Dear all,

I have pretty much read every post from the last few weeks and done a lot of research. I am still slightly confused by taxes. I have summarized my understanding below, but am a bit in disbelief about the result (everybody keeps telling me taxes should be in the 10-20% range in Switzerland, but I am not seeing that). If some experienced folks could comment on whether my calcs are correct, I would highly appreciate it.

A sticky reads the following:

" As an ex-pat you will pay Quellensteuer, which means tax at source. Your tax will come straight out of your monthly salary and is made up of Kantonal tax (e.g. Zurich) and Gemeinde tax (e.g. Thalwil.)Roughly speaking the amount of tax you will pay will be between 10-15% of your earnings."

Now, I have used various tax calculators and they all show a federal tax in addition to these two. And the total of the 3 is nowhere close to 15%.

Take a hypothetical case of 200k income in Lausanne, 0 wealth, no children, single, no church affiliation. the three taxes combined come to 33%? Can that be right? On top of that 5% AVS, 1% unemployment (and a bunch of other things that vary depending on one's contract: e.g. health, 2nd and 3rd pillar pension etc.)

Is the tax rate so high because the income number is high? or Lausanne is expensive? Where do the notions of 10-20% tax come from?

Thank you in advance.

P.s. calculator used for above:
http://www.homegate.ch/homegate/fina...ault&a=default

Canton VD is quit spendy. and yes the more you make the more you pay....
mine was 15 for 5k monthly to give you an idea

As soon as you go over 120k it moves into the next tax bracket.

Why hypothetical, 200k income, zero wealth, no children, single and no church affiliation ?

If you want to know why you're paying so much tax we will need some details in order to help you.

Assuming you do earn 200k and your situation is as described, this sounds about right.

Tax is dependant on the commune, the canton and the federation

The example mentioned is in Kanton Zurich, gemeinde Thalwil, a relatively low tax area. In a number of the German speaking kantons the rates tend to be lower. However, the 10 - 15% is a the lower end of the range. The French speaking parts, especially Geneva and Lausanne tend to be higher taxed.

Your comment on federal tax is correct. On top of the Kantonal and Gemeinde steuer you pay federal tax (bundessteuer).

Hey H_M

I can't speak for that canton / income combination, but I can tell you that it varies widely based on where you're at. For example, total deductions from a 100k annual paycheck in Zug should be somewhere around 15%, but in the area of 21% in Zürich (again, no kids / wife / etc). In some cantons (such as Zürich) there's a different tax bracket every couple of thousand bucks, so your rate will vary.

I've found the comparis caclulator to be pretty good in the past.

http://en.comparis.ch/steuern/quelle...r/default.aspx

Cheers
Lance

There is also a federal tax calculator (maybe more accurate). But VD has high cantonal taxes, you can lower the tax if you live in the communes that have low local rates.

You can have full information from Canton Vaud tax administration. They have online documents and calculators that will give you accurate estimates. For the tax rate in VD check followin site (in french). You need also to know the tax rate of your commune (which is a % of cantonal taxrate, like 85% or 90% of cantonal rate).

Some tips to reduce tax:
- salaries above 120kchf may ask for normal tax procedure. So you may file a normal tax declaration and pay little less (transport costs, lunch costs at work, etc....).
- 3rd pillar and payment into 2nd pillar are very interesting taxwise if you can afford it.

PS: a good document from federal administration regarding "Quellensteuer" "impot à la source".

Cost of living - help needed to get it right

This thread has a lot of info and useful links.....

no, that can't be right. I just did the same calculation using the tax calculator on www.kantonalbanken.ch (sorry, there's no English version available). That gives me a total tax of CHF 33K with an annual income of 200K in Lausanne - so roughly 16% of your gross income.

Eingaben:
Zivilstand: Allein stehend ohne Kind
Konfession: Andere
Wohngemeinde: Lausanne VD

Bruttoeinkommen/Jahr: 200'000 CHF
Bruttoeinkommen/Jahr Ehepartner/in: 0 CHF
Übrige Einkommen/Jahr: 0 CHF
Abzüge für Säule 3a/Jahr: 6'000 CHF
Vermögen: 0 CHF

Wohngemeinde: Lausanne VD
Die Einkommenssteuern für die Wohngemeinde Lausanne VD betragen 33'824 CHF und setzen sich wie folgt zusammen:
Einkommenssteuer Bund: 5'446 CHF
Einkommenssteuer Kanton: 18'334 CHF
Einkommenssteuer Gemeinde: 10'044 CHF
Einkommenssteuer Kirche: 0 CHF

Ihr Grenzsteuersatz beträgt 38,1 %. Ihr steuerbares Mehreinkommen wird mit 38,1 %belastet. Ist Ihr steuerbares Einkommen tiefer, dann bezahlen Sie auf die Differenz 38,1 % weniger Steuern.

If you moved to Wollerau in Schwyz instead of Lausanne you would pay around 20K less than in Lausanne - only 13K per year.

Eingaben:
Zivilstand: Allein stehend ohne Kind
Konfession: Andere
Wohngemeinde: Wollerau SZ

Bruttoeinkommen/Jahr: 200'000 CHF
Bruttoeinkommen/Jahr Ehepartner/in: 0 CHF
Übrige Einkommen/Jahr: 0 CHF
Abzüge für Säule 3a/Jahr: 6'000 CHF
Vermögen: 0 CHF

Wohngemeinde: Wollerau SZ
Die Einkommenssteuern für die Wohngemeinde Wollerau SZ betragen 13'762 CHF und setzen sich wie folgt zusammen:
Einkommenssteuer Bund: 5'446 CHF
Einkommenssteuer Kanton: 4'940 CHF
Einkommenssteuer Gemeinde: 3'376 CHF
Einkommenssteuer Kirche: 0 CHF

Ihr Grenzsteuersatz beträgt 16,7 %. Ihr steuerbares Mehreinkommen wird mit 16,7 %belastet. Ist Ihr steuerbares Einkommen tiefer, dann bezahlen Sie auf die Differenz 16,7 % weniger Steuern.

Hi H_M - funny that you should post this (and late last night) as I was lyign in bed thinking I must write the same post...

I'm afraid that you have become aware of a phenomenon called "Swiss ex-pats co-conspire with the Swiss to pretend that Swiss tax rates are low".

I also have spent the last few weeks reading nearly the whole forum, and its full of posts from people who consistently understate the actual (headline) income tax levels.

Like you, I was mightily confused about the gap between the sentiment and examples presented here, and the reality from my own research.

(btw - note the use of the word "headline" above. Every tax system has the ability to make all sorts of deductions in order to lower the income level that you pay tax on, e.g. the mortgage interest paid. From what I can see, such deductions are not too different in CH from other countries that I know about, so its better to stick to comparing the headline tax rates without deductions).

Correct - if you use the Comparis website (which gives you federal, canton and gemeinde taxes) for 200k in Lausanne and the other parameters you give above, the tax is 66,582, which is 33%. And indeed on top of this you pay your Pillar 1 (4.9%) and a compulsory Pillar 2 (which varies but lets say 6%). Pillar 2 you don't have access to until you retire (unless you move out of the EU/Swiss) so as far as I'm concerned its a tax. Anyone who believes governments will not tax the hell out of any captive money in order to cover future deficits (think about the age distribution changes!) is totally deluded - 20-30 years from now the rules of the game will be wildly different. Anyway, I digress.

So your 33% becomes 38% including Pillar 1, and around 45% including Pillar 2. And still, the people responding to you in this thread will (and have) responded that you must be wrong, you must be wrong, you must be wrong. And generally if they do quote numbers, they indeed forget to add e.g. federal tax. And certainly they never add Pillar 1...

Maybe both of us, after all our research, really have not understood it. However adding the Comparis-calculated tax (after checking that it includes all three tax elements) to pillar 1 (and if you like, pillar 2), its hard to see where we could have come up with such a different conclusion...

[QUOTE=H_M;912557]Is the tax rate so high because the income number is high? or Lausanne is expensive? Where do the notions of 10-20% tax come from?[QUOTE=H_M;912557]

Lausanne has higher taxes than other parts of Switzerland, but in general I'm afraid that the tax rates are in fact much higher here than you may be led to believe. Why the delusional mob continues to try to lead you to believe that they are lower, I'm not sure yet.

p.s. I will add some more calculations in a minute, where I compare the extremely "high-tax" Netherlands vs the extremely "low-tax" Switzerland. Oddly enough, there isn't all that much difference between them... which doesn't make me very happy as I'm intending to make the move and I had been conned into thinking that there would be a big drop in tax paid.

I did a shed load of research on this and the most accurate calculator for pure tax (no social contributions) that I have found is an official one.

Having just submitted my first assessment & got a refund for Quellensteuer (in Kanton Schaffhausen), I can tell you that this calculator was within a percent or two.

It currently only has the 2008/2009 rates, but that should give you a very good idea. Choose the canton and the year from this starter page:
http://www.estv2.admin.ch/d/dienstle...uerrechner.htm

The one thing that can affect the outcome is which commune/gemeinde in which you live in. Lausanne is currently 83% for the commune tax (you can look up the 2010 rate for your Gemeinde on the Kanton website). So plug 83% into the calculator (Gemeindesteuer field).

The calculation for Lausanne currently comes out at 58K per year (29%). Plus social & pension.

Another source which adds credibility to this is the 2010 Quellensteuer scale at http://www.vd.ch/fileadmin/user_uplo...if_AB_2010.pdf. This shows you what must be deducted at source from each salary scale. The class relates to your situation - being single with no kids puts you in class A.

For 200K, your employer should be deducting about 25% per year. But bear in mind that Quellensteuer is calculated based on the average rate for the canton, so you may end up paying more or getting a refund after submitting a tax return. For example, I got a refund as I live in the cheapest gemeine and paid the average/too much Quellensteur.

FWIW, if I earnt 200K in SH, I would be paying about 24% tax according to the calc and 23% in Zurich, so with Lausanne being a higher taxed location, it makes sense.

Hope that helps somewhat...

Apologies - my somewhat broad-brush statements in my post above inadvertently included you...

But leaving out "social contributions" is not very helpful - they are taxes (involuntary payments to the state) and are obviously also charged in other countries. However in other countries they often wrap these up in the general tax rate rather than splitting them out - so to make comparisons we need the total, not just a part of the taxes. On the basis of a pared-down definition of what is tax in Switzerland, it is no wonder that this country comes up as a tax haven in so many surveys...

Just to add one data point to your calculations - I just checked my most recent tax filing that was prepared by my tax advisor. Based on her calculations, my total tax burden will be around 16% of my gross (before AHV deductions, etc.) salary for 2009. That is on an income which is slightly lower than 200K, maybe the number would go up to 19% or so if I had paid myself a higher salary (I'm employed in my own company). I live in Zurich, which is probably around average compared to other cantons. If you add 5% AHV and 2% other stuff, you end up at around 25% which in my experience is right in most years.

What you must not forget when doing your comparisons is that you can make many deductions from your gross salary. For me, the difference between gross salary and taxable income is 20%, but that's only standard stuff - no kids, no house, etc.

Agreed but social taxes and the 2nd pillar are a well-known element - a set percentage on a set portion of your income. Taxes are the variable element depending on where you live and the hardest to figure out, hence why I think this question was asked.

The site I referenced shows the social taxes you must pay but doesn't include them in the calculation.

FWIW, for me, the compulsory deductions required to live in CH (social taxes, pillar 2 & medical insurance) added about 10% on top of tax. So in CH, I pay ~30% of my income to match the equivalent necessary in the UK (i.e. tax & NI). which was ~35% of my income.

That works out at about 5% more money in my pocket compared to the UK. It's really hard to compare because that bottom line doesn't tell the whole story.

I reckon I am doing a bit better by living in Switzerland, but as you say, it's not the 'tax haven' it's made out to be for most. If you're earning a shed load or got a lot of investments making capital returns, then perhaps it compares extremely well to the UK, but I wouldn't know!

I am slightly better off here financially, but the biggest benefit to me is quality of life and the reason why we moved

I would like to put together some less-discursive info for people thinking about coming here with a real-life example of deductions - when I've got time!

Regards...

Ok, here is my comparison of taxes in Zurich vs Amsterdam. Its a bit lengthy so grab a comfy seat and a hot drink .

I lived in Amsterdam for a long time and ran my own business (with staff) there so I have a pretty good idea of the tax system. Clearly the taxes in the Netherlands are high - right? So when I move to Zurich (as I have been working on) I expect to pay much lower taxes - right? Well, lets see.

Lets take the OP situation (single, no kids, etc) but modify it a little:

• I'm going to take a company that has 200k CHF that it wishes to use to pay a member of staff for a years work. NOTE: This is NOT the salary, see below.
• Using the current fx rate (1.345 CHF/Euro) this is 148,700 Euro.
• I'm using Zurich here, the most common destination (and neither the highest nor lowest taxes in CH).

Important: I am going to do the calculations right from the company, and not just focus on salary. The company has to pay all sorts of employment-related taxes before it pays you salary, and to exclude these is ignoring a large part of the actual taxes. After all, money can only be paid out once - to you or the taxman.

In the Netherlands, we get to the final salary as follows:

• The employer has to pay approx 10% of salary in employer-related taxes. So the actual salary that the employee is able to receive from the 148,700 Euro is 135,181 Euro.
• If we then plug this salary into any standard tax calculator we end up with taxes of 65,728 Euro (this includes social contributions).
• So, the taxes amount to 65,728/135,181 = 49% of salary.
• After tax salary in CHF = (135,181-65728)*1.345 = CHF 93,414
• But in fact, its more useful to compare the taxes to the actual amount that the company is having to pay out - and this is 65,728/148,700 = 53%

Shock! Horror! Taxes in the Netherlands are sooo high! You can see why I am keen to escape the place. A full 53% of the actual overall cost of spending 200kCHF on an employee is paid in tax.

But calm down, because as an expat, its not too bad (poor locals though). The expat tax ruling lets you have 30% of your income tax-free, for the first 10 years. All you need to have is a degree and a decent (>35k Euro) salary. So most expats qualify, its not hard to get.

So with the standard NL expat tax ruling in place:

• Salary goes up a little (employer contribution is also calculated on only 70% of the salary)
• 30% of the salary is tax-free, 70% is put into the tax calculator (I won't bore you with the numbers)
• End result: 35% tax based on salary, 39% tax based on total company cost, after tax salary of CHF 121,520.

That looks better. Nearly 40% of the overall pot required to pay someone goes to the taxman. But keep an eye on that take home of 121,520 CHF.

Right, now to the Swiss situation, where we will all become rich because taxes are so low:

• The employer pays approx 15.6% on top of your salary. I got this figure from here, basically it consists of the employer parts of pillars 1 and 2 (the employer pays the same again as you do!) plus accident insurance etc etc
• This leaves a salary (from 200k CHF) of 172,936 CHF.
• Pop this in to the Comparis calculator - tax = 42,033
• Add pillar 1 (8474) and pillar 2 (assume 6%=10376)
• Total tax: 60,882
• After-tax salary actually paid out = 112,053
• So tax amounts to 35% of salary (60882/172936) and 44% of total company costs (60882/200000).

Gulp - 35%? or better said - 44%? Thats not low tax! Its higher than in the NL expat situation! And worse still, the expat in Switzerland based in Zurich sees a lower after-tax payslip (112,053) than the one based in Amsterdam (121,520).

(now for the mathematically-capable amongst you, note that the 35% tax rate on salary for CH still leaves you less net take-home income than in the NL expat situation, even though the tax-on-salary rate of 35% is the same. This is because the CH salary is lower due to employer taxes, and the actual taxes lower, so the rate is the same but the abolute salary is still lower).

Ok so there will be people who disagree with my pillar 2 treatment, so lets knock that off - you get tax at 30% of salary, 36% of total, net takehome of 127,714 CHF. The tax percentages look better, but the final take-home is only marginally higher than the NL expat situation.

Still can't say that I consider this "low tax" - do you? In no way does this match the mantra that we keep reading everywhere (including this forum).

Please can someone who knows the UK tax situation better than I do, use the above numbers to work out the same % of salary and % of company cost and take-home salary? My expectation (I did live there for 5 years) is that you'll end up at similar figures as the NL expat situation. Again, unless I'm mistaken, the road to Switzerland is not exactly paved with gold.

Anyway, I'm more than happy to be proven totally wrong (I still have a small hope.. but its getting smaller every day). My tone in this thread is an unhappy and annoyed one, because I (like the OP) was given the impression that Switzerland has definately and unquestionably got lower tax rates than the high-tax socialist countries of western Europe (like the Netherlands, which always comes out as having "one of the highest income taxes" in all surveys). I'm still intending to make the move, as I love the mountains and the space and the location etc, but its been disappointing to discover the 'real' tax situation and infuriating that fellow expats appear to have blinkers on.

I also used to maximise my deductions in NL. But I wonder if there is any substantial difference in deductions across countries - my experience so far suggests not. If there is, then it might be better to give people the 'full' tax picture excluding deductions, and provide some insight into what deductions are possible and how much impact this has.

I have a fundamental issue with your definition of tax. Tax is money paid over that you never see again (except in terms of services provided by the state / canton / community). You appear to have included AHV which is old age insurance - or pension - and other insurances. These are not tax but premiums from which you may (accident insurance) or will (pension) benefit.

My own situation is simple. In the UK I would pay 1.8 times the tax I pay here (married, 2 kids in school, two overseas at uni).

I think your calculation is flawed - I don't believe in additional non-wage labor cost of just 10% for the Netherlands. According to Wikipedia the number should be 30% (http://de.wikipedia.org/wiki/Lohnnebenkosten). If you add that and correct for your treatment of the 2nd pillar (which does not have tax character), CH looks much better than NL. Also, you could move to Zug or Wollerau which would bring your tax down even further.

At the same time, I would not recommend moving to CH just to save taxes unless you're making millions. In absolute numbers the difference is not big enough to justify.

Yeah. But deliberately considering Pillar II as tax instead of savings is not helpful either. Not to mention that if you choose to do so you can even recover your Pillar I by leaving to a country Switzerland has no social security agreement with.

Don't suppose you can do that out of the Netherlands...