposited or secured before the land register entry.

d) Securing Taxes Owed for Brokerage Activities Related to Real Estate

If a natural or legal person, who has neither domicile nor registered office nor actual administration in Switzerland, brokers a property located in the Canton, the collection authority may require the purchaser or vendor to deposit 3 percent of the purchase price as security for the tax amount owed for the brokerage activity.

4. Tax Apportionment and Settlement among Public Entities

a) Apportionment

1 From the gross yield of withholding taxes, the administrative costs and the creditable federal taxes are excluded in advance. The remaining amount is shared by the public entities in proportion to the tax rates levied.

2 The ordinance regulates the apportionment of other taxes and fines not levied based on tax rates, as well as collection remunerations.

b) Accounting

1 The reference authorities regularly transfer the tax shares obtained, which are due to another municipality, with their accounting statements. In the event of late transfer, default interest will be calculated.

2 The Government Council issues the necessary implementing provisions.

VII. Tax Criminal Law

A. Violation of Procedural Obligations and Tax Evasion

1. Violation of Procedural Duties

Anyone who intentionally or negligently fails to comply with a duty existing under the provisions of this Act or an order issued on the basis of this Act, despite a warning, shall be punished with a fine of up to 1,000 Swiss francs, and in severe cases or in the event of recurrence, up to 10,000 Swiss francs.

2. Tax Evasion

a) Completed Tax Evasion

1 Whoever, as a taxable person, intentionally or negligently causes a tax assessment to be improperly omitted or a legally binding assessment to be incomplete,

whoever, as a person obligated to deduct tax at source, intentionally or negligently fails to make a tax deduction or fails to make it in full,

whoever, as a taxable person or a person obligated to deduct tax at source, intentionally or negligently procures an unlawful refund or an unjustified remission,

shall be punished with a fine.

2 The fine shall, as a rule, be equal to the amount of the evaded tax. In cases of minor fault, it may be reduced to one third, and in cases of severe fault, it may be increased up to three times that amount.

3 If the taxable person, for the first time, reports a tax evasion themselves, prosecution shall be waived (penalty-free voluntary disclosure) if

a) the evasion is not known to any tax authority;

b) they unconditionally support the tax authorities in determining the evaded assets and income elements; and

c) they seriously endeavour to pay the overdue supplementary tax.

4 For every subsequent voluntary disclosure, the fine shall be reduced to one-fifth of the evaded tax, provided the conditions under para. 3 are met.

b) Attempted Tax Evasion

1 Attempted tax evasion is punishable.

2 The fine amounts to two-thirds of the fine that would be imposed for completed tax evasion.

c) Participation of Third Parties

1 Any person who wilfully incites or assists in tax evasion,

any person who, as a representative of the taxable person, wilfully causes or

participates in tax evasion,

shall be punished with a fine, irrespective of the punishability of the taxable

person.

2 The fine shall be up to 10,000 Swiss francs, and in severe cases or in the event

of recurrence, up to 50,000 Swiss francs.

3 Furthermore, the participating third party shall be jointly and severally liable

for the evaded tax up to the amount of the evaded tax.

4 If a person as per para. 1 reports themselves for the first time and the

conditions under Art. 202 para. 3 lit. a and b are met, prosecution shall be

waived and joint and several liability shall cease.

d) Concealment or Removal of Estate Assets in Inventory Proceedings

1 Any heir, heir's representative, executor, or third party who conceals or removes

estate assets despite a personal obligation to disclose them, with the intent to

withdraw them from the inventory, or who incites or aids such an act, shall be

punished with a fine.

2 The fine shall be up to 10,000 Swiss francs, and in severe cases or repeat

offences, up to 50,000 Swiss francs.

3 The attempt to conceal or remove estate assets is punishable.

4 If a person under paragraph 1 reports themselves for the first time, prosecution

for the concealment or removal of estate assets in inventory proceedings and for

any other related offences committed in this context shall be waived (immunity

for voluntary disclosure), if

a) the infringement is not known to any tax authority; and

b) the person unreservedly cooperates with the tax authorities in correcting the

inventory.

f) Tax Evasion by a Married Person

1 A taxpayer who lives in a legally and actually undivided marriage will be fined only for the evasion of their own tax factors. Section 204 remains reserved.

2 The signing of the tax return or its electronic submission does not in itself constitute participation within the meaning of Section 204 para. 1 with regard to the factors of the other spouse.

3. Legal Entities

a) General Provisions

1 If procedural obligations are violated, taxes are evaded or an attempt is made

to evade them, with effect for a legal entity, the legal entity shall be fined.

2 If acts of participation (instigation, aiding and abetting, complicity) in tax

evasion by third parties are committed within the business sphere of a legal

entity, § 204 shall apply to the legal entity.

3 The punishment of the acting organs or representatives under § 204 remains

reserved.

4 For corporations and institutions under foreign law and for foreign associations

of persons without legal personality, paragraphs 1 to 3 shall apply mutatis

mutandis.

b) Self-declaration

1 If a taxable legal entity voluntarily declares for the first time a tax evasion committed in its business operations, criminal prosecution shall be waived (penalty-free self-declaration) if

a) the evasion is not known to any tax authority;

b) it unreservedly supports the tax authorities in determining the evaded capital and profit elements; and

c) it makes a serious effort to pay the overdue tax.

2 The penalty-free self-declaration may also be submitted

a) after a change of company name or a relocation of the registered office within Switzerland;

b) after a transformation in accordance with Articles 53-68 of the Merger Act of 3 October 2003 (FusG) by the new legal entity for tax evasions committed before the transformation;

c) after an absorption (Art. 3 para. 1 lit. a FusG) or a spin-off (Art. 29 lit. b FusG) by the continuing legal entity for tax evasions committed before the absorption or spin-off.

3 The penalty-free self-declaration must be submitted by the organs or representatives of the legal entity. Criminal prosecution against these organs or representatives shall be waived and their joint and several liability shall cease.

4 If a former organ member or a former representative of the legal entity declares it for tax evasion for the first time and the tax evasion is not known to any tax authority, criminal prosecution of the legal entity, all current and former members of the organs, and all current and former representatives shall be waived. Their joint and several liability shall cease.

5 For every subsequent self-declaration, the fine shall be reduced to one-fifth of the evaded tax under the conditions set out in para. 1.

6 After the termination of a legal entity's tax liability in Switzerland, no further self-declaration can be submitted.

4. Limitation Period

1 The prosecution is time-barred

a) in the event of a breach of procedural obligations, three years, and in the case of attempted tax evasion, six years, after the legally binding conclusion of the proceedings in which the procedural obligations were breached or the attempted tax evasion was committed;

b) in the case of completed tax evasion, ten years after the end of the tax period for which the taxpayer was not assessed or was incompletely assessed, or for which tax deduction at source did not occur in accordance with the law, or ten years after the end of the calendar year in which an unlawful refund or an unjustified remission was obtained, or assets were concealed or misappropriated in the inventory procedure;

c) in the case of completed tax evasion of non-periodic taxes, ten years after the occurrence of the taxable event for which the taxpayer was not assessed or was incompletely assessed.

2 The limitation period no longer applies if a penalty order was issued before the expiry of the limitation period (§ 213 para. 1).

3 Fines and costs imposed in tax criminal proceedings are time-barred in accordance with § 140. Suspension and interruption are governed by § 139 para. 2 lit. b and c as well as para. 3 lit. a-c.

5. Criminal Proceedings

a) Investigation and Final Order of the Tax Authorities

aa) Jurisdiction

The cantonal tax administration is responsible for investigation and criminal order.

bb) Commencement of Proceedings

1 The commencement of criminal proceedings for tax evasion is communicated in writing to the accused person, stating the grounds for suspicion. They are given the opportunity to comment on the accusation made against them. They are informed of their right to refuse to testify and to cooperate.

2 The commencement of criminal proceedings for violation of procedural obligations and in cases of self-disclosure can be directly initiated with a penal order.

3 The cantonal tax administration reopens discontinued proceedings if new evidence makes culpability or guilt probable.

cc) Investigation

1 The cantonal tax administration investigates the facts. It may question the accused

person or persons providing information, hear witnesses, and undertake

further investigative actions.

2 The accused person may inspect the files as soon as this is possible without

jeopardizing the purpose of the investigation. Furthermore, the provisions

applicable in the ordinary assessment procedure concerning the procedural

rights of taxpayers and the duties of cooperation of third parties and official

bodies apply mutatis mutandis.

3 Evidence from a supplementary tax procedure may only be used in a criminal

procedure for tax evasion if it was obtained neither under threat of an assessment

based on best judgment (§ 149 para. 2) with a reversal of the burden of proof

within the meaning of § 151 para. 3, nor under threat of a fine for violating

procedural duties (§ 201).

dd) Conclusion of the Investigation by Discontinuance or Penal Order

1 Upon conclusion of the investigation, the criminal proceedings shall be discontinued or a penal order issued.

2 In the event of discontinuance of proceedings, the costs shall be wholly or partially borne by the affected person, insofar as they caused the proceedings through a culpable and significant violation of legal duties.

ee) Concluding Order

1 The order of discontinuance or the penal order must be communicated in writing

and with a brief statement of reasons.

2 If a fine is imposed, the person fined shall bear the procedural costs.

b) Objection

1 The person concerned may file an objection against the penal order with the cantonal tax commission within 30 days of service.

2 Sections 151 et seq. apply mutatis mutandis.

c) Assessment by the Administrative Court

aa) Request for judicial assessment

1 The accused person may, within 30 days of the service of the penalty order or

the objection decision, request judicial assessment in writing from the Administrative Court.

2 The cantonal tax administration may request judicial assessment within 30 days

of the service of the objection decision.

3 A request for judicial assessment may be withdrawn until the pronouncement of the judgment.

4 If no request for judicial assessment is submitted within the deadline or if it is

withdrawn, the penalty order or the objection decision is equivalent to a legally binding judgment.

bb) Indictment and Representation of the Indictment

1 The penal order or the decision on the objection shall be deemed the indictment.

2 The cantonal tax administration shall represent the indictment.

cc) Preparation for the Main Hearing

1 The Administrative Court informs the parties about the receipt of the request

for judicial review.

2 The lower authority immediately transmits the files to the Administrative Court.

3 The Administrative Court, on its own initiative or upon application by a party, takes the

necessary measures to supplement the investigation.

dd) Main Hearing

1 The hearing is oral and public. To protect essential public or private interests,

the Administrative Court may, upon application by a party, exclude the public

from the hearings in whole or in part. After hearing the parties, the court may

conduct the proceedings in writing.

2 The Administrative Court shall conduct a taking of evidence if necessary.

3 The Administrative Court evaluates the evidence freely. It is not bound by a

decision regarding the supplementary tax.

4 The judgments must be made publicly accessible.