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Does marriage make financial sense in Switzerland?

Thinking of taking the plunge in Switzerland? Here are some important things to consider.

Two wedding rings on a wet table
From a financial perspective, is it worth getting married in Switzerland? Photo by Zoriana Stakhniv on Unsplash

We updated this story in February 2024 after the Federal Council submitted proposals for a reform of tax legislation regarding spouses. 

It might not be the most romantic conversation to have with your significant other, but marriage in Switzerland can have a range of financial consequences regarding tax, insurance, debt and wealth. 

Although there are of course financial benefits to be had, there are also a range of potential disadvantages to consider.

Some of these are relatively minor, although others can be significant – so much so that the financial disadvantages of marriage are a frequent topic of conversation in Switzerland under the term “marriage penalty”.

Swiss financial services organisation Accurity says there are “massive tax penalties” for getting married in Switzerland, while think tank Avenir Suisse asked in mid-2020 “why marry when living in sin is cheaper?”

READ ALSO: The pros and cons of having kids in Switzerland

Switzerland even had a referendum on the issue back in 2016. 

As many people know, things tend to change slowly in Switzerland – just ask women who only got the vote nationally in 1971 (and in every canton in 1990).  

Marriage laws which have a financial impact in Switzerland come from a time when only one partner tended to work. That was then, however, with 80 percent of wives now working in Switzerland, according to Avenir Suisse. 

However, this could change soon. As The Local reported, on February 21st 2024, the Federal Council sent a proposal to the parliament, calling for a reform of the longstanding legislation by allowing separate, rather than joint, taxation of spouses.

But as things stand, is “living in sin” really cheaper? While there are some advantages, these primarily relate to death and inheritance. 

The following guide outlines some of the common advantages and disadvantages of taking the plunge in Switzerland in broad categories. 

READ ALSO: What names do foreign nationals give their babies in Switzerland?

Taxation

Taxation is the main area in which many married couples feel they are at a disadvantage. 

The reason for this is relatively simple. 

Switzerland uses a progressive income tax system, so higher incomes are taxed at a higher rate. 

Married couples are required to jointly file their taxes. Their income is added together regardless of who made what. 

If both spouses work, this arrangement – called the ‘marriage tax penalty’ —can be quite costly.

It is unconstitutional for a married couple to pay more than 10 percent of the amount they would be charged if they were living together without marriage.

In practice, however, many couples pay considerably more. Postfinance provides the following example:

“The marriage penalty actually means that for dual-income couples where both partners earn 75,000 to 125,000 francs annually, there is an added tax burden of around 10 percent compared to cohabiting couples with the same income.”

According to estimates from 2019, 700,000 married couples pay more tax than they would if they were unmarried. 

Keep in mind that not all married couples are the same. The amount of tax you will pay depends on a variety of factors including how much you earn, how you earn it, which canton and municipality you live in and how you organise your tax affairs. 

In that sense, marriage will not always constitute a disadvantage. 

Revealed: The Swiss canton with the best tax rates for families

Appropriately named Swiss financial comparison site Moneyland says Switzerland’s tax framework can be problematic as “if you and your partner have a higher income and get married, the tax rate will go up and you may pay a higher amount of income tax than if you were both taxed separately.”

Moneyland also notes that this can in fact be an advantage if one partner earns a low amount of money or no money, as “a person in a high tax bracket may be placed in a lower tax bracket if their spouse earns little or no income”. 

Is this likely to change? 

One effort to change the law came about in 2016 when Switzerland held a referendum on the issue. 

In 2016, Swiss voters narrowly rejected the initiative to scrap the marriage tax penalty. 

However, it turned out that the information on this subject published by the government seriously underestimated the number of couples that were subjected to the tax penalty.

The authorities said only 80,000 couples were affected (more accurate estimates suggested it was closer to 700,000).

The vote was therefore reversed by the Federal Tribunal, Switzerland’s highest court.

However, as we mentioned earlier, the Federal Council has voiced that it wants to scrap this reform and implement a tax reform. 

So watch this space. 

Pensions 

Married couples can also be at a disadvantage when it comes to pensions. 

The Swiss pension system, while relatively complex, is largely calculated on the basis of contributions you made during your working life. 

EXPLAINED:How does the Swiss pension system work – and how much will I receive?

While single individuals will be entitled to 100 percent of their pension on retirement, a married couple will only be entitled to a maximum of 150 percent of their two pensions together. 

Unmarried couples will therefore be entitled to 200 percent of their pension entitlements (when considered together). 

This results in a reduction of 25 percent each – or 50 percent taken together – for married couples. 

This system was created when one of the married people, usually the man, earned much more than the other partner. 

However, where both members of a married couple earn good money, they are effectively penalised when it comes time to retire. 

In the instance of divorce, the money will be split evenly. 

The main advantage of the system is in the unfortunate instance someone dies. In that case, the survivor will be entitled to a survivor’s pension, which is sometimes known as a widow’s pension (but is not restricted to women). 

In order to receive this pension, the couple must have been married for at least five years. The surviving partner must be at least 45 years old or they must have dependent children. 

Married partners are also entitled to make lower contributions to the AHV pension collectively, which can be an advantage. 

Inheritance

There can also be benefits when it comes to inheritance for surviving spouses and children. 

Marriage will ensure that the main barriers to inheriting a deceased spouse’s wealth are removed. 

Taxes on inheritance or gifts are relatively low in Switzerland, depending on the canton. 

The disadvantage, however, of being married is that individuals will have comparatively little choice to select their heirs or even to determine where their money will go. 

In Switzerland, a spouse is entitled to a compulsory portion of the estate. This will take place automatically and will trump whatever you say in your will. 

Debt

One final element is debt. 

When one partner who is in debt gets married, the debt becomes that of the couple – unless you specifically specify this in a pre-marriage agreement. 

Even then, Moneyland notes that your partner may be liable for your debt in some cases, which may be an unwelcome surprise for your partner. 

The obvious advantage for individuals is that their debt obligations are now halved, although the person you (theoretically) love will be liable for the other half, which probably shouldn’t be considered an advantage at all. 

As with all of our financial guides, this report has been prepared to provide an overview only and should not take the place of tailored financial advice from a qualified expert. 

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COST OF LIVING

One in 10 struggle to make ends meet: Poverty in Switzerland revealed

Switzerland is one of the wealthiest countries in the world which contributes to overall high satisfaction, but many people still have financial worries.

One in 10 struggle to make ends meet: Poverty in Switzerland revealed

People in Switzerland have the highest level of life satisfaction in Europe, according to a study published his week by the Federal Statistical Office (FSO).

However, that doesn’t mean that everyone in the Alpine nation is satisfied with their quality of life. 

According to the FSO, who carried out the survey on income, poverty and living conditions in 2022, almost one in 10 people in Switzerland struggled to make ends meet financially, and nearly 5 percent of the population had to do without important goods, services and social activities due to financial reasons.

The poverty rate in Switzerland was measured as 8.2 percent. 

READ ALSO: The Swiss cantons with the highest (and lowest) incomes

How satisfied are people in Switzerland?

On a scale of 0 to 10, the mean score for satisfaction with current lifestyle in Switzerland was 8, compared to 7.9 in Austria, 7.2 in Italy, 7.0 in France and 6.5 in Germany. In Switzerland, life satisfaction has hardly changed since 2014 and increases with age, level of education and income.

The population is particularly satisfied in interpersonal areas such as living together, the working atmosphere and personal relationships. More than half of people aged 16 and over were very satisfied in these areas in 2022 (scores of 9 or 10). In contrast, only one in three people were very satisfied with their leisure time or personal financial situation.

A person works on a laptop.

People were generally happy with work in Switzerland. Image by StartupStockPhotos from Pixabay

The FSO measured the general standard of living on the basis of the median available disposable income, whereby the price level differences between the countries were corrected. In Switzerland, disposable income is 2.5 times as high as in Greece, 1.5 times as high as in Italy, 1.3 times as high as in France, 1.2 times as high as in Germany and 1.1 times as high as in Austria.

The FSO said: “Despite the high price level in Switzerland, the population’s standard of living is therefore higher than in neighbouring countries and the majority of EU countries.”

But there are stark differences between living conditions in Switzerland, a country of around 9 million people. 

In 2022, 9.9 percent of Swiss residents had difficulty making ends meet at the end of the month and 4.9 percent of the population were affected by material and social deprivation, according to the survey. This means that they had to do without important goods, services and social activities such as new clothes, regular leisure activities or meetings with friends for financial reasons, were unable to pay their bills on time or couldn’t pay for unexpected expenses.

As you would expect, those struggling to make ends meet have a significantly lower level of life satisfaction. In 2022, only one in nine of those facing financial issues were satisfied with their lives (10.9 percent vs. 37.9 percent of the total population). This group also stated that they felt discouraged or depressed most or all of the time (24.3 percent vs. 5.4 percent of the total population) and were less likely to be happy most or all of the time (37.1 percent vs. 76.6 percent of the total population).

How many people in Switzerland are in poverty?

In Switzerland, 8.2 percent of the population had low levels of income in 2022 – this corresponds to around 702,000 people. The poverty rate was therefore lower than in the previous year (8.7 percent), but the difference is not statistically significant, researchers said.

Furthermore, the price increases for electricity, heating costs and consumer goods since 2022 are not yet reflected in these figures. Although Switzerland has been shielded from severe inflation hikes seen elsewhere in Europe in the wake of Russia’s war on Ukraine, consumer prices have still gone up.

As in previous years, foreign nationals, people in single-parent households, people without further education and those in families or households where there are high levels of unemployment are frequently affected by income poverty. At 3.8 percent (144,000 people), the poverty rate among the working population was also slightly lower than in the previous year (4.2 percent), but again, researchers said that this development is not viewed as significant. 

In a previous study by the statistical office, the parts of Switzerland with the lowest incomes were found to be the cantons of Jura, Valais, and Ticino.

READ ALSO: Where are the poorest parts of Switzerland?

The poverty threshold comes from the guidelines of the Swiss Conference on Social Welfare (SKOS). In 2022 this amounted to an average of CHF 2,284 per month for an individual and CHF 4,010 per month for a family.

This income threshold is higher in Switzerland than elsewhere, but the cost of living is higher as well. 

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