Direct federal tax (impôt fédéral direct, IFD) is the federal corporate income tax levied by the Swiss Confederation on the net taxable income of Swiss companies at a flat rate of 8.5% on after-tax profit (effective rate approximately 7.83%). It is assessed in addition to cantonal and communal taxes, which vary significantly by canton, resulting in combined effective tax rates ranging from approximately 11.9% (Zug) to 21.0% (Geneva). Understanding the federal and cantonal tax burden is essential in business valuation to correctly estimate after-tax cash flows and normalised earnings in the WACC / DCF model.

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Example: a Swiss SA domiciled in Zug has a taxable profit of CHF 3.0 million. Combined effective tax rate: approximately 11.9% (IFD 7.83% + cantonal/communal 4.07%). Total tax charge: CHF 357,000. Compared to a Geneva domicile (effective rate ~18.0%): CHF 540,000 — a CHF 183,000 annual tax saving that represents approximately CHF 2.0 million in NPV over a 10-year horizon at an 8% discount rate.

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Hectelion integrates Swiss federal and cantonal tax rates accurately into DCF models and advises on cantonal domicile optimisation for Swiss companies.