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Old 09.02.2016, 14:06
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Consulting contract outside Switzerland (tax issues)

Hi all,

I've tried to find some information on the forum but failed. My obvious keywords gave dozens of irrelevant results.

During my previous job, I developed a software that was sold to a company in Canada. That company now owns the IP rights for the software and the actual source code.

I am currently employed in Zürich (B permit) and I'm being taxed at source (fixed monthly salary). The said company has contacted me to develop some extensions and fix some bugs in the code. They will provide a list of bugs and features, we will agree on a price and deadline, and upon completion they will pay me the money.

My previous company has replied in writing that they have no demands on money etc. (since nobody there can do the job anyway). My current company has no problem in me doing this as long as I don't use company equipment, my work is not affected, and I don't use the company name in any way.

My assumption is that I'll make a declaration of this money at the end of the year and they will recompute my tax and contributions based on the revised income and I'll pay the difference. For instance, I am now paid X/month, so Income=12*X+Contract. Is this correct? Will I get taxed on the lumped money for the year, or just on the month I get the money?

Do I have to charge VAT for these services? The company told me they usually pay the VAT on their side in Canada. Any hints I need to keep in mind so as not to get in trouble?

As soon as I receive the contract I will of course visit a lawyer (and hope he doesn't charge me half the amount I get ). However, I would like a first view to see if it's worth the trouble.

Thanks in advance!
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Old 09.02.2016, 14:24
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Re: Consulting contract outside Switzerland (tax issues)

I work through my own GmbH for a client head-quartered in the UK. I do not add VAT to their invoice. When I complete my VAT return, the foreign earnings are, however, reported. If your turnover is less than 100K, then you won't need to worry about VAT at all.

I'm no expert, but it seems to me that you'll work for the Canadian company as self-employed, and that the you'll just have to request a tax return from the authorities in order to be able to declare your additional earnings. If your earnings take you over 120K in total, you'll have to do that anyway. Then you'll receive a bill for the tax due. You'll pay the tax probably about twice a year - after it's all set up and running, they may ask for payment of tax on account midway through the year based on what you earned last year.
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Old 09.02.2016, 14:37
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Re: Consulting contract outside Switzerland (tax issues)

As stated by NotAllThere, VAT need not be charged since you apparently will be billing a company in Canada and your annual revenues will apparently be less than CHF 100'000.

An ordinary income tax filing should be made for a side-job (Nebenerwerb) for a B permit holder who is normally subject to Quellensteuer. The income tax rate for Zurich should be 10%:

"Quellensteuerpflichtige Personen mit steuerrechtlichem Wohnsitz in der Schweiz bzw. im Kanton Zürich werden für ihr Einkommen, das dem Steuerabzug an der Quelle nicht unterworfen ist (z.B. Einkünfte aus selbstständigem Nebenerwerb, Renten, Erträge aus beweglichem und unbeweglichem Vermögen im In- und Ausland, Unterhaltsbeiträge usw.), sowie für ihr Vermögen im ordentlichen Verfahren veranlagt."

See question 12 at this link:
https://www.steueramt.zh.ch/dam/fina...t_qst11_de.pdf

Gruenden.ch is informative regarding setting up a business in Switzerland. The website is in German but most of it has been translated into English:

http://www.gruenden.ch/en/faqs/self-employment/
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Old 09.02.2016, 14:57
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Re: Consulting contract outside Switzerland (tax issues)

If you don't have permission to be part time self employed you can't pay tax! The tax office will want to see the permission. Min AHV payment is 475CHF
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Old 09.02.2016, 17:10
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Re: Consulting contract outside Switzerland (tax issues)

Hi, thanks for the info.

@NotAllThere My current salary is gross at around 86k. The extra income will be 10-20k (not sure yet). So, in any case no more than 120k.

@Mullhollander Besides the 10% tax I should pay, will they recompute my social security contributions (pension, etc.)?

@fatmanfilms At my current company I work at 100%. Should I ask them to give an official permission to do part-time work? My boss told me "sure, no problem", however, as you say I should get a more official permission?
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Old 09.02.2016, 17:53
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Re: Consulting contract outside Switzerland (tax issues)

Quote:
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Hi, thanks for the info.
@Mullhollander Besides the 10% tax I should pay, will they recompute my social security contributions (pension, etc.)?
You need to contact an SVA Ausgleichskasse to receive permission to work independently. Generally, you will estimate your income and the SVA will bill you quarterly for AHV. If the expected annual earnings are less than CHF 2'300 from this secondary activity, AHV is not due.

"Sozialversicherungsabgaben und Steuern

Da Sie mit Ihrer zweiten Tätigkeit als selbständig erwerbstätig gelten, sind Sie verpflichtet, direkt auf diesem Einkommensteil Sozialversicherungsabgaben abzurechnen. Sie können das entsprechende Anmeldeformular bei der SVA bestellen oder online herunterladen. Im Nebenerwerb erzielte Einkünfte bis zu CHF 2'300 pro Jahr sind nicht AHV-beitragspflichtig (AHV / IV / EO). Sofern Sie ein Einzelunternehmen führen, benötigen Sie von der SVA gleich zu Beginn eine Anerkennung der Selbständigkeit. "

http://www.gruenden.ch/gruendungseta...m-nebenerwerb/
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