Climate change taxation reforms and incentives in Switzerland

1. Has your country ratified the Paris Agreement? 

Yes. On 6 October 2017.

2. Has your country introduced environmental taxes?

2.1 Energy taxes

On the federal level

Mineral oil tax (Mineralölsteuer)

The mineral oil tax entails a tax on crude oil, other mineral oils, natural gas, their processed products, and engine fuels and a surtax on engine fuels. The mineral oil tax varies heavily depending on the product and the use of the product. For example, the tax for unleaded petrol is 73.12 cents per litre, 75.87 per litre for diesel oil and 0.3cents per litre for extra light heating oil. Tax reductions are provided for engine fuels used in certain industries.

Support of renewable energy, energy efficiency and ecological refurbishment hydropower

Swiss electricity consumers have to pay a surplus of 2.3 cents per kWh for the support of electricity from renewable energy.

Under certain conditions, producers of renewable electricity (wind, solar, geothermal and biomass) may benefit from subsidies in different forms, e.g. cost-covering remuneration in exchange for renewable electricity or a one-time fee covering a certain percentage of the investment or further incentives.

Swiss hydropower plants may benefit from special subsidies and further supporting measures, as Switzerland recognises hydropower to be an important pillar of the Swiss power supply. Further subsidies are available for geothermal exploration projects, and for improvement of energy efficiency and ecological refurbishment measures. 

2.2 Transport Taxes

On the federal level

Automobile duty (Automobilsteuer)

An automobile duty of 4% of the vehicle's value is levied on light commercial vehicles with a unit weight of no more than 1,600 kg, as well as on passenger vehicles. 

Performance-related heavy vehicle charge (Schwerverkehrsabgabe)

The performance-related heavy vehicle charge is calculated on the basis of the total weight, emissions level and kilometers driven in Switzerland (and the Principality of Liechtenstein). It is levied on all motor vehicles and trailers with a total permissible laden weight exceeding 3.5 tonnes and which are used to transport goods. 

National highway charge (Nationalstrassenabgabe)

Since 1985, the use of Swiss motorways has been subject to a charge in the form of a motorway charge sticker. It costs CHF 40. The obligation to display a motorway charge sticker generally applies to motor vehicles and trailers with a total weight of up to 3.5 tonnes each, i.e. primarily passenger vehicles, motorbikes, vans, trailers, etc. 

On the cantonal/municipal level

Motor vehicle tax (Motorfahrzeugsteuer)

The Swiss cantons levy a motor vehicle tax on each registered vehicle. The amounts vary from canton to canton. Some cantons grant a reduction of motor vehicle tax or waive it completely for ""clean"" or highly efficient vehicles. Individual cantons and municipalities, and in particular cities, as well as energy suppliers are supporting the introduction of electric vehicles with subsidies.

2.3 Pollution taxes

Contamination site levy (Altlastenabgabe)

A contamination site levy is applicable on the waste deposited in Switzerland and abroad. The charges for waste deposited in domestic landfills vary between 5 CHF/t and 16 CHF/t. The charges for waste deposited in underground landfills is 22 CHF/t. For other landfills, the same rule as for domestic landfills apply.

Advanced disposal fee (Vorgezogene Entsorgungsgebühr)

The advanced disposal fee is levied on the purchase price of a product, e.g. glass beverage bottles, batteries, in order to cover the disposal costs in advance.

On the cantonal/municipal level

Waste levy (Abfallabgabe)

The waste levy is partly levied by the cantons, but often by the municipalities. It is calculated on volume or weight and is a levy for the disposal of the waste. It is often designed as a garbage bag fee. The amount of the fee varies from canton to canton and within a canton from municipality to municipality.

Water Levy (Abwasserabgabe)

The cantons or the municipalities respectively levy a charge for the use of the public wastewater disposal infrastructure. 

2.4 Resources taxes

CO2-tax (Carbon Tax)

The CO2-tax is an incentive tax that has been imposed since 2008. Its goal is to reduce the use of fossil thermal fuels. As of 2018, the rate of the levy is CHF 96 per tonne of CO2

The CO2-tax covers fossil heating and process fuels (heating oil, natural gas, coal, petroleum coke and so on) if used to produce heat/electricity, to generate light, or for the operation of heat-power cogeneration plants. Not covered are motor fuels (petrol, diesel).

3. Has your country introduced a carbon tax?

  • Favourable tax treatment is granted for changes made to existing buildings that improve energy efficiency or protect the environment.
  • Since 2010, one-third of the revenue from the CO2-tax has been used for the federal and cantonal buildings programme that supports the renovation of building shells, investment in renewable energies, waste heat recovery and building technologies, and geothermal energy projects.
  • The federal government created a technology fund which promotes innovative technologies that focus on the reduction of greenhouse gas emissions and the consumption of resources, support the use of renewable energy and increase energy efficiency. 

4. Does your country offer sustainability incentives (tax credits, subsidies or other business incentives) to encourage taxpayers to engage in behaviours and develop technologies that can impact positively the environment? 

The Swiss Parliament is currently debating a revision of the Swiss CO2-Act. Among other measures, the following actions are being discussed:

  • The reduction targets of the Paris Agreement will be embedded into national law.
  • Emissions reduction will be achieved by domestic reductions of at least 60%.
  • Importers of fossil fuels will be obliged to compensate for 90% of the emissions, and 15% of this must be compensated domestically, leading to higher prices of fossil fuels. 
  • Importer of vehicles will be given individual targets for every category of vehicle. 
  • Introduction of a levy on flight tickets.   
  • Implementation of measures, eventually leading to a ban on new oil and gas heating systems.
  • Increased CO2 levy for fuel used for heating.
  • Introduction of an assessment obligation for climate compatibility (Klimaverträglichkeitsprüfung) when emission-intensive facilities such as transport and energy infrastructures, waste disposal, shopping centres or industrial plants are rebuilt or significantly changed. In the future, it is envisaged that they will have to be climate-neutral, i.e. either avoid or compensate for the emissions.
  • Establishing a climate fund for financing mitigation projects, including innovation.

5. Has your country recently announced tax reforms connected to climate change? 

N/A

6. Other comments

Please note that this overview is limited to the most important environmental taxes. On a federal level, but in particular on the cantonal and municipal level, certain cantons and municipalities may have introduced additional taxes, levies or similar measures relevant in this regard which cannot be outlined in this brief overview.  

In addition, please note Switzerland has recently linked its Emission Trading System with the EU's. The linking of the two systems entered into force on 1 January 2020. However, it is our understanding that Emission Trading Systems are not covered by this survey.

Portrait of Andrio Orler
Andrio Orler
Partner
Geneva
Portrait of David Hürlimann
David Hürlimann
Managing Partner
Zurich