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June 05
What happens if I file my tax return late?

Tax Return Filed Late

By FIN-Admin General

Tax Return Filed Late

These consequences could occur in Switzerland!

Filing your tax return on time is one of the most important obligations of every taxpayer in Switzerland. But what happens if you file your tax return late? Find out here what consequences you may face and why it makes sense to seek professional help.

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➔ Submitted too late
➔ What should I do?
➔ Frequently Asked Questions
➔ Checklist
➔ How to Avoid Problems

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What happens if the tax return is filed late?

1. Reminder and Fees

Immediately after the filing deadline, the cantonal tax office checks to see which tax returns are missing. If your return is not filed by the deadline, you will receive a written reminder shortly thereafter. This reminder is not just a friendly notice; it usually results in a fee. The amount of this fee varies from canton to canton, but is generally between CHF 20 and CHF 60.

The reminder also includes an extension of a few weeks, within which the tax return must be submitted in order to avoid further consequences.

2. Assessment by the tax office

If you still fail to file your tax return after receiving the reminder, the tax office will take more drastic measures: what is known as a discretionary assessment. In this process, the tax office estimates your income based on previous tax data or industry-specific averages.

This estimate usually works to your disadvantage, since tax authorities generally make conservative estimates, which means you’ll receive tax bills that are higher than what you’d actually have to pay. This estimate can only be corrected later by filing an amended tax return—though this involves additional effort and often costs as well.

3. Interest on Late Payments and Legal Consequences

If, following the assessment, you receive an inflated tax bill and do not pay it by the due date, you will be charged late payment interest in addition to the costs already incurred. In Switzerland, this interest currently ranges mostly from about 4 to 5 percent per year, depending on the canton.

Delays in payment or failure to meet the extended deadlines can ultimately even lead to debt collection measures. A debt collection proceeding not only results in additional fees and administrative burdens, but can also, in the worst case, lead to asset seizures or other unpleasant consequences.

What should you do if it's already happened?

If you've already filed your tax return late, you should take the following steps as soon as possible:

  • Respond immediately:
    If you have received a reminder, file your tax return as soon as possible to avoid a discretionary assessment.
  • Communicate proactively:
    Contact your local tax office. Open communication often helps reduce fees or secure additional extensions.
  • Professional Assistance:
    Seek professional help to quickly and accurately resolve errors or unclear issues in your tax return. Tax experts are familiar with potential tax deductions and can correct incorrect estimates efficiently and easily.

Frequently Asked Questions

What happens if I file my tax return in Switzerland late?

If you file your tax return late, you will first receive a reminder notice with a fee (approx. CHF 20–60). If you ignore this, the tax office will estimate your income, which usually results in higher tax bills.

Can I request an extension if I can't file my tax return on time?

Yes, you can usually request an extension from your cantonal tax office. It's important to do this in a timely and proactive manner to avoid additional costs and hassle.

How much are the late filing fees if I don't file my tax return on time?

Late fees vary by canton and are usually between CHF 20 and CHF 60 per notice. The longer you wait, the higher this fee is likely to be.

What is a discretionary assessment?

A discretionary assessment is issued if you fail to file your tax return despite receiving a reminder. The tax office will then estimate your income. This estimate is usually higher than your actual income, which results in higher tax bills.

Can I still correct an estimate that's too high?

Yes, you can have a discretionary assessment corrected retroactively. To do so, file an amended tax return as soon as possible to replace the estimate with actual figures.

What is late-payment interest, and when is it charged?

Late payment interest accrues if you do not pay outstanding tax bills on time. Late payment interest is usually around 4–5% per year, depending on the canton.

Does it make sense to seek professional help if you file your tax return late?

Yes, professional assistance helps you avoid mistakes, minimize costs, and optimize your tax burden. Tax experts also help you resolve any outstanding questions quickly and efficiently.

Checklist: What You Can Do Right Away

    • File Your Tax Return Right Away
      Gather all the relevant documents and file your tax return right away.

 

    • Contact the tax office
      Proactively notify the relevant tax office of your late filing and inquire about options for an extension or ways to avoid additional fees.

 

    • Review the Discretionary Assessment
      If an income estimate (discretionary assessment) is already available, review it thoroughly for errors or overly high estimates.

 

    • Plan and Document Late Submissions
      Carefully document your late submission (date, confirmation, copies) so that you have proof in case of a dispute.

 

    • Seek Professional Help
      If you're unsure about anything, get help from tax experts. They are familiar with all the legal options available to effectively resolve problems and prevent further delays.

 

    • Payment of Outstanding Amounts
      If you have already received late fees or interest on overdue payments, please pay these amounts promptly to avoid further charges and collection proceedings.

 

  • Plan Ahead for the Future
    Set reminders for future tax deadlines and consider having a professional prepare your tax return early in the future.

Here's how to avoid unnecessary problems

Missing the filing deadline for your tax return results in unnecessary financial and administrative burdens. The best strategy to avoid this is to seek professional assistance early on or to take immediate action as soon as you realize you’ve missed the deadline.

A tax return that’s filed on time and filled out correctly will save you money, time, and—above all—unnecessary stress in the long run. Make sure you always meet your tax obligations on time so you don’t have any unpleasant surprises.

Aug. 25

Wealth Tax in Switzerland

By FIN-Admin General No Comments

Wealth Tax in Switzerland

An Overview of the Wealth Tax

The wealth tax in Switzerland and the wealth levy are two different concepts. While the wealth levy is primarily intended to collect a specific portion of wealth for the benefit of the state, the wealth tax is not intended to reduce the taxpayer’s net worth. Instead, it is generally supposed to be paid out of the income generated by the relevant assets. In this context, wealth serves as an indicator of the taxpayer’s financial capacity.

A wealth tax, which focuses primarily on wealth, is generally levied only under exceptional circumstances and on a one-time basis. An example from Swiss history is the wealth taxes levied during World War II, known as “Wehropfer,” which were introduced to generate additional funds for national defense.
In contrast, the wealth tax—the main focus of this article—is levied regularly, usually annually, and in conjunction with the income tax.

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Basics of the Wealth Tax in Switzerland

One might wonder whether it makes sense to use wealth as a standalone indicator of financial capacity when this is already determined through income taxation. The legitimacy of the wealth tax depends largely on the tax rate applied and the valuation criteria underlying this tax. A regular wealth tax that takes taxpayers’ financial capacity into account should not be so high that the taxed wealth is diminished by the tax burden. If assets shrink, not only does the tax base decrease—thereby calling into question the recurring collection of the tax—but so does the intended financial capacity, which contradicts the actual purpose of taxation.

Given these considerations, it is not surprising that the wealth tax is the subject of debate. Today, it primarily functions as a supplementary tax alongside a general income tax that also takes income from assets into account. Until World War I, however, the focus of direct cantonal taxes was on the wealth tax. Since income from assets was not recorded separately at that time, higher tax rates were justified. This structure of the wealth tax ensured stable revenue for the state budget, which remained largely unaffected by economic crises.

Since 1959, the federal government has no longer levied a direct federal tax (dBSt) on the assets of individuals in order to avoid an excessive tax burden resulting from the combination of cantonal and municipal wealth taxes.

What exactly is the wealth tax?

The wealth tax is an annual tax levied on the net worth of an individual or a legal entity. This net worth consists primarily of real estate, bank deposits, securities, and other assets, less any debts.

Who pays the wealth tax?

In general, every resident of Switzerland pays wealth tax, although the exact amount depends on the value of their assets and the canton in which they live. However, there are often tax-exempt thresholds up to which assets are not taxed. The amount of these thresholds can vary by canton.

Regulations vary by canton

Like many other types of taxes in Switzerland, the wealth tax is regulated at the cantonal level, which means that tax rates can vary from canton to canton. Some cantons have lower tax rates to attract wealthy residents and businesses.

Valuation of Assets

An important aspect of the wealth tax is the valuation of assets. Real estate is generally valued at its fair market value, although the exact method may vary by canton. Securities and other financial instruments are generally valued at market value.

Deductible Debts

Debts may be deducted from the tax base for the wealth tax. This means that, for example, mortgages or consumer loans are deducted from total assets to determine taxable assets.

Implications for Public Finances

The wealth tax is a major source of revenue for many cantons and municipalities. It enables them to finance a wide range of public services.

In summary

The wealth tax in Switzerland is an integral part of the tax system. It ensures that even those with substantial wealth contribute to the financing of public services.

At the same time, cantonal wealth tax regulations can lead wealthy individuals and companies to relocate to another canton in order to benefit from lower tax rates. As with all tax matters in Switzerland, it is advisable to seek professional advice to ensure that you comply with all regulations correctly and take advantage of all available deductions.

July 24
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Inheritance Tax

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Inheritance Tax in Switzerland

Fundamentals, Regulations, and Implications for Estate Planning

Inheritance tax is an important issue in many countries, including Switzerland. When a person dies, they leave behind assets and property that are transferred to their heirs. However, this process can have tax implications.
In Switzerland, inheritance tax is regulated at the cantonal level, which results in different rules across the various cantons.

In this blog post, we will take an in-depth look at inheritance tax in Switzerland by examining the basics, the regulations, and the implications for wealth succession in greater detail.

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Basics of Inheritance Tax in Switzerland

Inheritance tax is a tax levied on the assets a person inherits upon the death of a family member or other close relative. In Switzerland, inheritance tax is not levied at the federal level; instead, it is regulated autonomously by the individual cantons.

As a result, tax rates and exemptions may vary by canton. Some cantons also impose a gift tax when assets are transferred during a person’s lifetime.

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Inheritance Tax Regulations in the Cantons

Since inheritance tax regulations are governed at the cantonal level, there are different tax models in Switzerland. Some cantons levy a progressive inheritance tax, in which the tax rate increases as the value of the inherited assets rises.

Other cantons have a flat-rate tax, in which a fixed percentage is applied to the total value of the inherited estate. Tax rates and exemption amounts can vary significantly from canton to canton.

Discussion on Inheritance Lawyers

Impact on Estate Planning

Inheritance tax can have a significant impact on the transfer of assets. Particularly in the case of larger estates, the tax burden can be substantial and affect the heirs’ liquidity. Sometimes heirs are forced to sell assets in order to pay the tax. This can lead to the fragmentation of the family’s assets and disrupt long-term financial planning.

Family Gathering in the Garden

Tax Optimization and Planning

Given the potential tax burden posed by the estate tax, careful tax planning and optimization are important to minimize the financial impact on the heirs. There are various legal strategies that can be used to reduce inheritance tax.
These include, for example, lifetime gifts, taking advantage of tax exemptions and tax rates in different cantons, and utilizing tax optimization structures such as family foundations or holding companies.

Discussion on Inheritance Tax

Reforms and Discussions

Inheritance tax is a recurring topic of reform and debate in Switzerland. Some advocate for the harmonization of tax rates and exemptions at the federal level to create a uniform system. Others call for the complete abolition of inheritance tax to facilitate the transfer of wealth and the preservation of family businesses.

P.S.

Inheritance tax in Switzerland is a complex issue shaped by the varying regulations of the individual cantons. It can have a significant impact on the transfer of assets and the heirs’ liquidity. Careful tax planning and optimization are therefore of great importance in minimizing the financial consequences for the heirs. The debate over inheritance tax will continue in the future, as efforts to reform the tax system and make it more equitable are ongoing. In any case, it is advisable to address the tax implications of estate planning early on and, if necessary, seek professional advice to find the best possible solution for your individual situation.

July 21
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Tax Differences Among Switzerland's Cantons

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Tax Differences Among the Cantons of Switzerland

Brief description

Switzerland is known for its federal structure, which allows its 26 cantons to enjoy a considerable degree of autonomy in various areas, including taxation. This federal structure results in significant tax differences between the cantons, meaning that tax rates and regulations can vary depending on where you live.

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Income Tax

Income tax is one of the most important types of taxes in Switzerland. The cantons have the right to set their own tax brackets and rates. As a result, income tax rates can vary significantly from canton to canton. In general, some cantons with lower tax rates are more attractive to high-income residents or businesses.

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Wealth Tax

The wealth tax is another important type of tax in Switzerland and is based on the value of an individual’s or a company’s assets. The amount of the wealth tax can also vary significantly from canton to canton.

In some cantons, wealth may be taxed at a lower rate than in others, which can influence the decisions of individuals and businesses to establish their residence or conduct business in certain cantons.

Tax Differences Among Switzerland's Cantons. The Swiss Flag

Corporate Income Tax

For companies, corporate income tax is a key factor in choosing a location. The cantons have different rules for corporate taxation. Some cantons offer companies attractive tax rates and tax exemptions to attract investment and business activity. This can lead companies to relocate their headquarters or branches to specific cantons.

Panoramic view of Zurich

Tax Benefits and Incentives

To promote competition among the cantons, many cantons offer tax benefits and incentives to attract businesses and individuals. These may include, for example, tax exemptions for certain industries or investments, tax breaks for research and development activities, or grants for newly established businesses. It is therefore worth reviewing each canton’s specific tax incentives before making a decision.

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Tax Benefits and Incentives

Although lower tax rates in a canton may seem appealing, potential taxpayers should also consider other factors, such as the cost of living, infrastructure, educational institutions, and quality of life. A comprehensive analysis of the tax burden within its broader context can help individuals and businesses make the best choice regarding where to locate.

Please note that tax regulations and laws in Switzerland are subject to change; therefore, it is advisable to obtain up-to-date information from official sources or tax experts.

July 19
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Income Tax

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Income Tax in Switzerland

A comprehensive analysis

Switzerland is known not only for its breathtaking scenery and world-class chocolate, but also for its highly developed tax system. Income tax is a key component of this system and affects the lives of millions of people in the country.

In this blog post, we'll take a detailed look at income tax in Switzerland, how it works, how it's calculated, and its unique features.

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What is income tax in Switzerland?

Income tax is a direct tax levied on the income of individuals and legal entities (companies).
In Switzerland, income taxes are a key source of revenue for the government, with the proceeds used to fund public services, infrastructure, and social programs.

Curia of the Swiss Confederation

Tax Brackets and Rates:

Switzerland has a federal tax system, which means that taxation can vary from canton to canton. Each canton has its own tax rates and regulations that affect income tax. The federal tax is a common tax levied by the federal government, while the cantons and municipalities also levy their own taxes.

In Switzerland, income tax rates are typically progressive, meaning that higher incomes are subject to a higher tax rate. However, rates can vary significantly from canton to canton. Some cantons may also adopt a “flat tax” system, in which a uniform tax rate applies to all incomes.

Meeting between tax experts with an overview of statistics

Sources of Income

Income tax in Switzerland covers various sources of income, including:

  1. Earned income: This includes salaries, wages, bonuses, and other forms of compensation resulting from employment.
  2. Self-Employment Income: Income earned by self-employed individuals, freelancers, and entrepreneurs.
  3. Capital income: Income from capital gains, such as interest, dividends, or profits from the sale of securities or real estate.
  4. Pensions: Income from pensions, including old-age and disability pensions.
  5. Income from renting and leasing: Income derived from renting or leasing real estate.

Tax Benefits and Deductions:

Swiss tax law provides various benefits and deductions that allow taxpayers to reduce their tax burden. These include:

  1. Social Security Deductions: Contributions to AHV/IV (Old Age and Survivors' Insurance / Disability Insurance) and occupational pension plans may be deducted from taxable income in many cantons.
  2. Child Tax Credits: Taxpayers with children are eligible for child tax credits to reduce their tax burden.
  3. Education and Training Expenses: Certain education and training expenses may be claimed as deductions.
  4. Homeownership Deduction: Some cantons allow a deduction for mortgage interest and maintenance costs on owner-occupied residential property.

It is important to note that tax benefits and deductions may vary by canton, and it is worth checking the specific regulations in the canton where you live.

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Tax Assessment and Payment

In Switzerland, tax assessments are generally conducted annually. Taxpayers must file their tax returns, usually by March 31 of the following year. The tax return is a comprehensive statement of sources of income, expenses, and deductions that enables the authorities to calculate the tax liability.

Most taxpayers can file their taxes electronically, which simplifies and speeds up the process. Tax payments are typically made in several installments, although the exact deadlines and payment terms may vary from canton to canton.

Tax Consulting

Tax Consulting and Compliance

Swiss tax laws can be complex, especially when it comes to international tax situations or complex income structures. Therefore, it is advisable to seek professional tax advice to ensure that your tax return is accurate and complete and that you take advantage of all available tax benefits and deductions.

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Conclusion

Income tax in Switzerland is a complex issue that affects many aspects of the lives and finances of individuals and businesses. It is important to understand your tax obligations and options in order to optimize your tax burden while remaining in compliance with the law.

As one of the world’s most competitive economies, Switzerland offers a well-developed tax system with reasonable tax rates and a wide range of benefits for taxpayers. With the right planning and advice, you can minimize your tax burden and successfully shape your financial future in Switzerland.

Income Tax Open Folder
July 17
Real Estate Income Tax, Cover Image

Capital Gains Tax on Real Estate

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Capital Gains Tax on Real Estate in Switzerland

Everything You Need to Know About It

In Switzerland, the real estate market is a key component of the economy and a sought-after investment opportunity for many. If you already own a property or are considering investing in real estate, you need to familiarize yourself with the tax implications involved. One relevant tax in this context is the real estate gains tax. In this blog post, you’ll learn everything you need to know about this tax and how it works in Switzerland.

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What is the real estate gains tax?

Real estate gains tax, also known as property gains tax or real estate gains levy, is a tax on the profit realized from the sale of real estate. It is calculated based on the difference between the sale price and the original purchase price of the land or property. In Switzerland, this tax is levied by the cantons and municipalities, which means that the specific regulations may vary depending on the location.

Residential Building Complex

How is the real estate gains tax calculated?

Property gains tax is generally calculated by the relevant tax authorities of the canton or municipality where the property is located. The exact calculation methods may vary, but in general, the tax follows a progressive rate schedule, whereby the tax rate increases as the gain increases.
To determine the taxable gain, various costs associated with the sale and purchase of the property are taken into account. These include:

  1. Acquisition cost: The original purchase price of the land or real estate.
  2. Sale expenses: Costs incurred when selling the property, such as real estate agent fees and notary fees.
  3. Value-Adding Investments: The costs of renovations or upgrades that have increased the value of the property.

The profit is then calculated as the difference between the selling price and the total of these costs. Some cantons also grant certain exemptions or deductions to reduce the taxable profit.

Real Estate Statistics

Tax Exemptions and Exceptions:

In Switzerland, there are certain exceptions and tax exemptions related to real estate gains tax. For example, owner-occupied residential properties that have been owned by the seller for at least two years may be exempt from the tax. There may also be special rules in cases of inheritance or gifts.
It is important to familiarize yourself with the regulations in effect in your canton or municipality in order to take advantage of any potential tax benefits.

Deadlines and Tax Returns:

In general, sellers must file and pay property gains tax within a certain period after the sale. The deadlines may vary by canton, so it is advisable to find out about the relevant requirements in a timely manner to avoid late payment interest or penalties.
To calculate and file the tax return, all relevant documents—such as purchase and sale agreements, as well as receipts for investments and expenses—must be submitted.

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Conclusion

Real estate gains tax is an important factor that property owners and potential investors in Switzerland should take into account. It can have a significant impact on the profitability of a real estate transaction. Therefore, it is advisable to thoroughly research the applicable regulations in your canton before selling or buying and, if necessary, seek expert advice.
Keep in mind that tax laws and regulations in Switzerland are subject to change, so you should always stay up to date and make your decisions accordingly. By addressing capital gains tax early on, you can avoid potential surprises and financial burdens and plan your real estate investments optimally.

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Nov. 21
Deductions on a tax return.

Tips for Filing Your Tax Return

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Tips for Filing Your Tax Return

Tax Tips

Every year, many people find themselves reluctantly filling out their tax returns. With all the stress and confusion involved, it’s easy to overlook one or two opportunities to save on taxes. That’s why many people seek help with their tax returns.

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➔ Medical expenses
➔ Donations
➔ Income from securities
➔ Administrative costs and negative interest
➔ AHV contributions following early retirement
➔ Property maintenance
➔ Energy-saving measures
➔ Underutilization of primary residence/vacation homes

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Healthcare Costs

The vast majority of costs incurred due to accidents or the treatment of illnesses are covered by health insurance providers or other insurance companies. However, if the financial burden resulting from copayments exceeds two to five percent of net taxable income, the amount exceeding that threshold may be deducted on your tax return. The exact thresholds are set by the cantons and therefore vary from canton to canton.

Donations

Financial support for nonprofit institutions and organizations is also rewarded with tax relief. Amounts up to one-fifth of net income are tax-deductible. In some cantons, donations to political parties and labor unions are also taken into account.

Tax expert at work

Income from Securities

Income from dividends and interest on securities is generally taxable and must be reported on your tax return using your securities portfolio. Especially if you hold a large number of securities, it can be helpful for investors to have their bank prepare a tax statement—which is essentially a way to have this part of the tax return filled out for them.
In most cantons, the costs associated with this are deductible as asset management expenses and can be claimed as a tax deduction.

Asset Management Fees and Negative Interest Rates

If costs or fees are incurred for a securities account, a safe-deposit box, or a safe, these can be reported as asset management costs on your tax return. The same applies to collection fees for coupons and negative interest rates that are not listed in the statement of liabilities. In some cantons, up to 3 per mille of the value of your securities portfolio is considered an asset management cost.
However, fees for consulting services (e.g., having your tax return prepared) or fees related to the purchase and sale of investment securities are not deductible.

Tax Estimate

AHV Contributions After Early Retirement

The obligation to pay AHV contributions generally applies until age 65 for men and age 64 for women. Accordingly, even people who are not employed and early retirees continue to pay contributions as long as they fall within this age range. In these cases, you can report the contributions paid on your tax return and claim them as a deduction.

Property Maintenance

Property owners can claim a portion of the imputed rental value or rental income as a flat-rate deduction for maintenance costs on their tax return. In most cantons, there is an age limit of 10 years for buildings: 10 percent can be deducted for newer properties and 20 percent for all older ones. If the costs of renovations exceed the flat-rate deduction, it is worth claiming the actual amount as a deduction on your tax return instead of the flat-rate deduction. This also includes premiums for property and liability insurance.

Modern Residential Building

Energy-saving measures

Expenses for energy-saving investments are exempt from the requirement to preserve property value and may therefore be deducted even if they result in an increase in property value. These expenses may be claimed on your tax return for up to three years.

Underutilization of Primary Residences and Vacation Homes

Unused rooms or living space can be claimed as a deduction from the imputed rental value on your tax return. In some cantons, however, it’s important to note that the rooms in question must be unfurnished if you wish to claim this deduction on your tax return.
For vacation rentals, the percentage of the property that is rented out annually can also be deducted from the imputed rental value. In some cantons, the depreciation of the furnishings in your own rental property can also be claimed for tax purposes.

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Nov. 14
Bond Price Overview

Save on Taxes on Bonds

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Save on Taxes on Bonds

Filling Out a Tax Return

Filling out tax returns is bad enough on its own. The only silver lining: the deductions. If you need help filling out your tax return, I have a few tips here on how you, too, can get the most out of it. Alternatively, you can have your tax return filled out for you—I’d be happy to help.

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By selling fixed-rate securities at the right time, investors can realize tax-free gains. Interest on a bond is paid annually at a fixed rate. The bond is redeemed at the end of its term. Price fluctuations during the term depend on supply and demand: If the general interest rate level rises, the price of existing bonds falls, making them less attractive to new investors. Conversely, the price and demand rise as interest rates fall. It also stands to reason that the longer the remaining term, the more volatile the price trend will be.

Taxation of securities is based on the annual interest rate in effect at the time the bond’s interest becomes due. Therefore, if the security is sold at a profit shortly before, during, or after its term, the accrued market or pro-rata interest is not taxable. At the same time, it is not particularly advantageous to purchase new bonds shortly before the interest payment date. Knowing this allows you to maximize your profit.

Nov. 10

Tax Return – These Deductions Are Allowed

By FIN-Admin General No Comments

These deductions are allowed

Filling Out a Tax Return

Filling out tax returns is bad enough on its own. The only silver lining: the deductions. If you need help filling out your tax return, I have a few tips here on how you, too, can get the most out of it. Alternatively, you can have your tax return filled out for you—I’d be happy to help.

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➔ Support: Family
➔ Long-term care costs
➔ Commute
➔ Meals
➔ Dental costs
➔ Medical expenses
➔ Cost of living
➔ Pillar 3a
➔ Pillar 3b
➔ Week-long stay
➔ Education
➔ Childcare
➔ Premium Reduction
➔ Private school
➔ Job application costs
➔ Child deduction
➔ IT costs

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Support for Family Members

If you provide financial support to a family member and that family member is not required to repay the support, you may be eligible for the “support deduction,” which can be claimed from the federal government in most cantons—though not in all. This is only possible if the family member is of retirement age or older and in need of support. The recipient of the support does not have to pay taxes on the payments.

Long-Term Care Costs

Facts: A family member must move into a nursing home and is responsible for covering the uninsured costs themselves. In this case, it is possible to deduct the costs of actual care as medical expenses. If the daily care requirement is at least 60 minutes, the person is considered to have a disability. In this case, the care costs incurred are considered disability-related expenses. However, pure living expenses and care services provided free of charge are not deductible.

Care and support for seniors.

Commute to Work

Leasing payments for a car—even if it’s used for your daily commute to work—are not tax-deductible. From a strictly legal standpoint, a lease is essentially a rental-like arrangement, and after all, your rent isn’t tax-deductible either.

However, you can generally deduct the cost of public transportation, provided that it would not take you significantly longer to get to work by public transportation than by car. The cantons have different rules regarding the requirements that must be met.

Meals

Let's say you work 50 percent of the time. In this case, you may deduct meal expenses. If your work is spread over, for example, two full days, you can make a pro-rata deduction. However, if you work only in the morning or only in the afternoon, this is not possible.

However, if you are generally able to eat at home during your lunch break, you may not make this deduction. In that case, however, you may claim the additional travel expenses.

If your employer contributes to the cost of lunch, you may only claim the lower flat rate.

Lunch - Meals

Dental Costs

As long as no final tax assessment has been issued, you can still claim any overlooked expenses (such as costs for dental restoration) within the 30-day appeal period. Once this period has expired, however, you will no longer be able to do so. To prevent this from happening, you can have your tax return prepared; I’d be happy to assist you with that.

Healthcare Costs

In most cantons, the deductible for medical expense deductions is five percent of net income. If your medical expenses exceed this amount, you may claim a deduction; otherwise, you may not.

A young woman is sick in bed.

Cost of Living

Unfortunately, you cannot deduct moving expenses—such as those incurred because you have to move to another canton for a new job—since these are considered part of your general living expenses.

For the same reason, the wages paid to a privately employed housekeeper cannot be deducted either, even if both work 100 percent.

Pension Fund and Pillar 3a

If you have made a pension fund purchase, please be aware of the deadlines for claiming this deduction. The date of the purchase—not the date of payment—is what counts. Be especially careful to act within the deadline, as you may otherwise forfeit this deduction. If you have me prepare your tax return, there is no such risk, as I have many years of experience in this area.

If one spouse has received an early withdrawal from their pension fund for any reason, this does not affect the other spouse. The other spouse may make a catch-up contribution to the pension fund and then benefit from the full income tax deduction.

If your unemployment benefits expired two years ago but you still made contributions to Pillar 3a last year, you can only claim the amount if you have an income. Instead, you must request a refund of the contribution from your pension fund. A document from the tax office is required for this. You will receive this when you claim the deduction on your tax return.

Withdrawals from a Pillar 3a account or a pension fund are subject to taxation. The information sheet “Taxation of Withdrawals from Pillar 2 and Pillar 3a” provides an overview of the tax rates at the federal level and in the various cantons. The information sheet “Calculation Examples” lists the specific tax amounts for each canton.

A young woman during a meeting.

Pillar 3b Insurance Premiums

You can claim life insurance premiums only as part of the general insurance deduction. However, this deduction is usually already fully utilized for health insurance premiums.

Weekly Stays

Suppose you were working in the canton of St. Gallen until the end of July of last year. After that, you moved to Basel and have been living there as a weekend resident ever since. You cannot claim deductions for your lodging and meals on weekends, as these are not directly related to your income. All deductions must be work-related out-of-pocket expenses. Since you earned no income after the end of July, you cannot claim any expenses for that period.

If your child is a weekly resident, that child must also claim the additional costs for travel and rent on their tax return—even if the parents cover these costs. Parents can only claim the child tax credit; nothing else.

A commuter working on the train.

Education

Since 2016, it has been possible to claim a tax deduction for educational expenses. Prior to that, these expenses were considered occupational expenses. Now you can claim a deduction for all educational or continuing education programs, as well as expenses for any retraining. However, initial education is excluded from this provision. The maximum tax deduction for federal taxes is 12,000 Swiss francs per year, although it is up to the cantons to set their own maximum amounts.

Child Care

If your parents look after your children on specific days each week and you wish to reimburse them for this in an amount equal to the child care deduction, you may deduct these costs from your income. However, it is important that you include a breakdown of the costs along with payment receipts. Your parents must then report the compensation they receive as taxable income. This is by no means a gift, since you are clearly receiving something in return in the form of childcare.

Childcare at a daycare center, nursery, or preschool.

Premium Reduction

A premium reduction is now forwarded directly to the health insurance company. Previously, you could only deduct the amount you had paid yourself anyway. So you must have this premium reduction credited to your account.

Private School

As a general rule, the costs of your child’s private school cannot be deducted. This is only possible in cases where attendance at a private school is based on a recommendation from a school psychologist. In such cases, the costs are then deducted as disability-related expenses.

Application Costs

If you are currently unemployed, you can deduct the costs of postage, copies, photos, and application portfolios, as these qualify as business expenses. However, if the tax office asks you for details, you should be able to provide documentation for all of these costs.

A young woman at a job interview.

Child Deduction

If your child has completed an apprenticeship during the current calendar year and you have been responsible for the child’s support up to that point, you cannot claim the child deduction on a pro-rata basis. The so-called “cut-off date” rule applies here. This means that only the situation on the cut-off date—December 31—is decisive. If the child is no longer in an apprenticeship on that date, no child tax deduction can be claimed.

You can also contact me at any time to have your tax return prepared.

IT Costs

If you regularly work from home, you cannot deduct the resulting expenses for electricity, cell phone service, and your computer, since your company generally provides you with a workspace at the office and merely grants you the option to work from home.

This also applies to the work-from-home periods mandated by the Federal Council in response to the COVID-19 pandemic. In this case as well, you are not entitled to compensation for any additional costs incurred as a result of working from home.

Freelancer on a Video Call - Technical Equipment
Nov. 02
Handcuffs and a judge's gavel. Tax evasion verdict

Consequences of Tax Evasion

By FIN-Admin General No Comments

Consequences of Tax Evasion

Tax Law

These are the consequences

Providing false information or concealing assets from the financial and tax authorities is considered tax evasion and may result in back taxes and penalty taxes.

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Young Tax Lawyer

Interest on late payments and additional claims from the Old Age and Survivors’ Insurance (AHV) can be assessed retroactively for up to ten years. If the taxpayer does not voluntarily report the matter to the authorities or the police, the fine can be up to three times the amount of the additional tax. However, by voluntarily reporting the matter and demonstrating a willingness to cooperate, the fine can be reduced to up to one-fifth of the actual additional tax.

In addition to tax evasion, tax fraud is punished even more severely and can in some cases result in prison sentences. Tax fraud occurs when a person attempts to avoid paying taxes and deceive the tax authorities by forging or tampering with documents or records. As a result, funds—or tax revenue—are knowingly withheld from the government and, consequently, from the public and society. Therefore, fraudulently obtaining a favorable tax return is by no means a trivial offense.

Young Tax Lawyer