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Old 23.10.2015, 17:18
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Relocation allowance question

Hi everyone,

I am addressing this topic to any legal / tax advisors here
I have recently started my job with a Swiss based company and within my employment contract I am granted a relocation allowance which according to the contract language I can use within a period of 12 months upon showing an invoice.
Now my HR has informed me that due to Swiss Tax Laws they need to break that relocation allowance into several parts and add that to my monthly salary, making it tax deductible and even with a higher margin than normally.
When I challenged this, HR justified that it is not "correct" what they initially put in my contract as it is not in line with the Swiss Law thus they will go down this path.
My question is what can I do now since the whole agreement in the first place was to present the invoices in order to not pay the additional tax but if I would have known of this type of issue I would have asked for a higher allowance?
Just to clarify I do not want to commit any tax fraud and I will comply with local laws but from my point of view the employer should carry this burden as it is their mistake, shouldn't they? If so, what can I do now?

Cheers,
Eddykalex
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Old 23.10.2015, 17:37
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Re: Relocation allowance question

Been there this year - the allowance we got was fully taxed as income, not reimbursed as expenses even though we had more than enough bills... (as the employer of my wive did not even cover the full cost of the move.). Had some heated discussion with a thick headed HR person - without any useful outcome.

So I cannot give you any good tip what to do, but I can confirm that this seems to be the way it's done in CH right now. Had we known it before would we have requested a higher allowance as well.
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Old 23.10.2015, 18:12
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Re: Relocation allowance question

So if I want to re-discuss the allowance now would that be with me manager or HR?
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Old 23.10.2015, 18:42
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Re: Relocation allowance question

For a re-negotiation I would start with your manager but they may need to discuss with HR to be compliant with the policies of the company.
In Switzerland, most relocation support is considered a taxable benefit unless the company has a deal negotiated with the tax authorities for some level of relo costs.
Some companies deliver the amount with a gross-up for taxes but that still impacts your overall tax rate.
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Old 23.10.2015, 19:30
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Re: Relocation allowance question

? is it tax deductible for them or for you ?

If it is for you, it sounds like they are trying to help you.

If it is for them, then you have something to negotiate on, since according to your contract you could present the invoice and expect immediate payment. If they want something else, they need to offer you something in return.
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Old 23.10.2015, 19:42
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Re: Relocation allowance question

It's a bit tricky -> it is deductible for them if business related. Invoices delivered by you may or may not be accepted by the tax authorities.
If they pay it through payroll, definitely tax deductible for them.

On your side, it is taxable income either way. If they give you money against the invoices or if they pay it through payroll, it should be reported as taxable benefit = income. (again, unless there is a special deal with local tax authorities that allow some amount paid to you tax free)
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Old 23.10.2015, 19:42
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Re: Relocation allowance question

Some companies pay suppliers directly (for example the moving company) and therefore the "allowance" is reduced.


Taxes are handled on a cantonal level, so it really does vary by canton.
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Old 24.10.2015, 11:38
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Re: Relocation allowance question

I was thinking about the same thing. What if the employer picks up the invoice instead of me? Or is that also seen as employee benefit?
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Old 22.11.2015, 23:47
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Re: Relocation allowance question

Are you eligible for the 1500 per month special expat deduction for tax purposes in your first year? This is designed to mitigate the costs of moving for work.
Ask your HR if this is agreed with the Tax office (alternatively you can claim it yourself if you make 120k+ per annum or 250k in Geneva).
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Old 23.11.2015, 15:52
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Re: Relocation allowance question

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Are you eligible for the 1500 per month special expat deduction for tax purposes in your first year? This is designed to mitigate the costs of moving for work.
Ask your HR if this is agreed with the Tax office (alternatively you can claim it yourself if you make 120k+ per annum or 250k in Geneva).
Thanks for this Magyir.
Very interesting Information.

Do you have anything more on this Topic?
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