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Old 03.01.2008, 11:58
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End of the 'expat' benefits ??

My 2004 tax return was challenged by the nice folks in the Zurich steuer department, on what I felt were very flimsy grounds. I was treated as an 'expat' for 2002 and 2003, and was allowed to deduct the cost of international school from taxable income on that basis. Out of the blue, last year (2006), they decided that back in 2004 I was not eligible for the benefit because my 2002 contract was 'open ended'.

I hired a lawyer and challenged them at the rekurskommission. The kommission have just come back with a decision, and have not only allowed the tax dept to retroactively charge me higher tax, but also said that the whole regulation allowing benefits to expats was illegal and therefore not to be applied (to anyone, I presume)

I am pissed off to say the least... but also left wondering, how can it be legal for them to go back in time and change the law on me ???

Has anyone else been affected by this whimsical change?

I would fight them further, but Swiss lawyers don't come cheap; so even though I am convinced I am not at fault, I will have to give in and just hand over a chunk of my hard earned savings...
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  #2  
Old 03.01.2008, 12:11
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Re: End of the 'expat' benefits ??

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My 2004 tax return was challenged by the nice folks in the Zurich steuer department, on what I felt were very flimsy grounds. I was treated as an 'expat' for 2002 and 2003, and was allowed to deduct the cost of international school from taxable income on that basis. Out of the blue, last year (2006), they decided that back in 2004 I was not eligible for the benefit because my 2002 contract was 'open ended'.

I hired a lawyer and challenged them at the rekurskommission. The kommission have just come back with a decision, and have not only allowed the tax dept to retroactively charge me higher tax, but also said that the whole regulation allowing benefits to expats was illegal and therefore not to be applied (to anyone, I presume)

I am pissed off to say the least... but also left wondering, how can it be legal for them to go back in time and change the law on me ???

Has anyone else been affected by this whimsical change?

I would fight them further, but Swiss lawyers don't come cheap; so even though I am convinced I am not at fault, I will have to give in and just hand over a chunk of my hard earned savings...
Open ended is the clue here, surely.

Why should you get tax relief for not wanting to send you kids to a local school?
And make me pay more for your privelege when I already pay taxes for the school system...
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  #3  
Old 03.01.2008, 12:42
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Re: End of the 'expat' benefits ??

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Open ended is the clue here, surely.

Why should you get tax relief for not wanting to send you kids to a local school?
And make me pay more for your privelege when I already pay taxes for the school system...
Actually, this makes me realise there was one difference for me - the local schools could not offer my 14 year old daughter a place - she went 4 months without any schooling at all and we sent her to International School as a last resort. So I do believe I have a right to feel a bit cross .
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Old 03.01.2008, 13:02
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Re: End of the 'expat' benefits ??

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Actually, this makes me realise there was one difference for me - the local schools could not offer my 14 year old daughter a place - she went 4 months without any schooling at all and we sent her to International School as a last resort. So I do believe I have a right to feel a bit cross .
So:
- you uprooted a 14 year old (from the UK?, exams in 2 years)
- did not plan her schooling before you arrived here
- left her unschooled for 4 months

And then moan about not getting tax relief because you had to run around and arrange private, expensive schooling

Which is expensive because companies pay it for short term high flyers on expat deals...
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Old 03.01.2008, 13:16
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Re: End of the 'expat' benefits ??

I remember the old, old days where Zurich tax office was really taken advantage of - mid-90s. Every contractor was hit back then as they closed the self-made loopholes.

Thank goodness Swiss taxation rates are so reasonable.
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Old 03.01.2008, 13:41
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Re: End of the 'expat' benefits ??

Considering the fact that attending school is mandatory in Switzerland, it seems quite strange to me that they couldn't offer you a place. Didn't they offer you a place in another district ad interim or something?

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Actually, this makes me realise there was one difference for me - the local schools could not offer my 14 year old daughter a place - she went 4 months without any schooling at all and we sent her to International School as a last resort. So I do believe I have a right to feel a bit cross .
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Old 08.01.2008, 13:54
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Re: End of the 'expat' benefits ??

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Open ended is the clue here, surely.

Why should you get tax relief for not wanting to send you kids to a local school?
And make me pay more for your privelege when I already pay taxes for the school system...
GBN

if you feel like venting, be my guest, but I don't see how you conceivably pay for my 'privilege'. In fact, part of my taxes pay for the public school that your kids attend, and mine don't ...
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  #8  
Old 03.01.2008, 12:40
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Re: End of the 'expat' benefits ??

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My 2004 tax return was challenged by the nice folks in the Zurich steuer department, on what I felt were very flimsy grounds. I was treated as an 'expat' for 2002 and 2003, and was allowed to deduct the cost of international school from taxable income on that basis. Out of the blue, last year (2006), they decided that back in 2004 I was not eligible for the benefit because my 2002 contract was 'open ended'.

I hired a lawyer and challenged them at the rekurskommission. The kommission have just come back with a decision, and have not only allowed the tax dept to retroactively charge me higher tax, but also said that the whole regulation allowing benefits to expats was illegal and therefore not to be applied (to anyone, I presume)

I am pissed off to say the least... but also left wondering, how can it be legal for them to go back in time and change the law on me ???

Has anyone else been affected by this whimsical change?

I would fight them further, but Swiss lawyers don't come cheap; so even though I am convinced I am not at fault, I will have to give in and just hand over a chunk of my hard earned savings...
I had the same experience but in Saint Gallen and without the expensive lawyer. The bill I got was a shock to say the least.
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Old 03.01.2008, 13:00
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Re: End of the 'expat' benefits ??

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My 2004 tax return was challenged by the nice folks in the Zurich steuer department, on what I felt were very flimsy grounds. I was treated as an 'expat' for 2002 and 2003, and was allowed to deduct the cost of international school from taxable income on that basis. Out of the blue, last year (2006), they decided that back in 2004 I was not eligible for the benefit because my 2002 contract was 'open ended'.
(emphasis mine)

The guidelines of the Zurich tax office are quite clear on this: If you're on an open ended contract, you're not supposed to enjoy expat benefits at all. Hence, I'm sure you're out of luck for 2004 and the following years.

I don't know about 2002 and 2003 though.
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Old 03.01.2008, 14:57
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Re: End of the 'expat' benefits ??

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(emphasis mine)

The guidelines of the Zurich tax office are quite clear on this: If you're on an open ended contract, you're not supposed to enjoy expat benefits at all. Hence, I'm sure you're out of luck for 2004 and the following years.

I don't know about 2002 and 2003 though.
You are clear for 2002 but they could well bite at you for 2003... And you are quite correct that there are strict conditions attached to expat privileges...

The comment that they are illegal is however entirely new to me as this is an international agreement to allow free flow of executives to the benefit of international companies in various locations worldwide and not something the Swiss dreamt up overnight...
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Old 08.01.2008, 13:56
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Re: End of the 'expat' benefits ??

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You are clear for 2002 but they could well bite at you for 2003... And you are quite correct that there are strict conditions attached to expat privileges...

The comment that they are illegal is however entirely new to me as this is an international agreement to allow free flow of executives to the benefit of international companies in various locations worldwide and not something the Swiss dreamt up overnight...
Richard

I doubt there is any 'international agreement' involved here. Its entirely local regulation that the large MNCs negotiated with the steueramt in Zurich canton.

I actually have a copy of the regulation and it clearly describes all tax benefits granted to expatriate specialists as 'illegal'. Let me know if you would like a copy by email..
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Old 08.01.2008, 14:12
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Re: End of the 'expat' benefits ??

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Richard

I doubt there is any 'international agreement' involved here. Its entirely local regulation that the large MNCs negotiated with the steueramt in Zurich canton.

I actually have a copy of the regulation and it clearly describes all tax benefits granted to expatriate specialists as 'illegal'. Let me know if you would like a copy by email..
Yes please I would be very pleased to receive a copy of this...
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  #13  
Old 08.01.2008, 14:18
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Re: End of the 'expat' benefits ??

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Richard

I doubt there is any 'international agreement' involved here. Its entirely local regulation that the large MNCs negotiated with the steueramt in Zurich canton.

I actually have a copy of the regulation and it clearly describes all tax benefits granted to expatriate specialists as 'illegal'. Let me know if you would like a copy by email..
This has very little to do with Kanton Zürich unless they have some other additional benefits which would indeed be questionable, but the principle itselt is definitely not illegal. The relevant Swiss law covering this is:
Verordnung vom 3. Oktober 2000 über den Abzug besonderer Berufskosten bei der direkten Bundessteuer von vorübergehend in der Schweiz tätigen leitenden Angestellten, Spezialisten und Spezialistinnen(Expatriates-Verordnung, ExpaV)

And this document is pretty damned clear...
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Old 08.01.2008, 14:28
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Re: End of the 'expat' benefits ??

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This has very little to do with Kanton Zürich unless they have some other additional benefits which would indeed be questionable, but the principle itselt is definitely not illegal. The relevant Swiss law covering this is:
Verordnung vom 3. Oktober 2000 über den Abzug besonderer Berufskosten bei der direkten Bundessteuer von vorübergehend in der Schweiz tätigen leitenden Angestellten, Spezialisten und Spezialistinnen(Expatriates-Verordnung, ExpaV)

And this document is pretty damned clear...
... as is the document dated 23 Oct 2007, that declares the abovementioned law 'illegal' ... copy being mailed to you
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