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Old 02.04.2006, 06:06
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branching out professionally

Hello knowledgeable friends who run their own businesses!

I'm currently an independent English teacher. I give lessons in company, then bill the company for the hours. Bookkeeping is a small part of my activity as I must declare earnings and expenses like any taxpayer.

I currently deduct some (not all) English materials if I use them for classes - books, magazines, music CDs, train tickets to cities where the bookshop is where I'm buying the said books for English classes, etc...

I wish I could say I was a "cheater," but I'm too much of a scaredy cat to try to get away with noting all my DVDs and CDs and mags as "English materials." So unless I'm seriously using the main article for a class discussion, "Cat Fancy" would not make it to my expenses list.

I've just recently officially embarked on my next professional activity - writing. That is not to say that I've already been published or sold any writing yet.

My writing buddy lives in Zurich (and this weekend has been damned expensive!). Can I start to include these travel expenses to Zurich when I'm meeting and actively working with my writing buddy? Include many of life's expenses as research? Films, workshops, lunches with friends where there's interesting conversation, etc...? Basically, if there's a genuine link to my writing, can I write it off? Or am I totally hallucinating?

According to the "Service de la population et des migrants," my independent lucrative activity is "language teacher." They used to write it on my B permit every year next to "has Swiss spouse." This year I got my C permit and it doesn't mention either on it!

Project for the coming week: Talk to those guys and ask if I can put "writer" in my file next to "language teacher." In the meantime...

Talk to me, guys! (That means girls, too, in Californian!) Thanks!
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Old 30.08.2006, 18:15
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Re: branching out professionally

...don't know if the topic from February is still current, but a lot of it is all about the form of business you have. There are accounting rules for the various types: Sole Propietership, limited partnership, corporation, etc.

At the end of the day, however, it's a function of what your friendly tax guy or gal at the local village level is going to let you deduct. I've seen spectacularly outrageous items deductible and people often get tacit agreement in advance for some amount of "non-receipted expenses" (see: Representationsspesen, in German).

Are you completely self-employed with no corporate structure? Then it's all a function of what you can get by your local tax folks.
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Old 30.08.2006, 18:45
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Re: branching out professionally

Hi Carrie! Hope all is going well with the writing.... How're you getting on with the tax issues?! I don't know if this is any help or not, but I know there are deductable expenses for a freelance writer (being one myself) but usually they include stuff like paper, fax, photocopy stuff, printer stuff etc if you work from home (like I do) or expenses directly related to a specific job ie. travelling to Zurich to interview a particular person for an article.....

Best advice is to get yourself a nice, friendly tax advisor (or talk to someone in the know) and see what the Swiss system allows. Some countries have more flexible decdction systems than others....

Best of luck!
Megan
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Old 30.08.2006, 18:46
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Re: branching out professionally

Hey David! American? The topic was actually from April. Be careful of dates now that you're in Switzerland.

To get back to this subject, I learned that I must first earn money from writing before I can deduct any "expenses." Until the day it becomes a lucrative activity, it will simply be considered my hobby. The guy suggested that I save all receipts until the big day hits.
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Old 30.08.2006, 18:49
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Re: branching out professionally

Yes, I am American. And, I've been here 20+ years and am up on the date/time formats. But: I quoted the date off your "joined date" (duh...) instead of the post date. Still not that familiar with this forum layout.
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Old 01.09.2006, 10:43
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Re: branching out professionally

If you can make around CHF8000 per year then you can be self-employed. You just need to fill a form and you are good to go. I think you have to just make AHV contribution that comes to around CHF400 per year (assuming u made exactly CHF8000 in the year).
If you make less than 8k then you can continue to be self-employed but you need to pay higner administration fee to the Swiss masters. I think around CHF 300 more. My numbers might be out but you get the rough picture. Contact AHV and they will send you a simple booklet with a form to declare your status as self-employed.
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Old 01.09.2006, 10:50
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Re: branching out professionally

Just deduct everything you think is allowed to be deducted. Don't worry too much if it's allowed or not. Do you think they really check through every single tax declaration form they receive? I doubt it.

If they do check and find out you won't get fined...it's their job to check it. Just claim you didn't know. Everyone I ever spoke to about this does it that way and they're not sitting behind bars
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Old 01.09.2006, 10:57
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Re: branching out professionally

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Just deduct everything you think is allowed to be deducted. Don't worry too much if it's allowed or not. Do you think they really check through every single tax declaration form they receive? I doubt it.
Actually, they most likely DO check. Why? There are effectively 4,000 tax departments in Switzerland, just at the commune level. There are 10,000 residents where I live and we have about 4-5 staff in the tax department. They have all year to process the tax returns (maybe 3,000 tax returns). They might not check every single item deducted, but you can be sure that a critical eye will be cast over it.

The principle is very different to other countries where you have a small chance of being caught, but if you are you'll be punished severly. The Swiss approach takes MUCH more manpower but means you'll be asked further questions before the tax return is made "definitive" if there is any doubt.

I've had a lot of to'ing and fro'ing over my 2003 tax return. The tax dept and I only came to an agreement about it last month. Just to make matters more uncomfortable my direct neighbour (my only one) is the one responible for my tax at the commune.
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Old 02.09.2006, 11:44
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Re: branching out professionally

Quote:
Just deduct everything you think is allowed to be deducted. Don't worry too much if it's allowed or not. Do you think they really check through every single tax declaration form they receive? I doubt it.
They check. Especially in Gemeindes like mine which have a high tax rate and a high percentage of lower class draining their social resources. In the last tax return I submitted, I claimed car use based on the distance to and from work (I could claim car due to shift work). They calculated a lower distance and refused some of that claim.

There is a big difference here to refusing/failing to pay tax, and tax avoidance (dishonest tax returns). The former will get you black marks in the default register and possible seizure of your assets, but as far as I no does not constitute an offence (richard will probably pull me up on this ). Telling fibs on your tax return does constitute a serious offence here. You would probably do more time for that than here for robbery.
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Old 02.09.2006, 11:57
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Re: branching out professionally

According to Swissinfo:
Quote:
  • Tax evasion is a civil misdemeanour rather than a criminal offence in Switzerland and evaders seeking refuge in Switzerland will not be extradited.
  • However tax fraud is a crime in Switzerland if it can be proved the evader falsified documents.
  #11  
Old 02.09.2006, 13:02
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Re: branching out professionally

Quote:
There is a big difference here to refusing/failing to pay tax, and tax avoidance (dishonest tax returns). The former will get you black marks in the default register and possible seizure of your assets, but as far as I no does not constitute an offence (richard will probably pull me up on this ). Telling fibs on your tax return does constitute a serious offence here. You would probably do more time for that than here for robbery.
Refusing to pay tax will get you nowhere. They will simply betreiben you and then for future years, unless there is a good reason, they can place an order against your salary to cover the tax bill - generously cover that is. Which as I think Mr Rockster has said is not such a bad thing because they pay you 2% interest... The betreiben is however a problem as you will have to pay, you will lose and you have little if any chance to negotiate. Once the judgement is made you then have a problem for the next 10 years... But other than that no problem, they have covered this avenue and have a system that works and it is not an offence.

As far as telling lies on your tax return it depends on what kind of lies they are. If they are deliberate lies in order to reduce your tax bill such as filing false documents then you are in the kaka as that is tax fraud which is treated very seriously here. If you are filling in expenses which you have incurred but you failed to read and understand that you can only claim 80% of the total or whatever then this is no problem they will simply correct it and put it down to your dumbness... So claim everything you can substantiate and that is reasonable and hope it goes through. btw all tax forms are checked in detail for the deductions made... Note that each tax officer is expected to deal with 2 tax forms per day. Therefore you can calculate the number of returns your Gemeinde has based on this info Perhaps in SZ they are meant to be more efficient... I guess you can also calculate that each tax form is costing 150 Francs to check - what a waste...
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Old 06.09.2006, 08:25
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Re: branching out professionally

If you teach, write or whatever (I do both) you will first off need to register at your local tax office as self-employed. This can be backdated, thus if you want to give it a go but want to try the waters first you can tell them you've been doing it for some years after you find it works. This is almost necessary, as you will be required to produce some invoices and quotations to prove you are self-employed.The state pension fund (AHV) will bill you for the back years though. (Not that much).

Also many companies will not give you work (such as in-house teaching) if you are not registered as self-employed because they could be liable for your social contributions (AHV).


On your tax form you will need to complete 'Hilfsbatt A' (Supplementary sheet A) - not all of it unless you have a large business, but just the simplified back pages. Here you can put in your income net of expenses and then take of further office/car/computer/etc expenses.

Note: if you opt for Hilfsbaltt A, you cannot also claim travelling and other expenses on the main tax form.

I have fould the tax system a pain to complete the forms, made worse by being allowed to September 30 each year to submit it, but very generous as to what you can claim. I even clain CHF500 for filling in the form.

Rule#1: keep a record of everything - every invoice and receipt. I've never been asked in 10 years of being self-emloyed, but I'm ready for the day...
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Old 07.09.2006, 00:46
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Re: branching out professionally

Hi AbFab sweetie,

Great, advice! Yeah, cheers, thanks a lot!

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Old 08.11.2006, 10:47
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Re: branching out professionally

Quote:
If you teach, write or whatever (I do both) you will first off need to register at your local tax office as self-employed. This can be backdated, thus if you want to give it a go but want to try the waters first you can tell them you've been doing it for some years after you find it works. This is almost necessary, as you will be required to produce some invoices and quotations to prove you are self-employed.The state pension fund (AHV) will bill you for the back years though. (Not that much).
Regarding the backdating bit. Imagine if I want to become self-employed. So I give it a go. In the first year I make15,000CHF In the second year I make 20'000CHF. So when I register for self-employed status I have to back date to the year where I made 15k? What do I do with the 15k that I earned for that years tax return? Just not declare it? That seems bit confusing as I would have issued invoices to the client and I would be in the system through their tax returns.

How much does one have to earn before they can be considered self-employed? In my first year let's say I earn 1000 CHF from one client, 15,000CHF from another and let's say 500CHF from a third client. Can I become self-employed?
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Old 08.11.2006, 11:18
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Re: branching out professionally

OK I got the bull by the horn and phoned SVA zurich (just now). Combination of RUDE assholes on the phone and some really smashing guys! Bottom line is if your are serious about becoming self-employed and and manage to earn money then it's no problem. Specially if your status about staying in CH is not tied to your work etc.
I used the above (15k 20k) example and the person told me that you don't even need to wait till the 20k year. You can go self-employed in the first year already.
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Old 08.11.2006, 11:20
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Re: branching out professionally

Note that you will be required to declare your expected "salary" to take from your business. Your SVA payments will be based on a % of this ,(which in theory should ultimately provide benefit) so choose wisely.
dave

Quote:
OK I got the bull by the horn and phoned SVA zurich. Combination of RUDE assholes on the phone and some really smashing guys! Bottom line is if your are serious about becoming self-employed and and maange to earn money then it's no problem. Specially if your status about staying in CH is not tied to your permit etc.
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Old 08.11.2006, 11:24
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Re: branching out professionally

Quote:
Note that you will be required to declare your expected "salary" to take from your business. Your SVA payments will be based on a % of this ,(which in theory should ultimately provide benefit) so choose wisely.
dave
DaveA do you mean aim low? And pay the difference if you earn more? Instead of declaring expected salary to be high and having to claim tax back?
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Old 08.11.2006, 12:13
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Re: branching out professionally

You will be taxed on your "profits" as income in any case. The "expected salary" is to give SVA a figure on which to based their deductions.

Too low, and your "old age pension" and "unemployment insurance" (if eligible) will be based on too low a salary.

Too high, and you will be committed to paying a larger amount of money even if you are not earning that much.

Remember the "salary" is what you choose it to be (within reason).
Remember also all those "expenses" that mean you may not able to pay yourself that salary.

You want to maximise your deductible nice expenses so your profits look low. If you have a high salary take out of it, that would be difficult.

I am not sure if you can force a reassessment of salary during a year. I have a feeling that you can't.

dave

Quote:
DaveA do you mean aim low? And pay the difference if you earn more? Instead of declaring expected salary to be high and having to claim tax back?
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Old 05.12.2006, 18:20
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Re: branching out professionally

I am a freelance designer and i currently have a few clients in the UK, as i have not been here long I am still declaring my income in the UK, I decided to finish my financial year. My accountant has told me I can continue fiilling in a tax return for income earned in the UK whilst living abroad, but I am unsure about this?

In the meantime I am hoping to get some freelance work in CH but I don't anticipate it to be much just yet so I had sort of hoped I could declare what I earned on my husbands tax return, is this possible? I don't want to register as self employed just yet as I don't feel like I will be earning enough to warrant this. But I have been asked by one potential client if I have self employed status in Switzerland, I haven't so now I am worried I wont be eligible for the work.

Any help/advice would be greatly appreciated

Nicky
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Old 05.12.2006, 18:35
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Re: branching out professionally

While it may be a good idea to use your UK tax free allowance, it is a simple matter to add your income to your spouce's Swiss tax return. (Just add the amount in the space provided.)

This may seem daunting at first after the simplified UK tax return, but the Swiss tax system is far more 'generous', so you would pay less tax here, not only are the tax rates lower (depending on where you live), but there are for more deductions possible.

The UK Inland Revenue should be informed that you have left the country and they may take a number of years to grant you 'ordinarily non-resident status'. It took me five years (though as a director in the UK my tax was well inspected). They also expected me to fill in a tax form each year. This is no chore and taxes about 10 minutes. I fealt it may be useful to keep my tax-free allowance. After 14 years here the tax forms final stopped coming from Bootle (the expat tax office)...
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