Hi all,

I've lived here since early December 2009, and I am currently doing my UK personal and partnership tax returns for the last tax year (April 2009 - April 2010).

I've always worked full time in the UK, but had a small revenue making hobby with a friend in the UK (the partnership) and tax returns have not been an issue. to complete - very simple.

Here, I am taxed at source and I am on a permanent local contract.

I am expecting that if/when I do a tax return, I have to declare earnings from the UK. I am expecting this to be very small, just a few hundred pounds from a business that turns over a few thousand (it's effectively non profit). This is all fine, but I am wondering if I need to adhere to "Swiss" record keeping for that business, or whether simply imputing the income will be sufficient? I am assuming it would be prorata given the UK tax year differs from the Swiss calendar year.

Also, if I started working on the 1st of December, am I obliged to submit a return for just the month? I haven't done anything yet, as I am used to getting requests for returns in the post in the UK and I am not sure that same process applies here!

Thanks

My 5 raps:

1) Yes you do (officially) have to keep to Swiss standards. You could - for whatever reason - be audited and then you would be "in trouble". Maybe not big trouble, for sure, but my experience of Swiss law is that things are black and white. Either things are right or they are wrong...

2) We used information from the 2009-10 UK tax to complete our 2009 tax year declaration, for 2010, we will use 2010-11 UK year. It makes things complicated, but going pro-rata sounds like even more of a headache. It means that we have to file our tax declaration late, but early (or on-time) payment means no penalties. Although as you are taxed at source, I don't see that this would affect you.

3) Absolutely do put in an evaluation for December - you will most likely get money back, as the tax calculation is based month on month, i.e. they will take your earnings for that month, multiply by 12 and work out what your tax should be. This means that people who are paid bonuses get whacked with a bigger tax in bonus month, but it evens out when a tax declaration is made.

:Hey Carlos R,

Thanks for your 5 r's - to me they are worth 50 Frs

So, just to be clear, I'd have to show receipts detailing £900 expenses on £1000 turnover equalling £100 income, £50 was my share for the year, on a UK partnership in Switzerland? I happen to be the person who does the partnership books, but if I was not, e.g. it was a UK based partner who did it, would I still have to retain a copy? If I worked for a limited company in the UK it would of course be different, so just want to be sure in the case of a partnership.

Is this a decision you took or is this the "norm" - I suppose over a few years it evens itself out and the authorities would not have a problem.

That makes sense - I will have been taxed on that month's salary x 12, when actually in December I shouldn't have paid any tax, however, a 2009 Swiss tax return have to take into account UK earnings from the rest of the year though, so it's not like I'd pay zero tax right?

Is there a deadline for self submitted non-mandatory tax returns?

Many thanks

Actually. I just had a thought. Sorry if this is a basic question, but if I have Swiss income and UK income but I am domiciled in Switzerland, so I have to still report Swiss earnings on my UK tax return?

I am thinking no, just UK earnings?

From what you say, I doubt very much that you are domiciled in Switzerland. You need to read up the definition of domiciled, nonresident, ordinarily nonresident etc. as defined by the tax authority in the UK - the UK tax return handbook explains all this (although, it's a bit of an effort to get your head round it from the wording). Depending on which category you fall in will determine what has to be declared where. You probably will be defined as ordinarily nonresident (although I don't recall if you achieve that only after a period of time). As such, your swiss earnings are not relevant to the UK tax authorities, but UK earnings are. You will get the basic allowance (approx. 5k these days?) against which to offset these.

Hey Jaudi,

Thanks for the response. You are correct, I've used a word there without really knowing what it means. I'll look into it, but I am certainly hoping that what you have suggested is the case as it makes things so much easier. It makes complete sense also.

So that only leaves the issue of record keeping. I am allocated a share of profits from a partnership which theoretically could have lots of members - would the Swiss really expect me to justify the entire partnerships P&L, just for my share?

If anyone could recommend an accountant in or around the Lasuanne or Rolle area with experience of expats I'd appreciate it.

I am not a tax expert, so cannot really comment officially. However if you are taking money out of such a venture (vs. being "paid") then yes, you have to show where the money comes from and any deductions. If you were being paid, you'd need the equivalent of a pay slip.

This is a decision we took with our tax lawyer. So far no problems, as the tax authorities do acknowledge that variations in tax years exist between countries.

Right, I guess*

March/April of the following year. BUT, you can file for an extension to Sep of that same year, although you will pay interest on late payment.

If you have to declare taxes as a CH resident, you are required by law to declare all global income/capital/assets, as far as I understand it. Based on your comments, notwithstanding Jaudi's comments, you would be based in CH and would actually have to declare your UK income on your Swiss tax return, and not the other way around as per your post above.

*see earlier comment about lack of expertise...

Thanks, makes sense. Think I need to do some more research on the "paid" versus "taking money out" side of things. Seems a little impracticable.

So that's the case if I voluntarily submit a return for December, or are you talking about non-taxed-at source?

I am told someone earning over a certain amount, has to submit a tax return regardless if they are taxed at source. Assuming that applies for a full year and not December as above, will they send me the notification, or is it on my own initiative?

Cheers

Yes, I guess I am talking about non-taxed at source. Although even if you are taxed at source you should still do a tax declaration, as you may be paying too much. You can always get a tax lawyer to calculate all your returns and decide if you want to submit it...

You will have to do a tax return (i.e. no tax at source) if you are on a C permit, or if you are on a B permit and earn more than 100,000-120,000 CHF pa.*

*Depending on what you read/who you listen to...

1) You should have paid tax in December. It works like this: imagine you earn 120,000, so 10,000 a month. You move here on 1 December, and earn 10,000. The tax office does NOT record your income for 2009 as 10,000. They take what you earned, and multiply up as if it was a full year, in order to find out which % tax to take from you (along with the usual calculations for married, kids, etc).

We had this on our first year - we moved here in March 2008, but our tax % rate for that year was on a 'virtual salary' of months 03-12 earnings pro-rata'ed as if we were here the full year. Note that we didn't pay tax as such on these 'imaginary' earnings, it's just used to put you in an income tax % band.

2) The Swiss tax office is not remotely interested in any UK income you received before becoming resident here. I, for example, only had to show share dividends received after mid-March 2008. They also, of course, want to know your total global wealth/ assets as of 31 Dec.

Have fun with it all! It gradually becomes clear...

kodokan

Hey, thanks for your comment. I actually read a thread of yours on a very similar subject in my research .

That's quite correct. I was actually paid a little relocation bonus in December too, so effectively it looks like I earnt double, in your example 240,000 if prorated a year. Of course what I paid was based on the monthly amount if I understand correctly, and that prorata amount of 240,000 would only apply if I did a tax return in figuring out my overall tax rate.

Interesting. I paid myself those few hundred pounds after coming to Switzerland, even though I earnt a large part of them before I came. So I guess I should have taken some money out before I moved...

On the wealth tax issue, this is another source of confusion for me. I only have to do that if I do a tax return? Could I choose not to do a tax return until they decide to send me one? E.g. assuming that I am not "required" to do one for 2009?

Thanks!