Tax on Worldwide Income and Worldwide Wealth

If you are a Swiss citizen or a foreigner with tax residence in Switzerland and have income from abroad and/or assets abroad, you must declare them in your Swiss income tax return. This is because worldwide income and assets are included in the calculation of the tax rate in Switzerland. In this article, we will answer important questions you may have about this and show you how to keep your tax burden as low as possible.

Am I Liable to Pay Taxes in Switzerland at All?

The Swiss tax system distinguishes between personal and economic affiliation when assessing tax residence.

Does Everyone Have to File an Income Tax Return?

In principle, everyone with tax residence in Switzerland must file a tax return. Unlike many other countries, Switzerland does not have a general withholding tax. This means that employed persons have their gross salary transferred by their employer and this is not automatically paid by the employer to the tax authorities. Taxes are then calculated as part of the annual tax return.

« Accordingly, the double taxation agreement provides that the income is taxed in only one of the two states. »

I Already Pay Income Tax Abroad: Do I Have to Pay Again in Switzerland?

Income is taxed where it is received and where the recipient is resident for tax purposes. For people who do not work in the country where their tax residence is located, this rule would result in double taxation of income or assets.

Many countries in the world have therefore concluded double taxation agreements with numerous others in order to avoid precisely such cases. Switzerland also has such agreements with many countries. Accordingly, the double taxation agreement provides that the income is taxed in only one of the two states.

Therefore, if you already pay tax on your income in the country from which you receive it, you do not have to pay tax on it again in Switzerland. However, you must declare it in your Swiss tax return, because it affects your tax rate to be paid in Switzerland.

What Is the Property Tax?

Swiss wealth tax is levied independently of income and applies to both movable and immovable assets in Switzerland and abroad. Like income tax, wealth tax is payable by anyone who is resident in Switzerland for tax purposes.

All assets owned by you, both in Switzerland and abroad, must be declared in your tax return. Your worldwide assets are included in the calculation of your wealth tax rate, but the tax is only levied on assets located in Switzerland.

I Already Pay Taxes on a House Abroad: Do I Have to Declare That Too?

You must also declare properties for which you already pay taxes abroad in your Swiss tax return. You do not have to pay taxes in Switzerland for foreign assets. The respective values are only included in the calculation of your tax rate.

In addition, if you rent out the house abroad, you must also declare the rental income under your foreign income. These will then affect your income tax rate. The same applies to securities accounts abroad: dividend payments or capital gains from sales are added to your income.

I Have Never Declared My Assets Abroad Before: What Should I Do?

If you do not want to be caught for tax evasion sooner or later, it is advisable to file a voluntary declaration in this case. You submit this to the tax authorities together with a complete list (going back up to 10 years) of all the assets you have abroad. Self-disclosure saves you from a fine in most cases, and you may have to pay tax on the assets and interest on late payments.

Am I Eligible for a Lump Sum Tax on My Assets?

In some circumstances, foreigners have the advantage of being able to take advantage of lump-sum taxation of their assets. This is usually more favorable than exact taxation according to actual assets.

If the following four criteria apply in your case, ask your cantonal tax authority whether you qualify for lump-sum taxation:

How Can I Save on Income and Property Taxes?

There are some legal ways you can reduce your tax burden in Switzerland. Here are two useful tips for you to get a head start on how you can save on taxes:

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