The taxman cometh: the tax form for 2007 will arrive in early 2008, however, if you want to save on your taxes for this year then you will have to take action before December 31.
| Auteur | Donnellon, Brien |
| Fonction | MONEY |
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Mark Twain once wrote: "What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin." Surely it can't be as bad as Twain suggested but just in case he was right, let's look at some ways of reducing your tax burden.
Move canton or community before December 31, 2007
Federal taxes are the same throughout Switzerland, however there are huge differences between the cantonal and community taxes; many expats may not realise that until they have lived here for a year or two.
If you are moving to Switzerland, it is worthwhile checking the various scenarios. For example, eastern Switzerland generally has lower taxes than the west.
The cantons of Schwyz, Zug, Obwalden and Nidwalden are particularly advantageous, however even in these cantons the community taxes vary considerably.
Changing location is the most effective way of reducing tax, although it may not always be practical! Private individuals pay tax for the whole year to the canton and community where they are registered on December 31.
Pillar 3a
The government promotes and rewards active retirement savings.
If you are employed or self-employed and can afford the yearly payment, it is worthwhile to have a pillar 3a account because the contributions you make are fully deductible from income and no tax is levied on the interest. Assets in a pillar 3a account are taxable at a reduced rate once withdrawn.
If you have a pension fund, the maximum amount you can contribute in 2007 is SFr 6,565.
The maximum amount for the self-employed who do not belong to a pension fund is 20 per cent of their income, up to a maximum of SFr 31,824. If you don't require insurance cover then we currently recommend pillar 3a bank accounts instead of pillar 3a insurance policies.
Pillar 2 (company pension)
Contributions for savings in a Swiss company pension fund begin the age of 25. Expats may miss years of contributions but later choose to purchase the missing years. The amount is calculated by the pension fund and is payable in a lump sum or over a number of years.
An opportunity for additional investment in the pension fund can also occur due to a significant pay rise or following a divorce. The contributions are tax deductible and no tax is levied on the interest. Capital from a pillar 2 account is taxed at a reduced rate when withdrawn.
Payment from pillar 3 in different tax years
If you are approaching retirement age and have two or more pillar 3a...
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