When talking about the canton of Valais, the first things that might pop into one’ s mind are the 4,000-meter-high peaks, the breathtaking (and ligament-cutting) ski slopes or the small villages full of genuine raclette cheese. But many others also think of its supposedly rather generous tax system.
You most likely have already heard from a colleague, a friend or this old cat-lady from the ground-floor: “Snow, Sun and Spas, he said! What a coincidence, he for sure meant savings. Tax savings!”
Do you live in Valais? Or would you like to follow the path of all those who enjoy its high-peaks and low-tax landscapes?
Let’s navigate together the Valaisan tax burden waters. Remember, there are 3 taxation layers. This paper will only address one aspect of the taxes in Valais, namely the communal taxes. If interested in the cantonal, federal or wealth taxes, please refer to our dedicated articles. If you would like us to prepare your tax return for the Valais, don’t hesitate to contact us.
First step : Find out your taxable income in Valais
Of course, each canton has its own specificities, but essentially the flow is comparable to all others. I therefore invite you to read our article on taxable income or alternatively, below is a pictorial summary:
To better illustrate the sequence of events, we will assume that your tax return has been properly prepared and that your taxable income is CHF 70’000.
Communal, cantonal (ICC) and federal direct income tax (IFD):
Just a reminder (it never hurts): In the world of taxes, it is worth remembering that there are 3 layers of taxation:
First layer: The communal tax (corresponding to the first C of ICC)
- On your income
- On your Wealth
Second layer: The cantonal tax (corresponding to the second C of ICC)
- On your income
- On your Wealth
Third layer: The federal tax (summarized as IFD)
- On your income
You must therefore go through all these 3 levels of taxation to finally determine the amount you will have to settle for the past year.
Second step: The communal indexing
Trust me, these folks never get bored.
Oddly enough, the Valaisan tax authorities have decided to call their system this way and to make it the cornerstone of communal taxation… knowing that even the most curious and tenacious people would not find a valid definition on Google.
Nevertheless, compared to the cantons of Vaud or Geneva, this calculation methodology is much simpler to understand: each of the 126 communes has its own tax scale, period. Everything is as straightforward as it seems…
These scales range from 100% to 170%. Final twist? The higher the scale, the lower the tax…
And finally, here is the mapping of each of the 126 communes and their respective tax scales. Can you find your own? If not, do not worry… a commune is a group of municipalities, so behind one of the below, you will necessarily find out the tax scale applying to the place you live.
I know, it might remain a little blurry. Our example will turn this muddy indexation topic into a crystal-clear snowflake.
(PS: I provide you with the different links to find the scale corresponding to your commune).
Indexation 100 %, Indexation 105 %, Indexation 110 %, Indexation 115 %, Indexation 120 %, Indexation 125%, Indexation 130 %, Indexation 135 %, Indexation 140 %, Indexation 145 %, Indexation 150 %, Indexation 155 %, Indexation 160 %, Indexation 165 %, Indexation 170 %,)
Let’s get back to our 70’000 CHF of ICC taxable income.
If I would have opted for the Verbier ski resort, to perfectionate my carving technique in the Val de Bagnes (luckily for me, this commune applies the Index 170%), my basic tax would have been CHF 4’474,25.
While if I had gone for the scenic view over the Rhone and the Bernese Alps establishing residence in the commune of Veysonnaz (Index 110%) my basic tax would have been 5’701 CHF.
That’s it for the second part.
Now, you are familiar with the communal indexing system in the canton of Valais.
ATTENTION: Your basic tax is not your final communal tax! Just a few more lines and you will be given the final word.
Third step: the communal coefficient
Here we go again! After the indexation comes the coefficient…
It is intended to be a multiplier of the tax calculated through indexation to finally determine your communal tax. Thus, there is one coefficient per commune:
Let’s take our same example again, in other words, me hesitating between riding down to Verbier in the Val de Bagnes (Coefficient 1) or drinking my coffee with the most beautiful view of Switzerland in Veysonnaz (coefficient 1.20).
In the first case (Verbier) I had a basic tax of 4’474.25 that I should multiply by my coefficient, 1. You can double check, but I am confident the final communal taxation should remain 4’474.25 CHF
While the other side has a coefficient of 1.20 and therefore a tax of 5’701 CHF x 1.20 = 6’841.20 CHF
Et voilà ! Communal taxes no longer hold any secrets for you.
Actually, you might have been wondering the same thing I was. Should we rather rely on the coefficient or on the indexation to get a fiscally interesting direction?
Coefficient or indexation, which is the key metric to benefit from optimal income taxes?
It is quite interesting to know whether the municipality in which we plan to settle offers competitive tax advantages.
To get this visibility, each indexation and coefficient need to be combined and applied to a given taxable income.
We did it after some hesitation. You can find in the 3 pictures below the tax rate and the tax amount associated with a taxable income of either 60’000 CHF, 100’000 CHF or 150’000 CHF across all the communes of Valais. You can therefore identify your municipality and realize the potential tax burden you bear compared to your neighbors.
The place, and more precisely the commune you chose to live in will have a significant impact on your tax burden, and as a result on your saving or spending capacity.
For taxable incomes of CHF 60’000, the tax difference between the most and least favorable commune totals CHF 2’610 per year. And the gap obviously increases with your revenue. For a CHF 150’000 taxable income, the municipality with the highest tax rate resulting from its indexation and coefficient will require an additional 7’402 CHF from you.
From a fiscal perspective, choosing the right municipality can translate into savings – up to 5% of your income!
How does a marriage affect communal income taxes?
Have you had a look at our paper related to cantonal taxes in Valais? If so, I would suggest you to directly jump to our article bringing light on the wealth taxation system in Valais. Indeed, the impact of a marriage are equal at cantonal and communal levels.
However, if you haven’t done so, here is a short summary:
The tax gain from the marriage is calculated taking as reference the tax you would paid as a single person, with the same revenues and deduction as your household. Once this amount is known, the communes agree to waive 35% of this amount.
Nevertheless, it sets two rules:
Number 1: The allowance cannot fall below 650 CHF. This means that below a taxable income of CHF 38,200 you can benefit from a tax relief of CHF 650, just from being married.
Number 2: The allowance cannot exceed CHF 4’680. This means that if your taxable income exceeds CHF 117’900 you cannot claim a more substantial reduction.
Between these two thresholds, you can deduct 35% of your tax burden.
How do children affect your communal taxes?
It is simple, children do not impact the computation of your taxes. Unlike other cantons such as Vaud, which allows you to reduce your tax rate thanks to the family ratio, the communes of Valais make no difference whether you have children or not. The canton does, but not the communes.
Here is the nuance, children give right to tax advantages! Taxes computation just do not capture this fact. Still, it allows you to reduce your taxable income through authorized deductions, such as:
- Dependent child
- Childcare expenses
Calculate your global taxes in the Valais: ICC + IFD
In this chapter, we have clarified how municipal income taxes work. We do hope you are now able to simulate them. But in order to know the grand total of the Valais tax bill, you will also have to consider the cantonal taxes and the direct federal tax.
And I almost forgot… In these articles we talk about income taxation but we should never forget that, contrary to the vast majority of countries, Switzerland also taxes its residents wealth!