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Old 13.10.2020, 09:38
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Tax implications for 250k salary

Hi everyone,

I'm considering an offer to move from Asia to Zurich, but I just wanted to check that I have my numbers right when it comes to determining final take-home pay. I'm quite excited by the prospect, but I'm afraid that financially it actually doesn't make sense. I'm expecting about 250k CHF total annual compensation (same as what I earn now), so I'll use this figure below to work things out.

In my current position, I just pay about 15% in tax + 3% into a pension (similar to pillar 2), i.e. total 18%, and my take-home pay is therefore 205k annually, or 17k/month.

I used swisstaxcalculator.estv.admin.ch to calculate tax and contributions (leaving the default deducations), and added various items like pension and health insurance, and it comes down to this:


Federal______14,577___5.8%
Cantonal_____16,450___6.6%
Municipal_____19,575___7.8% (assuming living centrally for now)
OASI________12,813___5.1%
Unemplment___2,139___0.9%
Accident________593___0.2%
Pension______12,500___5.0% (?)
Health ins____12,000___4.8% (for two people)
TOTAL_______90,647___36.3%

Take-home = 250k - 91k = 159k
Monthly = 13k

So if I'm correct, it seems my take-home pay would be 25% less, i.e. decreasing by about 4000 CHF/month or roughly 50,000 CHF per year (ouch). In addition, I estimate my rent in Zurich would be about 1000CHF more than what I pay now, so it's actually more like a 30% cut in disposable income.

I just wanted to check that I have my facts straight and that I'm not missing something (either a cost or a benefit). Is the above correct, at least approximately? I completely realise that 250k is a large and comfortable salary which I am lucky to receive, and it is plenty to live off, so I am not complaining - I am just comparing with my current situation. There are other factors at play too in the decision!

Thanks for your help!
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Old 13.10.2020, 09:41
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Re: Tax implications for 250k salary

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Hi everyone,

I'm considering an offer to move from Asia to Zurich, but I just wanted to check that I have my numbers right when it comes to determining final take-home pay. I'm quite excited by the prospect, but I'm afraid that financially it actually doesn't make sense. I'm expecting about 250k CHF total annual compensation (same as what I earn now), so I'll use this figure below to work things out.

In my current position, I just pay about 15% in tax + 3% into a pension (similar to pillar 2), i.e. total 18%, and my take-home pay is therefore 205k annually, or 17k/month.

I used swisstaxcalculator.estv.admin.ch to calculate tax and contributions (leaving the default deducations), and added various items like pension and health insurance, and it comes down to this:


Federal______14,577___5.8%
Cantonal_____16,450___6.6%
Municipal_____19,575___7.8% (assuming living centrally for now)
OASI________12,813___5.1%
Unemplment___2,139___0.9%
Accident________593___0.2%
Pension______12,500___5.0% (?)
Health ins____12,000___4.8% (for two people)
TOTAL_______90,647___36.3%

Take-home = 250k - 91k = 159k
Monthly = 13k

So if I'm correct, it seems my take-home pay would be 25% less, i.e. decreasing by about 4000 CHF/month or roughly 50,000 CHF per year (ouch). In addition, I estimate my rent in Zurich would be about 1000CHF more than what I pay now, so it's actually more like a 30% cut in disposable income.

I just wanted to check that I have my facts straight and that I'm not missing something (either a cost or a benefit). Is the above correct, at least approximately? I completely realise that 250k is a large and comfortable salary which I am lucky to receive, and it is plenty to live off, so I am not complaining - I am just comparing with my current situation. There are other factors at play too in the decision!

Thanks for your help!
Health insurance no's look bonkers, sure it's possible to spend that much if you try.

Depending on your passport living in ZG/SG might be a better bet.
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Old 13.10.2020, 09:55
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Re: Tax implications for 250k salary

Is your HK apartment really 1000k less? In my experience it is the other way round.
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Old 13.10.2020, 10:30
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Re: Tax implications for 250k salary

I think you're about right for canton Zurich. We have low deductible health insurance and pay about 800/month for the required(2 people). Yes, I know I could find something less expensive but I like the service.

If you are young and healthy and don't take a lot of prescription meds, a higher deductible will save your monthly cost, but if you need health care you'll pay the Deductible before getting reimbursed. It's a wash generally, but if you tend not to need health care, then go with the high deductible. you're looking at maybe 100/month less per person. but that's for the required insurance. There's also supplemental, which is a whole other thing.

US citizens don't benefit from low tax cantons since they pay US as well as Swiss taxes. You don't have this nonsense as an EU citizen.

If you're going to walk or just take the tram to work, you'll save on commuting costs and times. I don't like long commutes either.

We live in Winterthur, so I can't tell you about Zurich rents and views.
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Old 17.10.2020, 20:36
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Re: Tax implications for 250k salary

Regarding health insurance many here quote exceptionally low rates for basic insurance.

This is all great as long as you are not sick, if you will actually need assistance you would be very surprised by all the things not included in basic insurance. It is not just nice 1-person rooms in the hospitals but also level of service, getting second opinion, access to certain high priced medicine etc.

In my family we always paid considerably more then minimal rate (about 1.7k for 2 people now) because we could afford it and -unfortunately- it paid off, a member of my family became very ill over 10 years ago and this private insurance is a blessing:

  • Obviously private rooms in hospitals.
  • We can get second and third opinions from leading docs without any complaints from insurance
  • We can get MRIs and other high cost checks many times a year without visits to home doc first and trust me: this is a blessing if each visit to doctor / travel by car is -literally- very painful and dangerous experience.
  • We got prescription and coverage to THC pain management drugs (Sativex) only because we had this additional insurance, otherwise we'd be swallowing cheap and horrible Oxynorm Opiodes (absolutely ridiculous)
  • We got coverage to other very high price drugs only because of private insurance

And so on. In a nutshell we can concentrate on fighting the illness instead of fighting the insurance.


Always remember: If you do get sick it will be too late for upgrade. So I would advise to consider paying more for additional security.

Cheers

Last edited by Son of Mom; 17.10.2020 at 20:48.
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Old 24.10.2020, 02:13
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Re: Tax implications for 250k salary

I wanted to check one more thing. Let's assume I do some futures or forex trading on the side, and that I net an extra 100k/year (hypothetical example) on top of my 250k income. I break most of the "5 rules" so let's also assume I am deemed to be a professional investor.

How is this taxed? Do I just add it to the regular gross income in the tax calculators, or is there a different treatment? Is it subject to all the usual OASI, disability etc contributions, or do I only apply my marginal tax rate to it? Or something different entirely?

Is there some good link that explains it?

(Let's not make this into a thread about the benefits/perils of trading one's own account!)

Thanks again!

Last edited by zyxi; 24.10.2020 at 02:14. Reason: Formatting
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Old 13.10.2020, 10:02
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Re: Tax implications for 250k salary

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Health insurance no's look bonkers, sure it's possible to spend that much if you try.

Depending on your passport living in ZG/SG might be a better bet.
I think you mean SZ not SG

Living in SZ will bring that tax down massively and also decrease your rental expenses at a cost of living 35 minutes from Zurich. ZG City will decrease the tax, but not the rental costs, but is more of a town than living anywhere in SZ.

Depending on your industry there are also tax free agreements with the authorities for t&e or representation allowances. For example I get CHF 14.4k a year tax free (but can’t make expense claims under CHF 50). This is standard at banks at my level of seniority.

Also, pension contributions are ultimately your money. If you pay 3% in Asia and 5% in Switzerland, you should equalise the post tax amount from your take home pay on both sides.
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Old 13.10.2020, 10:03
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Why focus only on take-home pay? A few pension points:

- I wouldn't count it as a deduction, the money is still yours
- The company will pay a pension contribution, you should add this in, not sure if you currently get that

Say the company adds 7.5% and you don't treat your 5% as a deduction, that's a 12.5% increase over your calculation (even if you can't immediately take it).

I used the basic calculator myself, not quite at that level of pay but probably comparable - and the result is 40% higher than I actually pay. I guess this shows the deductions can help a lot...

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I think you mean SZ not SG
Sadly true, SG not known for low tax

Last edited by roegner; 13.10.2020 at 10:52. Reason: Merging consecutive posts
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Old 13.10.2020, 10:29
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Re: Tax implications for 250k salary

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Can you elaborate? You have so many deductions that you've reduced your tax by 40%? Is that realistic?
I suspect you are putting gross earnings into the calculator, tax is net of Social deductions, Pension & allow a further 15k deductions to get a better idea.
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Old 13.10.2020, 10:41
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Re: Tax implications for 250k salary

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I suspect you are putting gross earnings into the calculator, tax is net of Social deductions, Pension & allow a further 15k deductions to get a better idea.

I don't think so. I enter 250k gross, the calculator then subtracts about 25k for social deductions and pensions (225k net), then subtracts about 9k in professional expenses and insurance premiums (219k net), and applies tax on that amount. The tax of 50k itself is about 20% effective rate (although at 35% marginal, squeezing any further upside).
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Old 13.10.2020, 10:59
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Re: Tax implications for 250k salary

On insurance premiums, depends on your age, type of policy and excess. We are mid 50's, have a pretty standard HMO policy and pay 860 in total. I believe insurance premiums drop 5-10% by moving a few KMs out of the city.
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Old 13.10.2020, 11:00
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Re: Tax implications for 250k salary

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I don't think so. I enter 250k gross, the calculator then subtracts about 25k for social deductions and pensions (225k net), then subtracts about 9k in professional expenses and insurance premiums (219k net), and applies tax on that amount. The tax of 50k itself is about 20% effective rate (although at 35% marginal, squeezing any further upside).
Maybe in your case it is more accurate - my point was that it is probably possible to optimise your tax more than the initial numbers suggest.
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Old 13.10.2020, 13:20
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Re: Tax implications for 250k salary

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I don't think so. I enter 250k gross, the calculator then subtracts about 25k for social deductions and pensions (225k net), then subtracts about 9k in professional expenses and insurance premiums (219k net), and applies tax on that amount. The tax of 50k itself is about 20% effective rate (although at 35% marginal, squeezing any further upside).
It seems to be about to be correct. The linked calculator also allows to use gross, net, and taxable income.

One note: health insurance deductions are capped at around 2.5k per person (depends on canton).
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Old 13.10.2020, 15:56
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Re: Tax implications for 250k salary

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I don't think so. I enter 250k gross, the calculator then subtracts about 25k for social deductions and pensions (225k net), then subtracts about 9k in professional expenses and insurance premiums (219k net), and applies tax on that amount. The tax of 50k itself is about 20% effective rate (although at 35% marginal, squeezing any further upside).
It's a bit off. We have roughly the same gross income, but we own a house (which means we deduct roughly 25K a year in renovation and maintenance, although we get taxed a bit for it) and we have 3 kids (which are a decent deduction). We pay about 28K/yr in taxes. And yes, you're overestimating health costs, although that won't move your gauge.
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Old 13.10.2020, 10:36
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Re: Tax implications for 250k salary

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Can you elaborate? You have so many deductions that you've reduced your tax by 40%? Is that realistic?
I'm not sure - I was just curious and did the basic calculation and got that result.

But looking at the deductions page, there is a bunch of stuff that could make a difference - a tax accountant will put something on all of those lines

One big thing is I can't see where it deducts the pillar 2 pension, which would be 12k. Plus I have at least:

- travel cost : 2k
- Pillar 3a contributions : 7k
- meal costs : 2k
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Old 13.10.2020, 10:06
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Health insurance no's look bonkers, sure it's possible to spend that much if you try.

Depending on your passport living in ZG/SG might be a better bet.

Well, wikipedia puts the average cost of the compulsory health plan at 396CHF/month (in 2014). This seems in line with various online searches I did. So for two people that's 396 * 12 months * 2 = 9.5k. Do you disagree with this figure? My 12k estimate comes from being a bit conservative and choosing a 500CHF/month plan, but in the overall scheme of things, this bump won't move the needle.


I thought about Zug, but I'm not very keen on a long commute, at least at first (I do this now). Part of the allure of moving to Switzerland is the increase in quality of life, and I don't think spending 1-2 hours traveling each day is worth it to me. Btw, I have a EU passport - why does it matter when choosing where to live? Is it difficult for non-EU to live and work in different cantons?

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Is your HK apartment really 1000k less? In my experience it is the other way round.

Yes, it is admittedly unusual. After living centrally for a few years, I moved out to an outlying island and currently pay the equivalent of 1800CHF/month. I now have twice the space (70sqm), a giant rooftop terrace and a spectacular mountain view that I will be sad to lose. (ok, "hill view"!)


For about 70sqm with some outdoor space, I'm hoping I can get something for 2500-3000 in Zurich - but even that might be tough to find. And a lake or mountain or at least some kind of open green view would be nice... probably dreaming though!

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Why focus only on take-home pay? A few pension points:

- I wouldn't count it as a deduction, the money is still yours
- The company will pay a pension contribution, you should add this in, not sure if you currently get that

Say the company adds 7.5% and you don't treat your 5% as a deduction, that's a 12.5% increase over your calculation (even if you can't immediately take it).

Completely fair, thank you, but unfortunately the numbers are probably not as in your example. Currently, I pay in 3.5% and company pays in about 7%, so ~10% total. I don't know the pension contributions in Zurich yet (thus my question mark on that line), but I expect it might be something like 5% employee and 5% employer, so similar to the current status. Hope to find out soon.


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I used the basic calculator myself, not quite at that level of pay but probably comparable - and the result is 40% higher than I actually pay. I guess this shows the deductions can help a lot...

Can you elaborate? You have so many deductions that you've reduced your tax by 40%? Is that realistic?

Last edited by roegner; 13.10.2020 at 10:52. Reason: Merging consecutive posts
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Old 13.10.2020, 10:27
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Re: Tax implications for 250k salary

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Well, wikipedia puts the average cost of the compulsory health plan at 396CHF/month (in 2014). This seems in line with various online searches I did. So for two people that's 396 * 12 months * 2 = 9.5k. Do you disagree with this figure? My 12k estimate comes from being a bit conservative and choosing a 500CHF/month plan, but in the overall scheme of things, this bump won't move the needle.


I thought about Zug, but I'm not very keen on a long commute, at least at first (I do this now). Part of the allure of moving to Switzerland is the increase in quality of life, and I don't think spending 1-2 hours traveling each day is worth it to me. Btw, I have a EU passport - why does it matter when choosing where to live? Is it difficult for non-EU to live and work in different cantons?
To put it in perspective we pay about 240 CHF a month insurance each.
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