When moving to Switzerland from abroad, understanding the Swiss tax system is crucial. The complexity of Swiss taxes often requires professional assistance, especially for foreigners. This guide covers essential aspects of Swiss taxation for expats, including proper taxation, withholding tax, ANobAG, possible deductions, and tax-saving plans like the pillar 3a.
Switzerland has a tiered tax system where taxes are levied at the federal, cantonal, and municipal levels. This structure means that tax obligations can vary significantly depending on where you reside within Switzerland. Before you settle down permanently, make sure to consider the local tax rates in your decision.
Foreigners residing in Switzerland with a B or L permit earning more than CHF 120’000 per year, as well as those married to Swiss citizens or holding a C permit, must undergo proper taxation. This involves filing an annual tax return similar to Swiss citizens. The process can be intricate, requiring detailed statements and adherence to deadlines.
For those earning less than CHF 120’000 annually, tax is deducted at source by the employer. However, these individuals can file a simplified form to claim deductions and potentially lower their tax liability.
Navigating Swiss taxes can be daunting due to the extensive paperwork and stringent deadlines. Engaging a tax expert can significantly ease this burden. Experts can assist in optimizing tax returns by identifying various deductions and leveraging investment opportunities like the pillar 3a for retirement savings.
Manage my tax declaration for me!If you too are new in Switzerland and are looking to save yourself money and time, contact our independent tax experts to handle your tax declaration.
Withholding tax is a system where taxes are directly deducted from the wages of foreign nationals residing in Switzerland and cross-border commuters. Employers are responsible for declaring and paying these taxes to the authorities.
You are subject to withholding tax if you fall into one of these categories:
The withholding tax rate varies based on the employee's canton of residence, gross salary, marital status, number of children, and religious denomination. Employers must submit monthly, quarterly, or annual statements to the cantonal tax authorities.
The withholding tax rate is indicated by a code, e.g., A0N or C2Y:
Note that a special tax rate of 4.5% applies to cross-border commuters from Germany who return daily to their German place of residence.
ANobAGs do not pay withholding tax, even though their resident status would usually require it. Instead, they are taxed under the regular tax system because there is no Swiss employer to deduct the tax from their pay (art. 4 abs. 1 QStV). If you are working in Switzerland as an ANobAG or are an employer looking to employ in Switzerland under the ANobAG system, contact us today for professional support & registration with the authorities.
There are various expenses you can deduct from your tax declaration to save money. The most common deductions for everyday life are:
Long-term deductions
Much more interesting are the long-term deductions. These are related to major life milestones and require much more planning. Among them are:
The pillar 3a is a voluntary, private savings & investment plan designed to keep up your standard of living in retirement, as the state pension from pillars 1 and 2 aren’t enough. Contributions to a pillar 3a account are fully tax-deductible. This plan not only helps reduce taxable income but also secures your financial future.
The pillar 3a plan is one of the key tools to secure your future in Switzerland. Contact us today to be expertly consulted & conclude your pillar 3a.
Consult me for a tax-saving pillar 3a plan!Zürcher Treuhand GmbH is our in-house tax partner that will personally take care of all your taxation needs with expat-specific knowledge. Let us optimize your tax declaration and secure your financial future in Switzerland - get in touch with us now.
