The Swiss tax system is incredibly complex especially because the country has 26 cantons and over 2,500 communities The Federal tax rate is the same for everyone, but cantonal and community tax rates differ greatly All income earned from employment and self-employment worldwide is taxable in Switzerland, including movable and immovable property and retirement incomes. Most income is aggregated and taxed, including that of married couples (but not couples who are separated or divorced). The provided rental value of owner-occupied dwellings is also taxable. However, capital gains on private movable properly (e.g. capital gains on shares) are tax free, unless the taxpayer is trading regularly,
Location, location, location
If you are looking to move within Switzerland, it is advisable that you check the differences in cantonal and community taxes when considering various areas. For example, eastern Switzerland generally has lower taxes than the west of the country Even a few kilometres can make a huge difference to your tax bill. Popular tax havens include Zug in Canton Zug and Wollerau in Canton Schwyz. However, even in some cheaper Cantons, the difference between the cheapest and the most expensive municipality can vary as much as 30 per cent.
Making pension schemes work for you
A simple way to save money regardless of your location is to invest in pillars two and three of Switzerland's three-pillar pension system. (For more details about this system, please see our November article entitled Switzerland's magical pillars).
Pillar 2 (company pension): Ask your employer if you can make a voluntary contribution to your company's pension fund. The contributions are tax deductible from your income tax and have the objective of ensuring you have sufficient capital at retirement. You can pay either in a lump sum or in instalments over a number of years Tax is not charged off the accrued interest on a pillar 2 account Instead, taxes are levied at a preferential tax rate when money is withdrawn. Pension fund savings can only be withdrawn under certain circumstances. These include deregistration when leaving Switzerland permanently, buying a primary residence in Switzerland (not a vacation home), giving up your employee status to become self-employed, and retirement or death (a disability pension is also paid)
Pillar 3a (personal account): If you can afford to, it is advisable that you open a pillar 3a bank account. The limited contributions are...