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It wasn’t so long ago that Switzerland was still suffering from negative interest rates. Almost two years ago, the Swiss National Bank finally announced the interest rate reversal. Swiss tax authorities are reacting this year and paying increasingly higher interest rates. Since banks react slowly on this issue, cantons are in many cases more tolerant than financial institutions. That’s why it’s best to pay your taxes early.
The special reason for this is compensation interest. Since this year, almost all cantons and the federal government have been paying interest again on tax payments received before the due date. The interest amount varies depending on the canton. Let me remind you: In the past years, interest rates dropped to 0 to 0.5 percent in many regions.
Today, tax haven Zug is at the top. The government has determined the compensation interest rate for 2024 as 2 percent. It is no coincidence that the canton of Zug is in the leading position. The state treasury is full. Citizens with the lowest tax rates benefit from the highest interest rates.
However, the situation is promising in other regions as well. More than half of the cantons pay interest of one percent or more. Interest rates at most financial institutions do not exceed 1 percent. For this reason, many tax offices are more tolerant than banks. The wage interest rate on direct federal tax increases from 0 percent to 1.25 percent.
Anyone who examines the map closely will immediately see that Röstigraben has emerged once again from a tax perspective. Governments in French-speaking Switzerland are stingier. In the cantons of Neuchâtel and Valais, the interest rate remains at 0 percent. At 0.5 percent, Geneva pays the highest interest rate in French-speaking Switzerland.
Another opportunity to benefit from the financial support of the cantons is the refund interest. This is being paid on the overdue amount due to people remitting too much to the tax office. Usually the fee is slightly higher than the interest rate and varies by canton.
The refund interest on direct federal tax is 4.75 percent. So can you deliberately transfer large sums of money to tax authorities to take advantage of high interest rates? Unfortunately, no. Tax authorities immediately reject disproportionate amounts.
If you can’t pay your taxes early, you shouldn’t pay them too late. Because then the default interest comes into play. Penalty interest on late paid tax invoices is, surprisingly, a multiple of compensation interest in all cantons.
The canton of Neuchâtel is shooting the bird. The late payment interest is a huge figure of 8 percent. By the way: Neuchâtel is also where the most indebted people live.
But like I said, it’s best to pay your taxes as early as possible if you can. Not transferring this and hoping that the tax administration will lose is already a hopeless situation.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
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