As a native Vaudoise, educated, working and living in Aubonne, Nils Piguet understands only too well the issues that many face when trying to come to terms with the Swiss tax system, especially as it applies to Vaud.
With a federal system of government, Swiss taxes can get quite complicated, with taxes being levied at three different levels: federal, cantonal and local. Given that many knowitall.ch clients live in the canton of Vaud, we asked Nils to clarify some of the basic issues to us. He explains:
When you arrive in Switzerland, you will be subject to taxation on all your income and personal assets from the day you take up residence until the day you leave the country permanently. To avoid double taxation, Switzerland has bilateral tax agreements with more than 60 countries (including all OECD countries).
Depending on your situation, your taxes will either be withheld from your salary or you will pay them on the basis of a tax return.
Withholding
In Vaud Canton, if you have an L or B permit, your employer will deduct federal, cantonal and local taxes directly from your salary each month in accordance with a special scale covering all three categories. In this situation, you will not have to file a tax return.
Tax return
Your taxes will not be withheld – meaning that you will have to file a normal tax return – if you are or become:
• a C permit holder
• a Swiss national
• married to a Swiss national or a C permit holder
• the owner of real estate in Switzerland
• self-employed
If you have an L or B permit and earn more than CHF 120,000 a year, your taxes will continue to be withheld but you will also have to file a tax return. The amount of taxes withheld will then be offset against the actual amount due...
In the tax return, you have to declare all your income and personal assets. Income includes money earned inside or outside Switzerland such as salary, pension, interest and dividend payments and any rental income. Income tax rates are progressive and can reach 41.5% (federal, cantonal and local taxes included). However, one of the main tax advantages in Switzerland is that capital gains on privately held securities are not subject to tax.
Swiss wealth tax is levied at the cantonal and local levels on your personal assets. This includes any financial investments – including bank accounts and securities held outside Switzerland – and property that you own. It is calculated according to the assets you hold on 31 December of each year or on the date that you leave Switzerland permanently. Wealth tax rates are progressive and can reach up to 0.8%.
In Vaud Canton, each town sets its own rate relative to the canton's base rate. Local tax rates thus vary from town to town. The tax rate applied takes into account personal factors such as your marital status, the number of children you have and place of residence valid as of 31 December of the year in question. Additional deductions are allowed for children and other persons in your care.
For those living in the canton of Geneva, Nils explains that the same tax system applies but with a few subtle differences:
• The level at which you have to fill in an ordinary tax return if you are taxed at source is CHF 500,000 instead of CHF 120,000;
• Following the last court case on the matter, every person subject to tax at source can ask to submit an ordinary tax return if this is deemed to be more accurate or beneficial for them. For this, they have to ask the tax authorities in the first three months following the end of the tax period, which means till the 31 March of the following year;
• The maximum tax rate for the income in Geneva is about 43% and the maximum tax rate on the wealth is 1% in Geneva.
Nils Piguet works as a part-time independent tax and legal consultant, and is based in Aubonne, Vaud. He provides a comprehensive tax service, which ranges from helping you to prepare your tax return and modify your tax instalments, through to preparing tax claims and optimizing your tax situation. By taking care of all your correspondence with the tax authorities, he aims to remove much of the stress that can be associated with making tax declarations.
His personalized service extends to both individuals and companies. He can arrange to meet clients either at their workplace, at their home or at his own office in Aubonne on Tuesdays and Thursdays. He can also meet on any evening during the week, and at weekends if that is more convenient for his clients.
Nils Piguet
Lic. Droit & LL.M. EUR.
CONSEILLER FISCAL & JURIDIQUE
TAX & LEGAL CONSULTANT
Rue du Chaffard 43
1170 Aubonne
079 405 69 82
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EDITOR'S NOTE 11 May 2016: Nils is now working full-time so will surely find time to assist you with any tax issues you have.
