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How to navigate your way to a lower Swiss tax bill

Think Swiss watches are complex? You should see their tax system! With four-tiers of tax burden – federal, cantonal, municipal and church taxes – working out how much you'll have to pay can be a rather bewildering and time-consuming process.

Published: 9 October 2020 07:00 CEST
How to navigate your way to a lower Swiss tax bill
Photo: Getty Images

Then there are those bizarre quirks you only come across in Switzerland – where else are you only allowed to lodge one tax return per household? For international residents, it can all seem like too much.

That said, there are some fairly simple ways to ensure that you pay lower taxes in Switzerland. Where you live is, of course, crucial – but so are a few other less obvious factors. In partnership with Tax Jungle, a new site for calculating Swiss taxes based on your exact personal circumstances, here are five things to consider to keep your tax bill low. 

1. Location, location, location

Much of your Swiss tax burden is divided between, cantonal taxes – that is to say, a tax that goes directly to your canton of residence – and municipal taxes. Cantonal taxes may cover infrastructure, education and healthcare, while municipal (or communal) taxes may be more focused on local social services. It’s good to know where this money is going, as you’re likely to be paying a fair amount! 

The tax rates for these two vary wildly across the country. Using the Tax Jungle tool, for instance, you can see that it’s not just a question of picking the right canton to take advantage of lower taxes, but the right town or village. Whether you want to spend to treat yourself or save to build for the future, the money you'll have left after your tax bill could vary greatly depending on just a relatively small distance!

Before moving to Switzerland or embarking on a cross-country move, carefully examine the area you’re looking at – can you save money depending on where you’re willing to live?

Want to keep your tax bill low? Use the Tax Jungle tool to find out how 

2. A question of belief 

It may seem rather personal to be asked whether you're a member of the three main churches in Switzerland – the Roman Catholic, Old Catholic and Lutheran churches. However, the way you answer the question is important. Like the other German-speaking countries, church taxes are levied to support the functioning of these organisations and roughly three quarters of the Swiss population choose to pay these taxes – up to around 300 Swiss francs a year. 

Photo: Getty Images

If you’re not a believer, simply mark ‘none’ on your paperwork as you register. If you've already ticked a box to say you are religious, you can always amend it with the authorities – but it may take some time. If you’re smart (and lucky), you could also choose a canton that doesn’t levy direct church taxes, such as Valais, Vaud and Ticino. Just be sure not to praise the Lord when you see how much money you’re saving …

3. Be a canny commuter

Switzerland isn’t a huge country, even by European standards. Some cantons can be crossed by foot in less than half an hour. It’s also a country serviced by excellent public transport. This gives the canny commuter a range of options when considering where to live – it doesn't have to be next door to your office.

Using a tool such as Tax Jungle allows you to compare a range of municipalities to find the one with the lowest overall tax rates. Adding an extra 15 minutes to your commute from commune to commune could save you hundreds of francs per year in taxes, while also giving you access to a broader range of social services – some communes offer a lot more than others. 

Moving for work? Use Tax Jungle to find out where you could save the most in tax  

4. Family matters

While we’d never advocate having a family simply for tax purposes (they tend to cost quite a bit of money, after all), those married or with a family will find that they pay lower taxes when it comes to those taken at the federal, cantonal and municipal level. 

This echoes the trend across many European countries to lower taxes for married couples. This is an important consideration for expats when deciding whether it’s affordable to bring your spouse and children with you if you're starting a new job. Switzerland has its share of cross-border commuters. But if you have a family, bear in mind that Switzerland does offer you some favourable tax treatment.

Combined with the tax savings that picking the right village can provide, this can make a huge difference to those coming to work in Switzerland and the standard of living they enjoy. 

5. Use the right tax comparison tool 

Whatever your circumstances, the new Tax Jungle website aims to be the simplest and most comprehensive tool to enable people living in or thinking of moving to Switzerland to calculate their potential taxes.

While other tools, such as that created by the Swiss federal government, give an overview, Tax Jungle users can enter their exact salary, marital status and other details to specifically locate the areas with the lowest tax rates for their own needs. It's available in English, as well as the four official languages of Switzerland (German, French, Italian and Romansh).

With just a few simple personal details, you can quickly find the kind of granular detail that you’d usually have to pay for – helping you make the best choice for your unique circumstances.

Moving to Switzerland or thinking of moving within its borders? Head over to Tax Jungle today to get a detailed comparison of the tax you'll pay depending on your personal circumstances and where you choose to live.

 

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QUALITY OF LIFE

‘Pleasantly constant’: Why Switzerland ranks as the ‘world’s best country’ — again

For the sixth time, Switzerland wins the coveted title of the world’s top country in an international ranking. Why does the nation make it to the no.1 spot —time after time?

Published: 6 September 2023 11:31 CEST
'Pleasantly constant': Why Switzerland ranks as the 'world’s best country' — again

It’s official: Switzerland has been ranked ahead of 87 other countries analysed by the US News & World Report for its 2023 ranking, which was released on Wednesday morning. 

It is the sixth time that Switzerland tops the rankings, which measure a country’s global performance based on 73 categories. They include entrepreneurship; quality of life; adaptability and progress; social purpose; and other attributes listed here. 

What exactly makes Switzerland the best in the world?

The country “snags the top spot for business-friendliness and education, “and ranks in the top 10 for quality of life, social purpose and cultural influence,” according to study authors. “Among attributes, it was considered No.1 for being economically stable, safe and least corrupt.”

“And while people may not see it as the sexiest place, they would like to live there.”

One of Switzerland’s top qualities, the study showed, is ‘consistency.’

Unlike the political and economic volatility of many other countries, “there is something pleasantly constant about Switzerland,” the survey found.

It is true that change of any kind is slow to come here.

Part of the reason for this sluggishness is cultural: the Swiss don’t like spontaneity (unless it’s planned) or doing anything on a whim. 

They believe that rushing things and making hasty decisions will have disastrous results, which is why they prefer to take a cautious — even if painstakingly slow — path.

As a general rule, the Swiss have a penchant not only for planning, but for pre-planning as well. They like to thoroughly examine each aspect of a proposed change and look at it from all possible angles.

Another reason (besides the cultural one mentioned above) contributes to Switzerland’s notorious slowness in decision-making — the country’s political system.

Due to Switzerland’s decentralised form of government, the Federal Council must consult with cantons before a decision can be made at the national level.

That, as you can imagine, could take a while as each of the 26 cantons may drag their individual feet, and there could be no consensus among them.

READ ALSO : Why are things so slow to change in Switzerland? 

While some may see this ‘consistency’ as a negative, the US News & World Report considers it to be a definite plus.

How did Switzerland rank in major categories?

‘Open for business’

In this category, the country is in the first place (100 points out of 100).

Simply, this means  the country  is ‘business friendly’ because the government has created a good environment for businesses to thrive. 

“Switzerland has low unemployment, a skilled labour force and one of the highest gross domestic products per capita in the world,” the report relates. 

‘Educated population’

Here, too, Switzerland excels (100 points, first place).

Switzerland not only has an excellent and accessible education system, but according to Organisation for Economic Cooperation and Development (OECD), well over 80 percent of the country’s population have an upper secondary education or above.

This proportion is higher than the OECD average of 75 percent.

READ ALSO: How can foreigners get into a Swiss university?

‘Quality of life’

Here, Switzerland also got a high score ( 96.7), which places it in the fourth place.

This particular category, which includes essentials such as broad access to food, housing, quality education, healthcare, and employment, also comprises “intangibles such as job security, political stability, individual freedom and environmental quality.”

This is not exactly a surprise, as Switzerland often ranks highly in this category in other international surveys as well. 

In which categories does Switzerland rate poorly?

‘Power’

Switzerland’s score here is 26, which lands it in the 20th place.

But this is actually good news, if you consider criteria for this category:

“The world’s most powerful countries also are the ones that consistently dominate news headlines, preoccupy policymakers and shape global economic patterns. Their foreign policies and military budgets are tracked religiously.”

Needless to say, Switzerland has no interest in wielding global power.

Besides (unintentionally) invading neighbouring Liechtenstein on three occasions, Switzerland is not at all power-hungry.

This is not only because it is neutral, but also because its politics is based on peaceful coexistence.

(The number 1 spot in this category was snagged, not surprisingly, by the United States).

‘Movers’

This too is not a major surprise, since the sub-category here is ‘dynamic’, for which Switzerland was given a low score of 29.1.

The country did a bit better in the ‘distinctive’ and ‘unique’ sub-category, with scores of 43.5 and 42.1, respectively.

Overall, Switzerland is in the 26th place.

You can see details of each category here.

What is the Swiss reaction to the report?

Overwhelmingly positive, of course.

“What people love about us is our reliability and our predictability,” said Jacques Pitteloud, the Swiss ambassador to the U.S.

“With us, you know what you get, which is rare nowadays,” Alexandre Edelmann, head of Presence Switzerland, a government agency that promotes the country abroad, pointed out.

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