Principle of Family Taxation
Taxation of families and children
The principle of family taxation states that the worldwide income and wealth of a married couple sharing the same household as well as potential dependent children must be declared in a joint tax return. The same principle also applies for registered same-sex partnerships. An exception the rule of a joint tax return is, if the married couple has different residences (see: International weekly commuters, tax residence).
The income and wealth of underage children must be declared by the parent in charge of parental custody. In the case of joint custody of unmarried parents, the allocation shall be made to the parent exercising the daily care of the child. If both the parents are occupied with the daily care the allocation must be made equally. In any case, income from self-employment is always taxed independently by the child.
Impact of marital status change and relocation within cantons
A joint tax assessment is made for the entire calendar year in which the couple got married or the partnership was registered. This means that if the marriage or the registered partnership took place e.g. in December of a year, the joint tax liability starts on a retroactive basis already as per January of the same year. The same applies when moving to another canton, where the tax for the entire year is paid at the place where the taxpayer lives as of 31 December. The canton of departure is left with no tax collection.
The income of individuals is taxed on a federal, cantonal as well as on a communal level. For federal taxes, the income is not split between married couples for the determination of the applicable tax rate. There are two different models by respective cantons. One follows the same model as for federal taxes, the other one the concept of splitting income. The latter leads to a reduction of the tax burden.
Tax consequences for married couples or couples in a registered partnership
Due to the principle of tax progression, the cumulated income of these couples is taxed at a higher rate as their individual income. This results in a disadvantage for jointly-taxed double-income earners. This effect becomes more noticeable as the incomes rise.
In order to reduce this effect, married couples benefit from a lower tax rate for the same income and further deductions can be made as compared to unmarried couples.