As an Expat in Switzerland, the landscape of taxes might be very confusing as we have 26 Cantons, each with its own tax law, in addition to a federal law as well.
However, this is not all; there is also a tax at the municipal level and tax is not always paid to one authority with one invoice. Usually, you would receive several invoices from different authorities.
In order to shed some light on this, we would like to explain the Swiss tax landscape in more detail below.
In principle, Switzerland has income tax and wealth tax. The income tax is levied on three levels: direct federal tax, cantonal tax, and municipal tax. Whereas the wealth tax is only levied by the cantons and municipalities.
Situation as a Resident in Switzerland
As an expat employee, usually holding a B residence permit, the income taxes are simplified so the employer is obliged to deduct the tax directly from the salary and pay the tax for the employee, similar to many other countries with a pay-as-you-earn system. In the tax at source, various factors are considered in the applicable tax rate, such as children, some work-related expenses, and so on.
Can it be that simple? Of course not. There are some exceptions, respectively additional requirements for a potential tax filing procedure.
If you either have an income of more than CHF 120,000 annually, interest or dividend income of more than CHF 1,500 per year, assets worth more than CHF 75,000 (or CHF 150,000 if married), or own any real estate in Switzerland or abroad, a tax return needs to be filed mandatory with the authorities.
Should you not meet at least one of these criteria, the tax at source becomes final.
You may ask, is there also a possibility to file on a voluntary basis if you would profit from it? This can be answered with a clear “Yes!”
Without reaching one of these figures, you may apply to file a tax return on a voluntary basis. This might be to your benefit when having additional deductions such as alimony payments to your ex-partner or voluntary buy-ins to a pension scheme.
Are there any downsides to filing?
Before you decide to file the request to do a voluntary tax return, you need to know once you have made the decision to file a tax return, the tax return filing will also be required for all upcoming years and the request has to be filed until March 31 of the subsequent tax year. As a side note, the absolute figures will vary by canton, thus each case has to be reviewed separately.
What do you have to declare in the tax filing?
In the tax declaration, your full worldwide income and assets have to be declared and on the other side, you would be able to claim some deductions from your income and assets. For example, you might deduct some costs for the commute to your workplace, health costs, private contributions to the pension scheme (private or corporate), educational costs, debts (such as student loans or mortgages), as well as the corresponding interest payments even if paid outside of Switzerland, alimonies, or financial support to family members (with some exemptions), and some more costs.
The filed tax return will be used to determine your final taxation in Switzerland. Of course, any payments made already at source (withheld from your salary) will be credited against the final taxes. Thus this could end in a refund or an additional payment required.
Situation as a non-resident in Switzerland
Another situation might be if you are an expat working in Switzerland, however your spouse and children will not join you in Switzerland and thus you commute regularly back to your home country. Such a setup would be qualified as an international weekly commuter in Switzerland. This situation is even independent of the residence permit granted; even the correct permit would be a G-Permit (commuter permit).
How does this impact the taxation?
In such a situation, the taxation would be similar at first glance; thus the taxes would be withheld from your salary at payroll level directly. However, at second glance, a tax return can only be filed on a voluntary basis as the tax law only applies solely to an economic connection to Switzerland. In addition, the possibility to file voluntarily depends on further conditions.
What are these conditions?
The main condition is that 90% of the total family income is generated in Switzerland and will be taxed in Switzerland. For the determination of the income, it is also relevant if someone is working remotely from the home country or has regular business trips.
It is to mention as an international weekly commuter, the request to file a tax return needs to be applied every year again, fulfilling also the 90/10 rule, considering the strict deadline of March 31 of the subsequent tax year.
Who are we and how can we help?
As you see, the tax system might be simple if you only need to pay the tax at source, however, most situations are more complex and a professional advisor would be needed to be compliant and ideally provide you as well with some tax-saving opportunities. Thus we would like to introduce ourselves.
The Artax Group is a fiduciary company with a tradition of more than 20 years. We are serving about 1,200 individuals and approximately 350 smaller and middle-sized businesses for many years in taxes, accounting, and payroll. If needed, we offer legal and other financial advisory services.
Our main individual client group are expats relocated to Switzerland or in the border region of Basel, nevertheless, we are able to serve you in all 26 cantons of Switzerland. In addition, to serve our cross-border clients, we are associated with partnerships across the near border to Germany and France, as well as globally through our membership with Morison Global.
Our goal is to provide you with financial and specific competitive advantages. The service is tailored to your individual case so you can profit from a suitable, comprehensive, creative, and compliant solution. Beside our know-how, we stand for seriousness and discretion.
We would be glad to invite you to contact us and if you would like to learn more about us to visit our website or send us an email to: info@artax.ch. You will find our office in Basel under artax Fide Consult AG, Gartenstrasse 95, 4052 Basel.
