Tax Declaration In Switzerland: Expats Guide

Filing a tax declaration in Switzerland doesn’t have to feel like navigating a maze in the Alps without a map. Looking to file your tax declaration in Swiss? Don’t Worry! We’ve got your back!

With a blend of precision and punctuality that rivals the country’s famed watchmaking, this guide demystifies the Swiss tax declaration process. Whether you’re a local entrepreneur or an international expat, understanding the ins and outs of Swiss taxes can turn a daunting task into a smooth and stress-free experience.

Let’s dive in!

What Is Meant By Tax Declaration In Switzerland?

In Switzerland, the taxes are levied by the individual 26 administrative cantons and the government. All the taxes, which include cantonal, federal, and communal taxes, are deducted by the employer under which one works.

Declaring taxes in Switzerland is done after the completion of one fiscal year, and one is taxed on one’s gross income. In the Swiss tax system, one is taxed directly by the government.

The cantonments and 2,550 municipalities apply the additional tax.

One’s taxes will vary. It primarily depends on which canton and municipality one lives in. Usually, the tax scales in Switzerland are progressive. It means that the more one’s income is, the higher the taxes one must pay.

One might get a reduced tax scale if one is married or has a single-parent family.

For example, a single taxpayer in Switzerland will be asked to pay 11.5% direct federal tax if their annual income exceeds CHF 769,700. However, a married or single taxpayer with children will only pay the same tax once they earn more than CHF 912,600.

The Swiss government also allows taxpayers to calculate their taxes using online tax calculators.

Expats or foreigners working in Switzerland are taxed on their worldwide income. It includes the yearly income earned via assets, foreign pensions, or offshore employment.

If one is not a Swiss resident, one only pays taxes on the yearly Swiss income.

To avoid charging foreigners double taxation, Switzerland has signed a Double Taxation Agreement (DTA). It is signed with over 100 countries, which include many European, African, and Asian countries.

Some new rules in Switzerland have forced foreigners earning lower annual incomes than CHF 120,000 to file for taxes voluntarily and then be taxed at the source.

Now, they can also file for the same expenses and deductions as the Swiss residents.

There are specific guidelines regarding the eligibility criteria for filing taxes in Switzerland, the types of incomes to be taxed, and the whole process of declaring the taxes. All of these details have been extended below.

So, read thoroughly!

Who Is Eligible To Pay Taxes In Switzerland?

One needs to be aware of who can pay the taxes in Switzerland.

The following list provides the categories of the individuals on whom it is mandatory to declare taxes:

Swiss Nationals
Foreigners having a Swiss permanent permit, which is also known as Permit C
Foreigners who are married to a Swiss National
Employees of foreign employers
Self-employed workers

Who Has To Declare Income Taxes In Switzerland?

It becomes mandatory for anyone to declare Income taxes in Switzerland when one stays in Switzerland for more than 90 days if one is visiting Switzerland, and if one is working there, then one has to file for taxes if one has worked there for more than 30 days.

Swiss nationals and individuals holding a permanent Swiss permit are taxed on their gross income and on their property and assets, except on the income earned abroad.

Some non-residents with particular financial links with Switzerland may also be required to pay taxes accordingly.

Also, self-employed workers in Switzerland are liable to pay taxes every year. Although, their taxes are arranged through a pay-as-you-earn (PAYE) system. The employer usually issues it.

Who Is Exempted From Paying Income Tax In Switzerland?

People living in Switzerland for less than 183 days a year and not working there for less than 30 days are exempted from declaring taxes.

Swiss citizens also do not need to pay taxes for additional pension benefits. Furthermore, individuals with income below CHF 17,800 and married couples with an accumulative earning of less than CHF 30,800 do not need to pay taxes.

Also, Switzerland allows a lot of researchers to be exempted from taxes. For example, people getting accepted into different research fellowships would not need to pay taxes in Switzerland. However, a few conditions apply:

If a fellowship is acquired without monetary conditions, it is tax-free.
If one has signed a contract of employment during one’s fellowship and receives money because of it, one might get levied with taxes.

People who live abroad but work under some specific canton in Switzerland will also be taxed on the source of their earnings.

One should always check the terms of employment before starting work. One should also try to verify and seek advice from the institution of fellowship and employment related to the taxes before signing the work contract.

What Are The Taxable Incomes In Switzerland?

Switzerland levies taxes on the individual’s gross income. However, it allows certain deductions to be made from the earned income.

These deductions include:

Employment expenses
Business expenses
Family and personal expenses (child support and alimony)

The remaining incomes are taxed. To identify which sources of exact income will be taxed in Switzerland, one may consult the following list:

Taxes on income or salary
Taxes on employment benefits
Taxes on savings and investments
Real estate or property taxes

To understand in detail, the following sources will have the taxes levied on the individuals in Switzerland:

Taxes On Income And Salary In Switzerland

All Swiss residents with valid work contracts must pay income tax, while a non-Swiss resident’s salary will be assigned to pay a withholding tax.

In Switzerland, one may need to pay taxes on different types of sources of income. Some of which have been given below:

Income from Employment: This category includes any self-employed work or salary job.
Income Earned via Benefits or Compensations: It includes pensions and other benefits.
Secondary Source of Income: This category includes seniority allowances and tips.
Other Incomes: Lotteries, money pools over CHF 1,000, income from bank accounts, and rents come under this category.

Taxes On Employment Benefits

Employment benefits are also taxed in Switzerland. Foreigners also need to pay WAT on employment benefits. However, some allowances and deductions are allowed on employment benefits.

For example, the Healthcare expenses not paid by the health insurance can be deducted from one’s income. These deductions include prescription glasses, homoeopathic treatments, dental care, etc.

Taxes On Savings And Investments

Any income earned from shares and ETFs is also taxed in Switzerland. However, money gained by buying or selling shares is not taxed. It is only the case if one is not a professional securities dealer.

Taxes On Property

Property tax is the tax one must pay on land or real estate. This tax is levied on the registered owners or users of the property at 0.2% to 0.3% of the property’s value by the cantonal tax authorities.

One will also have to pay a rental value tax when leasing a property which estimates around 60% to 70% of the property’s value, and a wealth tax too.

What Documents Are Required For The Declaration Of Taxes In Switzerland?

After the end of each fiscal year, the Swiss cantonal tax authorities will ask one to declare all the sources of income earned during that year and also to fill out the tax return application.

To follow the instructions dictated by the taxation authorities in Switzerland, one would need the following documents to attach with one’s tax applications to declare the taxes for the particular fiscal year.

The following list includes the required documents:

Salary Receipts.
One would require Certificates of remuneration and expenses:
1. If one is a registered Swiss employee, then one would need a Certificate of renumeration.
2. If one is a worker in Switzerland, one would need a Certificate of expenses.
If one is retired, one must submit the pension statements.
Account statements from the bank or post office for the past fiscal year.
All the Investment-related statements will also be required.

When one is supposed to declare one’s income and all the sources of income while declaring for tax, the Swiss authorities allow one to have various deductions. The allowed deductions depend on one’s source of income and spent expenses.

One would also need to attach documents to verify the allowed deductions. Thus, the following documents will be needed to attach to one’s tax declaration application:

Contribution certificates for pension schemes
Health insurance and medical bills.
Expenses related to one’s job or business.
Record of charitable contributions.
Documents proving paid property taxes,
Documents related to mortgage.
Maintenance and repair bills.
Receipts of expenses spent on administration and operations.
Social deductions (e.g., child support)

What Is The Procedure Of Tax Declaration In Switzerland?

The procedure of tax declaration in Switzerland is quite simple. One gets a letter from the Swiss taxation authorities by post at the end of every fiscal year.

One needs to sign the tax declaration and return it to the competent tax office before the Swiss cantonal tax authorities set the deadline.

The tax declaration can also be completed online. One can easily use the e-declaration platform of the canton where one resides.

Following the given steps below can easily allow first-time tax filers to declare their taxes and file for tax returns in Switzerland:

Fulfill The Tax Obligation

The first step is to conclude if one is eligible to apply for the taxes. The eligibility criteria can easily be checked. One’s sources of income and place of residency will decide whether one should apply for tax returns or not.

Gather Required Documents

The second step for declaring the taxes in Switzerland will be to gather all the required documents asked in the taxation filing application.

Mainly, it will include all the records of pay slips, properties or business income, bank statements, mortgages, deductions, allowances, etc.

Calculate Taxes And Fill The Tax Forms

After attaching the required documents to the tax form, one must calculate the taxes one owes to the authorities.

One can easily do it by using the online tax calculator provided by the taxation authorities of Switzerland to calculate the federal and cantonal taxes.

Also, one needs to fill out the tax form cautiously and according to the right calculated taxes, thus mentioning one’s income from every source and not missing anything deliberately or accidentally.

The form should also have the information and record of all the subtractions, any deductions, and allowances if needed.

One’s tax applications will be used as evidence if one is caught lying or misleading, which can also lead to one getting fined or even legally punished.

Submitting The Tax Return Form

After verifying and reviewing each detail, one may submit the tax form to the Cantonal taxation authority where one resides. One can submit the form by mail in person or through the online application.

Pay Any Outstanding Fee

One must pay the taxes one is owed based on one’s tax returns written in the tax application. This unpaid amount can be paid to the authorised department of the Swiss government before the deadline.

The fee can be paid electronically, in person, through cash, or by check.

Await Assessment

Once all the documents have been submitted with the filled tax declaration application, the federal or cantonal Swiss taxation department will also calculate the tax liabilities one owes.

The taxpayer applicant must patiently wait for the assessment to be issued. It will also include the notice of any refund owed or the remaining balance left to be paid.

Maintain Records

To be safe, one should keep records of all the financial documents and the tax notices. This record can be kept for a maximum of the past 7 years as this will save one a lot of pain and trouble if one gets investigated by the authorities.

So, one can save oneself from punishment, getting fined, or wasting time and effort by keeping proof of all the claims made when declaring taxes.

Take Professional Help

One may also get help from an accountant or a tax professional if you need clarification. Also, if one has complex financial investments or international sources of income, it is always better to seek help.

What Are The Deadlines For Declaring Taxes In Switzerland?

The fiscal year in Switzerland is akin to the calendar year. In most cantons in Switzerland, the deadline to declare the taxes is 31 March. Though Zurich and Geneva also have 31 March as the deadline, it may vary for other Cantons.

If one feels that one may only be able to apply for tax declaration after the decided deadline, then one may also apply for an extension. One should apply for the extension before the assigned deadline approaches.

The following table shows the declared deadline of different cantons in Switzerland:

Names of Cantons	Deadlines	Permissions for Extension
Geneva	31 March	Can apply for an extension.
Vaud	15 March	Can apply for an extension.
Valais	31 March	Can apply for an extension.
Fribourg	31 March	Can apply for an extension.

How To Apply For Tax Refunds In Switzerland?

In Switzerland, most cantons provide a unique form with one’s application for tax declaration to file claims.

One can apply for a correction claim if need be for the following:

Debt interest on consumer loans and credit cards
International residence cost.
Educational expenditure.
Health bills.
Disability costs
Alimony.
Childcare.
Donations
Pension fund contributions

Correction claims must also be filed before the deadline of 31 March of the following fiscal year.

Special Tax Refund For Expats In Switzerland

Expats can get some additional tax deductions as declared by the Expatriate Ordinance of the Federal Department of Finances of Switzerland.

To be eligible to claim this tax return, one should either be a member of senior staff on secondment or be a skilled worker with specific professional credentials working under a foreign employer.

Executives and specialists can only qualify as expats and file for this tax refund when they have a time-limited local work contract.

In this case, their employment has to be a local transfer, and their foreign employer must ensure continual re-employment after they leave Switzerland.

Expats may file for deductions when claiming tax returns. The deductions may include:

Costs for housing
Moving
Travelling
School fees

Some cantons may grant the expats an OEXPA deduction, a lump sum expat deduction almost equal to CHF 1,500 per month.

Conclusion

Crossing the finish line of your Swiss tax declaration journey can bring a sense of accomplishment akin to reaching a mountain summit. With the right preparation and knowledge, what once seemed like a steep climb becomes a scenic stroll through the financial landscape of Switzerland.

Embrace the process with the efficiency and precision of a Swiss clock, and you’ll find your fiscal responsibilities more manageable and less taxing.

Declaration Victory!

But wait! There’s lot more that you might be interested in following: