Zug Tax Rate 2026: Corporate and Individual Tax in the Lowest-Tax Canton

Canton Zug has the lowest combined corporate income tax (CIT) rate of any major Swiss canton at 11.85%. This rate covers federal, cantonal, and municipal taxes combined. For individual residents, Zug also offers low cantonal income tax rates and is one of the few remaining Swiss cantons where lump-sum taxation is still available. This article covers both the corporate and individual tax landscape in Zug.

Corporate income tax — the 11.85% rate

Swiss corporate income tax has two components: federal tax under DBG (Bundesgesetz uber die direkte Bundessteuer) and cantonal/municipal tax under StHG (Steuerharmonisierungsgesetz). These are assessed and filed separately but are often referenced as a combined effective rate.

• �Federal effective rate: approximately 7.83% (statutory rate: 8.5% on profit after tax, per DBG Art. 68)
• �Zug cantonal + municipal rate: approximately 4.02% combined (Zug city municipality)
• �Combined effective rate: 11.85%

This is a pre-tax effective rate. The federal statutory rate of 8.5% is applied to net profit after tax — the circular calculation produces an effective rate of approximately 7.83% on pre-tax profit. Cantonal rates are applied on pre-tax cantonal taxable income.

Cantonal comparison

Capital tax on companies

In addition to income tax, Swiss companies pay a cantonal capital tax on their net equity. In Zug, the effective capital tax rate is approximately 0.07% — one of the lowest in the country. This matters particularly for holding companies with large equity positions but low or zero taxable income: even a company with CHF 10,000,000 in net equity pays only approximately CHF 7,000 per year in Zug capital tax.

Some cantons (including Zurich and Geneva) allow the CIT liability to be offset against cantonal capital tax, so that only the excess is payable. Zug's capital tax is low enough that no complex offset mechanism is needed.

Withholding tax (Verrechnungssteuer)

Federal withholding tax (WHT) at 35% is levied on dividends, interest on Swiss bonds and bank deposits, and certain lottery winnings (VStG Art. 13). This applies equally in all cantons — it is a federal tax and does not vary by canton.

For Swiss residents

Swiss residents who receive dividends subject to WHT can reclaim the full 35% by declaring the income in their annual tax return. The WHT is effectively a withholding mechanism that ensures tax compliance, not a final tax.

For foreign shareholders

Non-resident shareholders can reclaim WHT to the extent permitted by a double taxation agreement (DTA) between Switzerland and their country of residence. Switzerland has approximately 100 DTAs in force. Typical treaty rates range from 0% (EU parent-subsidiary under the bilateral savings agreement, for qualifying holdings) to 15% for portfolio dividends. The excess 35% minus the treaty rate is the irrecoverable WHT cost for non-resident shareholders.

Capital gains tax

Corporate capital gains

Capital gains realised by Swiss companies on the sale of business assets are included in taxable profit and subject to CIT. However, capital gains on qualifying participations (holdings of at least 10% of share capital, or with market value above CHF 1,000,000, held for at least one year) benefit from the participation deduction under DBG Art. 70, effectively reducing the tax to near zero.

Individual capital gains

Switzerland generally does not tax capital gains on the sale of securities held as private assets (DBG Art. 16.3). This is one of Switzerland's most significant advantages for entrepreneurs: founders who own shares in a Swiss company as private individuals pay no capital gains tax on the sale of those shares, provided they are not classified as professional securities traders. Zug residents benefit from this exemption at both the federal and cantonal levels.

Individual income tax in Zug

Individual income tax in Switzerland is levied at three levels: federal, cantonal, and municipal. Federal rates are progressive and apply uniformly across all cantons. Cantonal and municipal rates are set independently by each canton, producing significant variation.

Zug is one of the lowest-taxed cantons for individual income tax. For high-income individuals, moving cantonal tax domicile to Zug can produce materially lower income tax bills compared to Zurich or Geneva. The cantonal tax authority publishes annual rate tables for the Zug city municipality and all other municipalities in the canton.

Lump-sum taxation (Pauschalbesteuerung)

Lump-sum taxation allows foreign nationals taking up Swiss tax residency for the first time (or after an absence of at least 10 years) to be taxed on a deemed expenditure basis rather than on actual worldwide income, provided they do not carry on gainful activity in Switzerland (DBG Art. 14; StHG Art. 6).

The taxable base under lump-sum taxation must be the greater of: seven times the annual rental value of the taxpayer's Swiss residence, or the federal minimum base (approximately CHF 434,700 per year for 2026 — indexed annually by ESTV). Several cantons abolished lump-sum taxation by referendum (including Zurich in 2009 and Basel-Stadt in 2014). Zug has retained lump-sum taxation and continues to attract qualifying foreign nationals.

VAT — a federal tax, not a Zug variable

Swiss VAT (MWST — Mehrwertsteuer) is a federal tax and does not vary by canton. The standard rate is 8.1% (from 1 January 2024, per MWSTG). The reduced rate is 2.6% for food, medicines, books, and newspapers. The accommodation rate is 3.8%. Registration is mandatory when worldwide taxable turnover exceeds CHF 100,000 per year (MWSTG Art. 10). VAT is administered by the ESTV (Eidgenossische Steuerverwaltung) and is the same in Zug as in every other Swiss canton.

Pillar Two (OECD global minimum tax)

The OECD/G20 Pillar Two global minimum tax requires large multinational enterprise groups with consolidated revenue above EUR 750 million to pay a minimum effective tax rate of 15% on profits in each jurisdiction where they operate. Switzerland enacted a domestic supplementary tax (Erganzungssteuer) effective from 1 January 2024 to collect any top-up tax needed to bring the ETR to 15% for in-scope groups.

For companies below the EUR 750 million threshold — the vast majority of Zug-based companies — Pillar Two does not apply. The 11.85% Zug rate remains fully operative for founder-owned businesses, holding companies, and SMEs.

Further reading

• >Swiss corporate tax — federal and cantonal structure explained
• >Swiss holding company — participation exemption and Zug structures
• >Participation deduction (Beteiligungsabzug) — DBG Art. 69–70
• >Company formation in Zug — full guide