Expat Tax Benefits

The term “expat” is regularly used for both, locally employed and dispatched employed persons of foreign nationality. However, it is important to understand that there is a difference. “Expatriates” or “Expats” are managers and specialists with special professional qualifications who are temporarily sent to Switzerland (usually to a subsidiary or sister company) by their foreign employer. In Swiss professional terminology, they are also called “assignees”. They must be distinguished from those employed by a company domiciled in Switzerland. These are referred to as “locally hired”.

Expats, respectively assignees, incur additional professional costs as a result of this temporary stay in Switzerland.

Since the revision of the corresponding legal provision regarding expat deductions (ExpatV), the conditions have become more stringent. Both executives and specialists are now subject to temporary assignments, i.e. a foreign employer can only send persons (within the same group) to Switzerland as expatriates for a maximum of 5 years for the purpose of employment. Specialists must therefore be able to prove that they have been sent to Switzerland temporarily (and within the same corporate group).

In practice, there may also be exceptional cases in which expatriates with a (temporary) local employment contract can also benefit from the additional deductions. However, the following obligations to provide evidence then apply:

If the employee qualifies as an expatriate, he is entitled to additional deductions. These include:

If, on the other hand, these additional costs are covered by the employer or if it is intended to claim lump-sum deductions for each group of persons, it is advisable for the employer to make a prior ruling with the relevant cantonal tax authorities.