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Switzerland to lower the obligatory TV license fee

Not everything in Switzerland is getting more expensive: the annual radio and television fee is set to become cheaper.

Switzerland to lower the obligatory TV license fee
TV license fee is set to become cheaper. Image by Frank Reppold from Pixabay

The current fee (also referred to as ‘tax’) of 335 francs a year per household will drop to 312 francs by 2027, and then to 300 francs from 2029, the Federal Council announced on Wednesday. 

The main goal of this reduction is to alleviate the financial burden that the license fee places on many households and businesses alike.

However, there is another reason for this move as well.

This measure is also a concession of sorts to the “200 francs is enough” initiative launched by some political parties, which want to cut the fee even more significantly than the government does.

This will not be the first time this tax is reduced: it fell from the original 451 to 365 francs in 2019, and to the current 335 in 2021.

What is this fee anyway?

Many foreigners who move to Switzerland are surprised to discover that they are automatically charged a television and radio license fee — even if they don’t own either.

This fee is compulsory for most households, though some can be exempted  from it (see below). The amount of 335 francs is the same for all private homes, regardless of how many people live there or how many TV sets they have.

The invoice is automatically sent out once a year — unless you opt for quarterly billing —by a company called SERAFE, which collects this fee on behalf of the government from private households. The Federal Tax Administration is responsible for collections from businesses.

Where does this money go?

The 1.37 billion francs collected annually is used to fund public broadcasters like the Swiss Broadcasting Corporation and other TV and radio stations across Switzerland.

“In this way, the public service will be guaranteed in all parts of the country and democracy will be strengthened; the entire country and all its inhabitants will benefit”, according to the Federal Office of Communications (OFCOM), which is responsible for the scheme.

This map shows which stations in your area are subsidised by the government:

Image by OFCOM

Who is exempted from paying this fee?

Several categories of households are not subject to this tax:

  • Households with persons who receive supplementary Old Age, Survivors’ and Invalidity insurance benefits from the federal government
  • Households with no means of receiving radio, and have no computer, no tablet, no smartphone, and no car radio (admittedly a very limited number of people)
  • Households of deaf-blind people, provided that there are no people liable for the fee living in the same household
  • Households of diplomats

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SWITZERLAND EXPLAINED

Why German-speaking Swiss cantons pay money to the French-speaking ones

Nearly every one of Switzerland’s French-speaking cantons will be receiving financial support from German-speaking cantons in 2025. How does this happen, and why is there such a wealth disparity between the two language groups?

Why German-speaking Swiss cantons pay money to the French-speaking ones

As outlined in annual data published by the Federal Finance Administration this week, six of the seven cantons where French is recognized as an official language will be receiving support from German-speaking cantons in 2025.

Geneva will the the sole exception – in fact, it’s contributing. 

Overall, 18 out of Switzerland’s 26 cantons will receive money and 8 will pay out to other cantons. In all the total transfer between cantons next year will add up to 6.2 billion Swiss francs.

Valais will be receiving the most financial support per number of residents – 2,469 francs per capita, followed by Jura at 2,229 francs and Neuchâtel at 1,818 francs per capita. 

The three cantons contributing the most – Zug (CHF 3,321 per capita), Schwyz (CHF 1,520) and Nidwalden (CHF 1,081) all recognise German as an official language. The other contributing cantons are Zurich, Geneva, Basel-CIty, Obwalden and Shaffhausen. 

Image: Federal Finance Administration

Why are cantons redistributing funds?

For decades each of Switzerland’s 26 cantons was able to hold onto the entirety of the taxes levied at the cantonal level, under the country’s devolved administration. 

This changed in 2008 when the Federal Council introduced the national financial equalisation mechanism, which had two purposes – reducing inequality in wealth between the country’s cantons, and ensuring that each could fulfil their responsibilities at the same level. 

Essentially some cantons (see below) take in far more in tax receipts than others and the mechanism is aimed at reducing the inequality that creates.

The redistribution also allows cantons to pay for public services which are harder to provide in certain parts of Switzerland than others, due to geographical challenges such as the Alps.

Using a complicated formula that has undergone several revisions, the cantons giving and taking funds are identified, before funds are distributed each year. 

READ MORE: EXPLAINED: Why Switzerland’s cantons are so powerful

So why are German-speaking cantons subsidising French-speaking ones? 

The distribution of specific industries and businesses within Switzerland’s cantons plays a significant role in the disparity. 

The German-speaking cantons of Zug, Nidwalden and Schwyz, who will contribute the most, are each significant centres of economic activity across multiple sectors.

Approximately eight percent of the country’s GDP is generated between these three cantons and it has seen dramatic growth over the past decade.

These three cantons also feature the highest overall concentration of startups in Switzerland, with Zug (13.7 per 1000 residents) in the lead, followed by Schwyz (6.07) and Nidwalden (4.42). 

Additionally, it’s also worth noting that ‘Crypto Valley’ – the concentration of cryptocurrency and blockchain businesses focused on the canton of Zug – is worth approximately $611.81 billion (CHF 548 billion). 

In comparison, many of the cantons receiving funds, in Switzerland’s French-speaking west feature a more specialized economy. 

For example, the cantons of Vaud and Valais, Jura and Neuchâtel are home to a significant proportion of Switzerland’s farms. 

Neuchâtel and Jura also have economies that are focused towards watchmaking and precision engineering. 

READ MORE: EXPLAINED: Why is Switzerland so famous for watches?

There have been efforts to diversify the economies of these cantons and embrace developing industries, such as the life sciences-focused ‘Health Valley’ and autonomous vehicle ‘Drone Valley’ initiatives, centered on the country’s west but these are still in their early years. 

Cantons set own tax rates

This leads to the role played by tax policy. 

Under Swiss law, cantons can set their rates of taxation – and they’re able to use it to continuously draw an influx of business and new arrivals. 

Zug (22.2%), Nidwalden (24.2%)  and Schwyz (25.3%) can afford to set some of the country’s most competitive individual tax rates, as opposed to Valais (36.5%), Jura (39.0%) and Neuachtel (38.1%). 

While not as wide a gulf, the company tax rates for Zug (11.85%), Nidwalden (11.97%) and Schwyz (14.6%) make them a far more attractive investment proposition than Valais (17.12%) and Jura (16.0%). 

Such competitive rates are possible because these ‘richer’ cantons have a wider economic base, diversified across several sectors.

This ensures greater resilience and a continual draw of new arrivals and enterprises, more so than cantons where one particular industry dominates and is subject to fluctuations from outside factors.

So does it run smoothly?

There is a fine balance to strike in the redistribution formula.

“The greater the support given to resource-poor cantons, the lower their incentive to seek to increase their tax base, and the more the resource-rich cantons have to hand over, the less the incentive to enlarge theirs,” Andreas Stöckli of the University of Fribourg told Swiss Info.

In other words the transfer from cantons that tax-attractive to those that are less tax-attractive needs to be well-balanced.

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