Income Tax for Freelancers: What You Owe and When

As a freelancer your business profit is taxed as your personal income — at federal, cantonal and communal rates, with no separate corporate layer.

The basis

You are taxed on your net income from self-employment: your revenue minus deductible business expenses. This net amount is added to any other income you have.

There is no separate business tax for a sole proprietor. Your profit flows directly into your personal tax return as self-employment income.

Your total taxable income is the sum of your business profit and any other income, such as salary or investment income, minus personal deductions.

Keeping accurate records of both revenue and expenses is what makes the net figure defensible. Good bookkeeping is tax planning in disguise.

• Net income (revenue minus expenses).
• Added to your other personal income.
• Taxed at progressive rates.

The rates

Rates are progressive and vary by canton and commune, so your total tax burden depends heavily on where you live. This makes location a real financial consideration for freelancers.

Switzerland taxes at three levels: federal, cantonal and communal. Each has its own rates, and cantons differ substantially from one another.

Because the system is progressive, higher income is taxed at a higher marginal rate. Your effective rate is a blend across the brackets.

For a freelancer who can work from anywhere, the canton of residence can be worth thousands of francs a year in tax. It is a legitimate planning factor.

Pay on account

Tax authorities issue provisional bills based on your previous or estimated income. These are payable during the year in instalments.

If your income rises sharply, tell the tax office and raise your estimate. Paying on account at the higher level avoids a painful final bill.

At year-end, your actual return reconciles everything, and you either receive a refund or pay the balance. The smoother your estimates, the smaller the surprise.

Deductions to claim

Claim every legitimate business expense, from software and equipment to professional fees and a home office share where it applies.

Personal deductions also matter: pillar 3a contributions, health insurance premiums and other standard allowances reduce your taxable income.

Consider timing of income and expenses near year-end. Legitimately shifting a deductible purchase into the current year can lower the tax bill.

facturio keeps your income and expense picture clear, so when the tax return comes due, the numbers you need are already assembled.