Understanding wealth tax in the canton of Vaud

Reading time 8 min. Updated on May, 16th 2024.

I have a first piece of good news to announce to you, we have set up a very simple way to make your tax return in the canton of Vaud, so do not hesitate to entrust it to us!

When it comes to the wealth tax, I have both good and bad news. 

Which one should I start with? 

The good one! 

The Confederation does not tax your wealth. 

The bad one? 

The cantons and communes do, and it is precisely this tax that we are going to explain in this article.

Who is subject to wealth tax in the canton of Vaud?

Most cantons agree to leave out part of your wealth. More simply, they accept that each taxpayer can own a certain number of assets (bank accounts, investments, property) without taxing them from the first franc.

For example, in the canton of Vaud, for a single person with assets of less than CHF 58,000, no tax is payable. If it exceeds CHF 58,000, you will have to pay wealth tax. For a married couple, the amount is simply doubled, so if together you have assets in excess of CHF 116,000, you will have to pay wealth tax.

Don’t be mistaken. Unlike the canton of Geneva (for example), this CHF 58,000 is not a deduction but a threshold below which you will not be taxed. If, after adding up all your assets, you arrive at a total wealth of CHF 100,000, you will not be able to deduct the CHF 58,000 – you will be taxed on the CHF 100,000.

Do people taxed at source also have to pay wealth tax in the canton of Vaud?

Since the revision of the law on withholding tax comes into force (in 2021), anyone who exceeds this threshold will have to file a tax return via the subsequent ordinary taxation (TOU) process.

Is wealth tax high in the canton of Vaud?

You may be surprised, but it all depends on how you perceive the word “high”. Some people will say that paying one franc is already too much, while others will say that it’s quite bearable. So as not to take sides, here’s how much tax you’ll pay each year based on your taxable assets. Whether you are single or married, the tax scales are the same.

example of wealth tax in the canton of Vaud

As you will discover in the rest of this article, which is devoted to the calculation method, the municipality you choose to settle in will play a relatively important role.

How to determine your wealth in the canton of Vaud?

Before we start talking about figures, deductions and calculations, the first thing to do is to understand what will be considered part of your assets. There are two broad categories:

Movable assets

As opposed to real estate, movable assets can be made up of :

Your bank accounts (savings account, salary account, rent guarantee, etc.)

Your investments

Share accounts, ETFs, investment funds, bonds, life insurance (note that only the surrender value must be declared), PEAs, PELs, etc.

Your household effects

In theory, if you own works of art, vehicles and other valuables, they should appear on your tax return at their market value.

Your banknotes

This is not common practice, and who can tell? However, the rule would also be that all your financial assets held in the form of cash should be declared at their value on 31.12 in your personal assets.

Real estate wealth

This is all your fixed assets, all your assets that cannot be moved. They include:

  • Flat, house, building in Switzerland
  • Building land in Switzerland
  • Commercial property in Switzerland

Do you have to declare your assets abroad in Switzerland?

Yes, it won’t be enough to keep part of your fortune safe in a PEL, PEA or other French financial product for Switzerland to decide to leave you alone. Once you become a Swiss tax resident, all your assets held in Switzerland and abroad will have to be declared in Switzerland.

Real estate held abroad

Luckily for you, we’ve taken the time to write a full article on the subject of foreign property.If you don’t have the time or the inclination to read it, here’s a condensed answer: Yes, your foreign property must also be declared in Switzerland, but it will not be taxed in Switzerland. They will be taken into account when determining your tax rate in Switzerland.

Is it possible to claim wealth tax deductions?

While all your assets will be taxed, all your debts, whether mortgage-related (coupled with a property) or unsecured (with no collateral, such as consumer credit), can be deducted from your total assets.

How to determine your taxable assets in the canton of Vaud?

If you’ve reached this point, then you now know what you have to declare, what you don’t have to declare and, even better, what can reduce your taxable assets.

All you have to do is go through the exercise and work out exactly what your taxable assets will be.

The rest of this article is a special dedication to all tax enthusiasts who want to go further than simply understanding how wealth tax works. Would you like to understand how wealth tax is calculated and what scales are used? Then you’ll love what follows.

How to calculate wealth tax in the canton of Vaud?

As described in the introduction, your assets will be taxed at two levels:

  • Your canton of residence
  • Your commune of residence

We therefore need to calculate the tax for each of the two parts and then add them together to obtain the final result.

First stage: Cantonal wealth tax in the canton of Vaud

Quite simple, just one scale and one calculation. Here is an extract from the scale. You can find it in full at this link.

extract from the wealth tax scale in the canton of Vaud
Figure 1: extract from the Vaud cantonal wealth tax scale

Let’s take a taxable asset of CHF 100,000 as an example. On this CHF 100,000, you will have a basic tax of CHF 78. To determine the final cantonal tax, you will have to multiply this basic tax by the cantonal rate, which for the year 2023 is 155%.

As a result, your cantonal wealth tax will be CHF 1.55 x CHF 78 = 121.

Second stage: Communal wealth tax in the canton of Vaud

No more complicated than step 1, you have to start from the basic tax calculated in step 1 using the same scale, and this time apply the rate for your commune. Don’t know where to find your municipal rates? Then simply click on this link.

In our example, we’ll assume that we live in Lausanne.

extract from the municipal tax scale showing each tax rate per municipality for 2022 and 2023 in the canton of Vaud
Figure 2: Extract from the municipal tax scale in the canton of Vaud

All we have to do is take the basic tax of CHF 78 and multiply by the Lausanne rate of 78.5% = CHF 61.23.

Finally, you will know how much wealth tax you will have to pay. This is the sum of cantonal tax and municipal tax: CHF 121 + CHF 61.23 = CHF 182.23.

Do you want to estimate how much you will pay in taxes? Then you should go check out our taxation calculator!

Tips and advice on wealth tax in the canton of Vaud

How do you know which values to enter on your tax return?

It’s not just a question of knowing what to declare, but also of understanding how to declare it. Many of our clients make mistakes when reporting their assets: what allowances are applied to your property? What conversion rates or other surrender values can legally be used to reduce your taxable assets?

What can you do if certain items of your wealth were not declared in previous years?

In Switzerland, and more generally in the canton of Vaud, it is possible to make mistakes (at least once) without necessarily being penalised. If you wish to correct an oversight, you can make a “spontaneous denunciation”, which gives you the opportunity to rectify the mistakes you have made.

How can FBKConseils help you understand your wealth tax?

At FBKConseils we specialise in all Vaud tax matters. As a general rule, our expertise enables our clients to better understand how to declare their assets. Most taxpayers who own property abroad tend to overstate the tax value of their assets.

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