The Swiss fiscal system subscribes firmly to the principle of federalism. No uniform legislation for direct taxation is applicable to the entire national territory. In terms of the Swiss concept of the state, fiscal sovereignty resides entirely with the cantons, based on twenty-six different legislations. The cantons are also responsible for the assessment of taxes. The federal government levies indirect taxes and direct federal tax. The most important source of revenue for the federal government is value-added tax.
Special provisions are provided in Article 92 of the Federal Act on Direct Federal Taxation (DFTA; income tax), including “tax-at-source” for artists living in a foreign country. Otherwise, artists are subject to the same tax regulations as everyone else (for self-employed persons, see Article 27ff. and 125, 2 DFTA; for the gainfully employed, see Article 26, 125, 1 and 127, 1 DFTA).
Although private support for culture is quite high in Switzerland compared to other European countries (see chapter 3.2), there are demands to introduce additional incentives to attract even more private investment in order to relieve public budgets. New legislation is needed to achieve this goal, in areas such as the law on foundations (see chapter 4.3), tax law, and law on lotteries. Also, the attitude of the public administration toward private investors will have to change if an environment conducive to private investment is to be created.
Donations or contributions in the form of sponsorship are tax-deductible. Cantonal administrations are being encouraged to pursue a more liberal tax policy toward foundations and private sponsors. Tax deductions vary considerably among the cantons. On the federal level, the deduction amounts to 10% of net profits. The cantons are able to stipulate their own percentage levels and conditions for tax exemptions, thereby making it possible for deductions to amount to 100%, such as in the Canton of Basel.
The Lotteries Act is crucial for cultural funding, as lottery funds constitute a major share of public cultural support. Conclusive assessment and a subsequent ruling are unlikely to be reached any time soon.
At present, two large lottery companies (SwissLos and Loterie Romande) hold exclusive rights to run lottery games, as granted by cantonal authorities. This situation has come under increasing criticism by the promoters of free-market policy.