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Old 19.08.2006, 23:07
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Contract Employment Tax Question

I was hoping someone might have some insights (or point me to some resources) in answer to a tax question.

My husband is a dual British/Swiss citizen. We are currently living in the UK. He is contemplating quitting his job here (which he is fed up with) and taking a contract job in Zurich. This would be a move to sort of scope out the idea of moving to Switzerland (he grew up in the Bern area) and so we want to check out life in Zurich as there are a lot of jobs in his field (IT, of course, what else? ) in that area.

I'm wondering how the tax would work on the Swiss side of things. If he has a short term apartment rental for a few months, will they consider that his address for tax purposes? Since this wouldn't be a permanent move (officially, yet) I'm at a loss as to how to estimate the tax that would be taken from his income so we can determine how much he would take home.

Thanks for any help or tips you might have.
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Old 22.08.2006, 10:35
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Re: Contract Employment Tax Question

Quote:
I was hoping someone might have some insights (or point me to some resources) in answer to a tax question.

My husband is a dual British/Swiss citizen. We are currently living in the UK. He is contemplating quitting his job here (which he is fed up with) and taking a contract job in Zurich. This would be a move to sort of scope out the idea of moving to Switzerland (he grew up in the Bern area) and so we want to check out life in Zurich as there are a lot of jobs in his field (IT, of course, what else? ) in that area.

I'm wondering how the tax would work on the Swiss side of things. If he has a short term apartment rental for a few months, will they consider that his address for tax purposes? Since this wouldn't be a permanent move (officially, yet) I'm at a loss as to how to estimate the tax that would be taken from his income so we can determine how much he would take home.

Thanks for any help or tips you might have.
There's anothe thread in this group which deals with the opposite but seems to be quite relevant to your case also:

http://www.englishforum.ch/help-tips...ying-here.html


As Lob says. there are laws the show when the Inland Revenue consider you domiciled in the UK:

http://www.hmrc.gov.uk/pdfs/ir20.htm


- 183 days a year. So, as long as your husband was in the UK for that amount of time, he'd still be a considered a UK resident and he'd still be paying UK tax.

I assume that under these conditions, the Swiss wouldn't consider him liable for tax as well (you can only be domiciled in one place) but I would check by phoning the tax authorities of the Canton he was thinking of working in. You'd also need to check Federal tax authorities and even the Gemeinde where he was going to live as they may have specific rules.


If he's going to be earning a decent rate, it's worth locating a good accountant and asking them. The accountant should be able to answer all your questions... for a fee of course

Your husband will benefit from having an accountant anyway if he's going to earning an appreciable amount contracting and a couple of hundred francs now could save much hassle and money later.


Gav
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Old 22.08.2006, 10:39
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Re: Contract Employment Tax Question

I would say if he's not 183 days into a UK tax year when he stops earning in the UK, he should domicile wherever in Switzerland and pay local taxes.

Because it's all cheaper than Tony B. Liar's income tax
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Old 22.08.2006, 11:34
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Re: Contract Employment Tax Question

This may help to estimate income and tax on the Swiss side before seeing an accountant etc:
http://212.90.216.117/revenueestimate/mainForm.jsp
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Old 22.08.2006, 12:50
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Re: Contract Employment Tax Question

Thanks for the replies and the links. We will look them over. It would be Sept. or Oct when he headed to Switzerland so he would definitely meet the UK residency/domicile requirements. I just didn't know how it worked since he was also a Swiss citizen. I think we may just meet with an accountant in Switzerland to get an overview of things, once he gets a contract position lined up.

THanks again.
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Old 22.08.2006, 14:40
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Re: Contract Employment Tax Question

Quote:
Thanks for the replies and the links. We will look them over. It would be Sept. or Oct when he headed to Switzerland so he would definitely meet the UK residency/domicile requirements. I just didn't know how it worked since he was also a Swiss citizen. I think we may just meet with an accountant in Switzerland to get an overview of things, once he gets a contract position lined up.

THanks again.
Hello, just for your information. I have had this exact situation before and these were the solutions that were recommended by the tax guys at KPMG and their advice.
The UK will only tax until the point of leave if you declare a permanent move. I GUESS you are borderline anyway in September for the 180 day rule as we are talking tax year and this begins in April not January in the UK and it is the number of midnights including weekends that are counted. The Swiss will tax you irrespective if you take a local contract and are Swiss or not - there is no formal tax agreement between UK and CH to stop double taxation so watch out! So you need to weigh up what you want to do in advance. In one case that I know about the recommendation was to leave all under UK tax as there was pension considerations that were substantial - this meant the contract was closed in the UK. In another it was run it all under Swiss law and if you leave to come back to the UK you can open the book again with a non-earning gap inbetween. The UK "generally" only taxes on UK earnings unlike Switzerland that taxes all earnings irrespective of where they were earned.

This brings up another point - is this a single earning family or not? IF you also earn this will needed officially to be declared in Switzerland... Not that you will declare it of course...
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Old 22.08.2006, 15:56
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Re: Contract Employment Tax Question

Hmm, more to think about.

On initial research this is what I have found so far:
The UK does appear to have a tax treaty with Switzerland
http://www.hmrc.gov.uk/manuals/dtmanual/dt18101+.htm

but I will need to wait until the toddler is asleep to delve into the specifics.

I have a friend that is really good with HMRC/Inland Revenue stuff so I will have her look at it as well. This page had what seemed to be a quick overview/summary of things.
http://www.lowtax.net/lowtax/html/jsw2tax.html

We are single income family (thanks to the afforementioned toddler) so at least that keeps things a bit simpler.

Thanks for the reminder about the British tax year - I am American and we've only been here a year so my brain is still on calendar years from the US system.

Quote:
unlike Switzerland that taxes all earnings irrespective of where they were earned
Do you mean that Switzerland taxes its expats? For some reason I thought only the US taxed the earnings of their expats . . . if so we have some catching up to do in Switzerland since my husband has been living and working outside the country for 10 years .. . .
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Old 22.08.2006, 16:13
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Re: Contract Employment Tax Question

Switzerland taxes its residents.
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Old 22.08.2006, 16:25
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Re: Contract Employment Tax Question

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Switzerland taxes its residents.
but not expatriates? Thanks for that - the thought of ten years of back taxes . . . Can't imagine breaking that news to my husband
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Old 22.08.2006, 16:51
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Re: Contract Employment Tax Question

Quote:
Hmm, more to think about.

On initial research this is what I have found so far:
The UK does appear to have a tax treaty with Switzerland
http://www.hmrc.gov.uk/manuals/dtmanual/dt18101+.htm

but I will need to wait until the toddler is asleep to delve into the specifics.
When you find the time I think you will find that along with other non-bordering countries the tax regulations apply to interest and dividends etc and company taxes and not to personal income tax. Hope I am wrong so that you have some choice here but I don't think I am...
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Old 22.08.2006, 17:02
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Re: Contract Employment Tax Question

Quote:
When you find the time I think you will find that along with other non-bordering countries the tax regulations apply to interest and dividends etc and company taxes and not to personal income tax. Hope I am wrong so that you have some choice here but I don't think I am...
We are in the process of getting our tax info together for our UK/US accountant to prepare our US tax return. I will ask her to look into this as part of our tax planning for the coming year. but this looks promising:

Quote:
DT18151 - DT: Switzerland: double taxation agreement, Article 2: Taxes covered

(1) The taxes which are the subject of this Convention are:

(a) in the United Kingdom of Great Britain and Northern Ireland: the income tax, the corporation tax, the capital gains tax, the development land tax and the petroleum revenue tax(hereinafter referred to as `United Kingdom tax`);
(b) in Switzerland: the federal, cantonal and communal taxes on income (total income, earned income, income from capital, industrial and commercial profits, capital gains and other items of income)

(hereinafter referred to as `Swiss tax`).


(2) The Convention shall also apply to any identical or substantially similar taxes which are imposed by a Contracting State or a political subdivision or a local authority thereof after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.

(3) The Convention shall not apply to the federal anticipatory tax withheld in Switzerland at source on prizes in a lottery.
(bolding mine)
source: here

I'll be the first to admit that all this is not my forte, but at first read I find that promising so I will try to get an answer from our UK tax consultant, and I'll update the thread with further info from her, in case it could be of help to others in the future.
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Old 22.08.2006, 19:49
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Re: Contract Employment Tax Question

Quote:
but not expatriates? Thanks for that - the thought of ten years of back taxes . . . Can't imagine breaking that news to my husband
Don't worry - the US is the only country that I know of that taxes non-residents. Richard was referring to a country taxing you on your worldwide income while you are resident in their country. To say that the UK doesn't do this is not strictly correct. If you are an oil baron living in London and not remitting income earned abroad into the UK then it is not taxable. However, for most people who earn some money from abroad this does end up taxable. Same deal for Switzerland.

Just a small tip - when you first arrive in Switzerland - declare your "wealth" that you might have outside of Switzerland. This means you'll be able to bring your savings into the country without it appearing as income further down the track. Don't worry about the Swiss wealth tax - it's so tiny it's almost a joke - heck even declare more wealth than you actually have if you like - it won't make much difference to your wealth tax bill. On the other hand if you declare zero as wealth and want to bring in some savings to support yourself in a few years time you have a problem - it looks like income to them...
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Old 22.08.2006, 20:10
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Re: Contract Employment Tax Question

Quote:
Don't worry - the US is the only country that I know of that taxes non-residents.
I thought we Americans were "special" that way.

Thanks for the tip on the wealth declaration. That is really good to know and something we will definitely keep in mind if we get to the point of a permanent move.

We've sent the first few CVs off to recruiters and he is going to make some follow up calls this week, so fingers crossed that he can get something. The job we moved to the UK for from the US has sucked bigtime so it will be nice for him to shake that dust from his feet.
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Old 22.08.2006, 21:24
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Re: Contract Employment Tax Question

Quote:
I thought we Americans were "special" that way.
Yeah, we ride the short bus in the tax arena
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