Filing your tax form.
Come 'tax time', most of us desperately search through piles of papers, looking for the necessary documents. If this sounds like you, we recommend arming yourself early in the year with an A4 file that has alphabetical dividers. Well-organised records make it simpler to complete the tax form, ensure that deductions are not missed, and may thus reduce your tax bill.
The tax form
The tax form arrives around February, with a period of 30 days to submit your information (an extension of the deadline may be possible). We recommend using the electronic version of the tax form, which can be ordered on a CD or downloaded from your Cantonal website. If a taxpayer fails to file a tax return, the tax due will be estimated and invoiced by the authorities. If this happens, the taxpayer automatically relinquishes the right to challenge the final amount.
A simple way of understanding the tax form is to divide it into two parts: income and wealth. Both parts have earnings and deductions, and are taxable. Most documents for tax purposes arrive in January. However, if you own shares or bonds, the dividends are paid throughout the year. Banks will send you receipts following the dividend payout, which should be filed. If you have a particularly complicated portfolio, the bank can provide a summary on 31st December, which details dividends and your account balance. Discuss this with your bank, as charges may be applicable.
Your salary statement for the previous year is usually provided by your employer in January. You are also required to provide details of other income, including that of your spouse or any part-time work. Details of income earned outside Switzerland, investment dividends, alimony, undistributed inheritance, capital payments from pension funds and lottery profits should be included. Imputed rental income is a Cantonal estimate of how much rent a homeowner would have to pay for the house or apartment they live in. If you cannot find this document, ask at your municipal office.
The following deductions are permitted upon receipt of proof, although some upper limits apply:
Mortgage interest and loans, employment expenses, home office, further education, pillar 2 (additional contributions to corporate pension plans), pillar 3a (contributions to personal pension accounts or insurance plans), health insurance premiums, alimony, dependents and child support, charitable contributions and property maintenance.
Swiss wealth tax is levied on the value of an individual's worldly assets (minus the value of any debts) at Cantonal and local levels. A taxpayer's assets and interests that have a cash and market value should be declared. These include life insurance, bank account statements (included with the income statements), cars or boats, other assets (jewellery, paintings etc.), loan balance statements, and undistributed inheritance. Wealth tax is charged on net wealth (gross wealth, reduced by the outstanding debt). Personal allowances and unpaid tax also make up part of the outstanding debt.
If you decide to use the services of an accountant or financial advisor, we recommend you agree a flat fee and deliver all your documents in one go.
Brien Donnellon is the owner of KEY INVESTMENT, a financial services company providing unbiased financial advice and solutions for Swiss-based expatriates, HR departments and foreign investors. The company, formed in 1997, is authorised and regulated by the Swiss Federal Banking Commission.
For further information:
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