Switzerland is one of the few countries described as tax havens not because they do not charge tax but because their governments charge extremely low tax.

The country has previously faced a lot of pressure from the European Union and the US because its tax laws were so soft that most wealthy people, including criminals, would take advantage by hiding their money there. However, the country overhauled its tax system in 2019. Here are a few things you need to know about the country’s tax haven status.

Switzerland is still considered a tax haven to some extent

The tax code changes made by the Switzerland government in 2019 did away with some of the extremely low rates such as the 5% foreign and international companies were required to pay. Despite the changes, the country still offers competitive rates at around 12 to 14% that foreign companies are required to pay. This means that foreign countries can still pay significantly low amounts in tax, which makes it an attractive tax jurisdiction.

Foreigners still have to pay tax

Some may still believe that Switzerland is tax-free, especially to foreigners who live and work there, but that is not true. Foreigners in the country are still required to pay taxes. However, the country’s government prefers to charge tax on a household basis rather than on a per-capita basis.

The tax code still offers huge benefits to wealthy people

The household taxation approach offers some benefits, especially to high-income households or wealthy couples. Also, keep in mind that Switzerland does not provide tax benefits to people who move to the country to work there.

Financial privacy in Switzerland

Switzerland banks used to uphold a high level of financial privacy for its clients. However, the banking industry in the country bowed to pressure to adjust its stance on financial privacy, especially after the 2008 financial crisis.

The country even signed the Foreign Account Tax Compliance Act, which requires Switzerland-based banks to disclose US clients’ financial information. Failure to do so would result in hefty penalties. The country also upholds a similar agreement with the European Union. Nevertheless, it still upholds some degree of financial secrecy.