Updated on November, 22nd 2023.
Calculating one’s taxes according to gross income is like peeling onions layer by layer. At the end, there is not much left and we shed a few tears along the way.
The advantage is that the surprise effect is avoided since the bill arrives at the begining of the year. Of course, even though the amount will remain unchanged, we can relieve you of the chore of doing your tax return in Geneva by doing it for you. But if you are interested in the calculation, then here is the procedure.
As you probably know, there are two levels of income taxation in Switzerland: the cantonal and communal income (ICC) and the direct federal taxation (IFD) and also a tax at cantonal and communal level only on wealth.
For the sake of clarity, I divided the calculation into three parts. On this page, I will only show you how to determine the cantonal and communal income taxes (ICC).
Taxation in Switzerland is a grey area for most. Euphemism. The problem is, people try to understand everything at once. The best strategy however is to take it step by step.
From gross to net salary
The gross salary represents the amount negociated with your employer or yourself if you are an entrepreneur or self-employed.
Net salary is what appears on your bank account at the end of the month. The difference between the two is made of deductions related to social insurances.
That being said, the net salary is not the taxable income yet.
From net salary to taxable income
Take the salary and subtract the authorised deductions: you will find the taxable income.
In the land of cheese and chocolate, there are three levels of imposition: communal, cantonal and federal.
These three levels are divided into two categories called ICC (communal and cantonal tax) and IFD (direct federal taxation).
Why do these two categories exist? Because authorised deductions are not the same for each one. Sometimes they are, somethimes not.
What is authorised at the communal level is also authorised at the cantonal level, this is why they are grouped. But this is not necessarily the case at federal level. The amount of authorised deductions can also vary.
Here is a non-exhaustive list of generally accepted deductions:
- Pillar 3A and B 30)
- LPP repurchases (19)
- Childcare costs
- Medical costs
- Health insurance
Here is an example of a deduction for a relatively simple situation.
And if you would like more information on Geneva’s deductions, check out our dedicated article: The 10 main deductions in Geneva.
Calculate the base cantonal and communal taxes in Geneva
Calculating the taxable income tax would have been too easy. It is not fun if it is too obvious.
To calculate the base ICC, we’ll take a look at the step-by-step calculation and finish with a numerical example.
- Take the amount of your taxable income and find out in which bracket it falls. The list is avalable on the canton de Geneva’s the website, page 48 (still valid for the 2023 tax return).
- Determine the tax corresponding to the previous bracket
- Apply the rate of the curent bracket to the difference between the maximal number of the previous bracket and your taxable income.
At this point, I feel like crying out loud, but it would not be very professional of me. Instead, I will use an example to illustrate the next steps. Presented this way, they are hard to grasp. But with an example, it will all become clearer.
My cousin Chloé lives in Bardonnex and works in Carouge, her taxable income is exactly 50,000 CHF.
Her bracket is highlighed in bold: 45,843 – 73,561 CHF.
The amount to keep in mind is the total tax of the previous bracket: 3,339.05 CHF.
Be careful, this is not (yet) the base ICC.
To calculate it, remember the taxable income. It is 50,000 CHF for Chloé. The difference between 45,842 CHF, the maximal number of the previous bracket, and the taxable income is 50,000 – 45,842 = 4,158 CHF.
This new amount is taxable at the rate of the current bracket, that is 15%. And 15% of 4,158 CHF, gives us 623.70 CHF.
4,158 x 0.15 = 623.70.
We now have to add up these two amounts to find the base ICC.
3,339.05 + 623.70 = 3,962.75 CHF.
Phew! The base ICC therefore is of 3,962.75 CHF.
Now, you can suspect that if it is called “base” tax, this means we still have a way to go before calculating your final taxes.
How to calculate cantonal taxes in Geneva?
And this way, I must admit, is rather bizarre. It seems to have come out of a science fiction book.
You do not believe me? I will prove it to you right now in the four following steps.
1. 12% reduction on the base tax
The canton of Geneva kindly takes 12% off the base ICC.
Let’s take Chloé’s example.
12% of the base ICC is 475.53 CHF.
3,962.75 x 0.12 = 475.53.
Keep this in mind for the final calculation.
2. Adding additional cantonal cents
Additional cantonal cents are expressed in percentages and refer to the amount the canton wants to withhold on your base tax. In Geneva, it is 47.5%. In other words, everyone in Geneva must pay 47.5% of their base tax to their canton.
Be careful: the calculation is done based on the base ICC (and not the base ICC minus the 12%).
3,962.75 x 0.475 = 1,882.31 CHF.
3. Subtraction of the 12% on the additional cantonal cents
This time, the canton takes 12% off the amount we just calculated.
1,882.31 x 0.12 = 225.88 CHF.
4. Adding the additional home assistance cents
What is this home assistance?
It is not clearly defined. What we know for sure is that it does exist and that it has to be paid.
The assistance represents 1% of the base ICC.
3,962.75 x 0.01 = 39.63 CHF.
5. All we have left to do is addition these amounts
In short, you have a base ICC. Cholé’s is 3,962.75 CHF.
Two additional amounts that the cantons call “cents”. Chloé’s are 1,882.31 CHF + 39.63 CHF.
And two amounts to subtract. Chloé’s are 475.53 CHF and 225.88 CHF.
In our example, the final cantonal tax is 5,183 CHF.
To find out your final cantonal and communal taxes (ICC), you still have to add the communal tax. Hold on tight, we are almost done!
How to calculate the communal tax in Geneva?
The communal tax, just like the cantonal one, is calculated on according to your base ICC. .
Part of your base tax goes to your commune of residence and the other part goes to the commune you work in.
The commune of residence had priority. It enjoys what is called a preferential part. This part is fixed. The remaining part will go to the other commune.
The list of rates is available on the canton of Geneva’s website.
Chloé lives in Bardonnex, in this commune, the preferential part is 75%. The remaining 25% will be paid to the commune of Carouge, where she works.
To calculate the tax, you first have to determine the 75% of the base ICC.
3,962.75 x 0.75 = 2,972.06 CHF.
You can see the tax rate in Bardonnex is 43%.
2,972.06 x 0.43 = 1,277.99 CHF.
Chloé has to pay 1,277.99 CHF to her commune of residence.
To find out her total communal tax, she still has to add the tax she will have to pay to the commune where she works, Carouge.
The 25% of the base ICC is 990.69 CHF. The taxation rate in Carouge is 40%. And 40% of 990.69 is 396.28 CHF.
Chloé’s communal tax therefore is 1,277.99 + 396.28 = 1,674.26 CHF.
The final ICC calculation
We have seen that the base ICC is not the final tax but rather a basis on which to calculate the two first levels of taxation.
To determine the amount of your communal and cantonal taxes, you just have to add both amounts you just calculated.
For Chloé, it is 5,183 + 1,674 = 6,857 CHF!
Chloé is single, maybe you are not. In which case, you are probably wondering whether the calculation is the same for a married couple or a registered partnership.
Everything we have seen throughout this article, which almost resembles a math class, remains true, with one exception.
The ICC for a married couple or a registered partnership
When you are single, the starting point of your calculation is your income. The taxable income, base ICC… stem from this.
When you are married or in a registered partnership, the income of both partners is additioned and divided by two.
The starting point of your calculation is therefore no longer the amount of your additional incomes but the household’s cumulated income, then divided by two.
For example, if Zoé, my wife, and myself make 100,000 CHF net amongst ourselves, then the calculation will be based on a 50,000 CHF net income for each one of us.
Also, the authorised deductions slightly differ. They are more advantageous for married couples and registered partnerships.
And the federal tax?
To find out the total amount of your annual income taxes, you still have to add the direct federal taxation (IFD).
If you still have a bit of energy left, you should have a look at the article dedicated to the IFD calculation (direct federal taxation).
And the wealth tax?
Finally, to find out the total amount of your annual taxes, you have to take the tax on wealth into account.
It is easier to calculate and I will tell you everything you need to know about how to do it in the next article, dedicated to the wealth tax in the canton of Geneva.
And then… it is the light at the end of the tunnel! By additioning the ICC, the IFD and the wealth tax, you will find the total amount of your taxes.
If you read the whole thing, I take my hat off to you.
The calculation of taxes is a mathematical marathon. My brain is sore. I am going to relax for a bit.
Do you have any questions? Please ask them to me via the chatbox below.
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