Tax in Switzerland for Expats
An overview of the Swiss tax system designed to help foreign nationals living in Switzerland gain an understanding of Taxes in Switzerland and have the opportunity to speak to a Swiss tax specialist.
There is a large expat community throughout Switzerland, especially in the major city and people moving to Switzerland or planning to work temporarily in Switzerland will need to seek specialist Swiss tax advice to ensure they meet the often complex tax rules.
We have created this guide to help foreign nationals living in Switzerland and Swiss nationals living abroad understand their tax obligations in Switzerland and provide the opportunity to be connected with an Swiss tax specialist who will be able to assist with your tax matters.
Please be aware that this article is provided as a guide only and must not be used to make decisions. You must always seek professional advice regarding your tax and general financial matters.
Tax in Switzerland introduction
Taxes in Switzerland can seem complicated: 26 cantons imply 26 different sets of rules and online tools to fill your taxes. Nevertheless, the main principles are the same across the federation. The tax logic is similar everywhere.
To detail how Swiss Taxes work, we need to look at:
- The multiple levels of taxes: federal, cantonal and municipal
- The income tax
- The wealth tax
- The deductions and reductions, that’s the cool part!
Multiple levels of taxes
Taxes are collected and managed by the cantons but there are four levels of taxes in Switzerland:
- Federal Taxes: for the country itself, funding the army, diplomacy, justice, etc.
- Cantonal Taxes: for the canton, responsible for healthcare, welfare, law enforcement, public education, and, well, collecting taxes.
- Municipal Taxes: for your town (“Gemeinde”, “commune” or “comuni”)
- Church Taxes: collected by the canton (sometimes the municipality) on behalf of your church. No religion means no tax.
Income Tax
You pay taxes on your income. Most of the time, it means salary from a job. That said, other sources of income also matter:
- Rental income from your properties
- Side hustles (Airbnb, selling things online, etc.)
- Dividends from shares
The sum of all your incomes gives you the gross income. By removing all the deductions from the gross income, we get the taxable income. This taxable income is what actually matters for your taxes.
For a married couple, the tax office will use the sum of both taxable incomes.
Wealth Tax
You will also pay a tax on your wealthin Switzerlandand abroad. This includes the cash in your bank accounts as well as:
- Your savings and checkings accounts
- Your stocks, bonds, and funds
- Life Insurance Policies
- House and other real estates
Your taxable wealth is the sum of these values.
Deductions and reductions
You are allowed to deduct a lot of items from both your taxable income and wealth. These will significantly reduce your taxes.
- Professional expenses (meals outside of work, transportation, some housing, training, work-related expenses, etc.)
- Health fees (health insurance premiums and health costs)
- Alimony (payments to your ex-partner and for your children)
- Child care deductions
A few levers to reduce your taxes in Switzerland:
- Invest a third pillar, that’s the easiest way
- Invest more in your second pillar, it’s a bit harder
- Deduct mortgage payments from taxable income
- Claim house-related expenses
- Claim donations
- Move to another municipality or canton with a lower tax rate
- Get kids, the net gain is probably negative... but still, it reduces the tax rate
Paying your taxes in Switzerland
During the year, you will receive bills to pay taxes in advance, for the current year. These are based on the amount of the previous year.
If you pay too much, the cantonal tax authorities will reimburse you, with interest. However, if you did not pay enough (or did not pay at all), you would have to pay the difference.
