Switzerland’s Canton of Zug Tax Rates

Switzerland’s glorious surroundings, high standard of living, top-tier infrastructure and favourable taxes have made it a firm favourite with international investors and entrepreneurs. 

It was the first country to introduce the modern lump-sum tax program, and it remains one of the most attractive global destinations for high-net-worth individuals (HWNIs). 

If you’re a high earner whose income isn’t derived from Switzerland, you can significantly reduce your tax bill by living there and taking advantage of its lump sum taxation scheme.

In short, financial stability, first-class banks and a strong legal system are synonymous with Switzerland. So, it’s little wonder it’s such a popular base for multinational companies and high-net-worth individuals.

What’s less well-known is that Switzerland can also be tax-advantageous for those who choose to live and earn their income there.

This is particularly true in one of its smallest cantons, Zug.

In 2024, the local government lowered local income tax rates and increased the threshold for tax exemptions, cementing its position as the most appealing region of Switzerland for low taxes.

The move increased Zug’s attractiveness as a low-tax destination and copper-fastened its potential for investors.

If you’re interested in exploring Zug further or making Switzerland your tax base, Nomad Capitalist can help. 

We’ve assisted thousands of high-net-worth individuals ‘go where they’re treated best’, whether that’s by moving their business offshore, relocating to a tax-friendly country, or even getting a second citizenship.

The team has put together this in-depth guide to help you understand exactly how taxes work in Zug for individuals and business owners. If you think it’s a good fit for you, reach out to us and find out how we can help.

A Quick Overview of Zug, Switzerland

Switzerland consists of 26 cantons, with Zug being home to some of the wealthiest people in the country.

The local government actively markets Zug as the leading business location in Switzerland, with some even considering it a tax haven. 

Many multinational companies have their headquarters there, allowing them to take advantage of the low corporate tax rates. 

As with the rest of the country, there are many areas of natural beauty to enjoy, like Lake Zug, upon which the region’s capital city (also called Zug) sits. 

The entire area is about 239 km² (one of the smallest cantons in Switzerland), and the population is around 133,000 people. The primary Language is German. 

Pros and Cons of the Zug Tax System

The reason that Zug houses so many companies and wealthy individuals is that it offers the most attractive tax system in Switzerland. 

However, this system comes with its advantages and disadvantages. 

Pros

• The lowest corporate tax rates in Switzerland (11.8%, including federal, cantonal and municipal tax) 
• Competitive personal income tax rates
• Lump-sum tax available for high earners with overseas income
• Swiss banks are renowned for strong levels of privacy and security
• Double taxation agreements prevent excessive taxation for international residents. 
• Business-friendly environment, as Zug is home to many global enterprises that take advantage of the low tax environment.

Cons:  

• A high cost of living, with real estate in Zug among the most expensive in Switzerland
• Zug has a wealth tax charged on worldwide assets.
• Accessing Zug’s tax benefits requires meeting the strict Swiss residency and economic substance rules. 
• Swiss tax policies are under constant review by international regulators. This global tax scrutiny makes some individuals think twice about moving their affairs to Zug.

Below, we’ll consider some of the pros and cons in greater depth and take a wider look at what Zug has to offer.

Income Tax in Zug

Income tax in Switzerland is charged at both a federal level (11.5%) and a cantonal level throughout the country. This means tax rates differ in each of its 26 cantons.

In Zug, income is taxed progressively with 14 different brackets. The highest tax rate is 6.89%, charged on annual earnings over CHF145,300 (about US$164,000).

However, since the tax-free allowance was doubled in 2024, your first CHF200,000 (US$222,917) of earnings each year is not taxable at a cantonal level.

Some Swiss cities also charge residents at a municipal level, although none of these are based in the Zug canton.  

What’s the Corporate Tax Rate in Zug? 

The federal income tax rate is 8.5% on profits after tax, but since corporate income is tax-deductible, the effective rate on profits before tax is around 7.83%.

Each Swiss canton charges corporate tax at different rates, with Zug currently having the lowest rate. 

Businesses in Zug pay corporate tax at a total rate of 11.85%, including federal, cantonal and municipal tax. This is why Zug is home to so many companies.

Wealth Tax in Zug

While wealth tax isn’t levied at the federal level, all cantons in Switzerland charge a wealth tax on worldwide assets, with the exceptions of real estate, a fixed place of business or a fixed establishment located abroad. 

The local government in Zug recently reduced wealth tax rates by 15% and doubled the tax-free allowances for this charge. It rose to CHF200,000 (around US$225,000) for single people and CHF400,000 (around US$450,000) for married couples. 

The wealth tax rates in Zug are as follows: 

• For the first taxable 250,000 CHF of assets, the tax rate is 0.0425%
• For the remaining 250,000 CHF of assets, the tax rate is 0.085%
• For the remaining 250,000 CHF of assets, the tax rate is 0.1275%
• For assets above 750,000 CHF, the tax rate is 0.17%.

Switzerland Tax System: VAT and Other Charges

In Switzerland, employees donate at least 6.4% of their salaries towards social security contributions. 

Employers will match this, and some may contribute extra to cover occupational accident insurance, an occupational pension scheme and a family compensation fund.

Switzerland charges VAT at three different rates:

• Standard rate: 8.1%
• Special rate: 3.8%
• Reduced rate: 2.6%.

The special rate of 3.8% is charged on certain accommodation services. The reduced rate of 2.6% is charged on a wide range of goods and services, including all foodstuffs (excluding alcoholic beverages), medications and certain hygiene products.

A one-off property transfer tax is charged at a cantonal level when buying Swiss real estate, although some cantons, including Zug, don’t charge that. 

Property tax is charged annually on a cantonal level, although, again, not all cantons charge it. No property tax is charged in Zug at all. 

Private capital gains on movable assets (like shares) are normally tax-exempt throughout Switzerland. 

Inheritance tax is charged at a cantonal level, with each canton having different rates depending on who you pass your assets to. 

Zug Taxes and Taxation in Switzerland: FAQs

Benefit From Switzerland’s Tax System

If you’re looking for a prime business hub in Europe, Zug has an excellent reputation.

Those who launch a business here benefit from low corporate taxes, world-class infrastructure and a business-friendly environment. 

If you already have business income elsewhere, perhaps you’ll be drawn to Switzerland’s lump-sum tax program. Either way, there are plenty of benefits available to investors and entrepreneurs who set up shop in Switzerland.

This includes the opportunity to gain Swiss citizenship by naturalisation after 10 years of permanent residency and one of the world’s best passports, according to the Nomad Passport Index.

At Nomad Capitalist, we advocate the idea of ‘going where you’re treated best’ and Switzerland could fit the bill for many people, although there can be some bureaucracy to deal with when you set up a business here. 

To learn more about how we help you cut through the red tape and access a more rewarding offshore life, get in touch with us today.