hi,

I am using the calculator at http://www.estv.admin.ch/e/dienstlei...rechner/vd.htm

to work out my likely deductions for tax, and in the field marked "Pension fund contribution" the help button says these are "contributions you have made to the second pillar."

I haven't quite got the hang of these yet, are they talking about the contributions I make to my company pension fund?

Thanks

Yes - Works pension = BVG = Pillar 2

FYI:
Pillar 1 = state pension = AHV(ALS in French?)
Pillar 3 = What UBS call "Fisca", voluntary

Thanks for that am finally getting th hang of this now,

although am still shocked by the difference the 2 calculators I have been using bring up as results!

I guess the credit-suisse one is very much more rough and ready and doesn't take into account the various allowances you have

The estv link is for the full tax return thingy.

Unless you have a C permit or are married to a Swiss person you pay source (or direct) tax "Quellensteuer"

This calculator will give you estimate for this kind of taxation
http://212.90.216.117/revenueestimate/mainForm.jsp

Aimed at contractors, but it works well...

Is it really that simple? I sat through a presentation on my works "welcome day" that had us building a model house that was supposed to represent the pension system, and also listened to some spiel from my Relationship Manager at my bank. I remained unenlightened after both.

Why can't finance types explain things in plain language?

More or less!
Pillars:
1 is 5.05% (x2) of salary to 8900 and 1% above that
2 is company specific but with a sliding scale minimum and maximum
3 is maximum 6365 and voluntary

For pillar 2 if you are below the maximum permitted for your age you can annually top it up which is tax efficient ie deductable.

I guess your house was also taking into account IV gap which is something else.

While this is generally true it is not correct. Homeowners and anyone who elects to be taxed not at source as well.

Thanks for all that, although I am being to think the only way I will know what my take home pay is going to be is to wait for my first pay packet!
Which isn't a wonderful plan as I really need to get a fairly accurate idea before I rent out my house in Finland so I know how much leaway I have on the rent I charge

I guess I should be happy that however it is calculated the tax will be significantly less of a burden than it is here in Finland Where my current BASE rate is 36% and my total stoppages is just under 50%

Can anyone give me a link to an English guide to pensions (pillars etc) in Zürich from both the employee's and employer's point of view ? I'm trying to do a comparison of total costs employee vs self-employed...

Thanks
David

I am EU B (5 year) & my wife is on a C, when we married, I stopped paying Quellensteuer & moved onto the traditional Swiss tax model, this happened automatically ... just some more info for the databanks ....

Hi Dave,

No I cannot but if you ask specific questions I will provide you some specific answers. I think the key to answering the question for yourself is to understand that the comparison costs of employee vs self employed is easily answer by adding ca 30% to your costs. This should cover all the self-employed additional costs. ie AHV, BVG, ALV, IV, etc.

Richard

Hi Richard,
I have understood that to be the case as well, but when I asked my employer, they tell me that despite being a home owner, over the 120k and doing a yearly tax return, I still need to pay quellensteuer. Anything I can show them to further discuss this?
Thanks!

Thanks Richard,

I'll try and frame the question in a more specific way. I am trying to established whether working for a company gives one something that being self-employed doesn't (in terms of pension benefits, tax efficiency or flexibility) in order to justify the overall costs (total of employee and employer) self-employed vs own employee.

I'm not after a complete analysis (without paying for it !), just a pointer would be helpful..

Here are a couple of useful links concerning employer and employee deductions :
http://www.svazurich.ch/text/index.c...007&sprache=en
http://www.svazurich.ch/text/index.c...ehm&sprache=en

Thanks
dave

Go to the local Gemeinde and ask for confirmation that you no longer fall under quellensteuer. Ultimately it is the responsibility of the Gemeinde to provide the letter you take to your employer to demonstrate this. Usually this is a C permit but not always. Anything else you actually need to ask for...

Okay Dave,

first off you need to understand that there are several ways that you can become "self-employed" although in reality there is only one. Contradiction? Read on.

To be self employed you need to go to the Gemeinde and fill in the AHV self-employed form. At this point you are self-employed and you can (indeed usually must) register your business in the company register. Then you can send out invoices etc. You are freed of the necessity to pay unemployment insurance and can elect to have no pension in which case your income increases substantially along with your tax bill. You can offset many things against your tax though such as part of your accommodation costs to cover a work place at home, your car costs, your computer, telephone etc. But at the end of the day it is still not very tax efficient. An improvement okay but it can be better.
Your ability to accumulate reserves is the major stumbling block and that you are taxed annually on total income with various opportunities missed.

This is the reason many self-employed people want to form their own GmbH. You are then employed but you yourself, within the restrictions imposed by law, determine what you spend the company income on. The key is to understand that your employment costs remain more or less the same as if you were "self-employed" ie AHV, tax etc but now only on your personal income. You do now have to pay ALV 2% but of your income not the company's.

So you could say bill at 150 per hour giving you ca 300K per year total income. You pay yourself 10K per month and this leaves ca 150K per annum. From the 150K you can run a company car usable by all company employees (ie you) save for next year, deduct for all things imaginable and whatever is left you can pay yourself as winnings - subject to tax but not everything else. Furthermore you are able to pay into a pension fund 2nd pillar up to the legal maximum and additionally have a 3rd pillar. You can send yourself on training courses at will and not just specific to your current occupation without needing to demonstrate their relevance. And all this because you are working for a business and not for yourself. The fact that you are the sole owner of the business is more or less irrelevant as legally it is its own person.

Downsides are the necessity to have your books audited but then again if you earn enough you will need to do this as a sole trader as well. You also have the currently ca 13K you need to invest to set it up - A lot of this can be done by pledging your car to the company if you own one. The final downside is the requirement to formally wind up the company once you are finished with it which is a bind but hey you cannot have everything...

Put simply you are much more flexible in what you can do with a GmbH in terms of optimising your tax bill and covering your existence going forward.

Richard,

Many thanks for that excellent and detailed answer. I suspected that there must be some major gains in the company route, and seperation of company revenue from personal income was it.

Many thanks

dave