“In this world nothing is certain but death and taxes,” said 18th century American statesman and inventor Benjamin Franklin, true as it might be we can hardly escape the inevitability of paying taxes. Depending on your status in Switzerland you might be required to be pay value added tax (VAT), tax on vehicles, inheritance, property and even dogs. Read on, as we provide you with a brief overview on paying taxes and give you some hands-on advice.
Value Added TAX (VAT)
Value added tax or VAT is a consumption tax on a product, whenever value is added at the stage of production and final sale. In Switzerland all businesses must pay VAT regardless of their legal form. If the yearly value of taxable materials is less than CHF 100,000 the business is exempt form paying VAT. It is also exempt from paying VAT if the value is 150,000 for charitable institutions. VAT is not required on certain goods and services i.e. medical services and goods/services supplied abroad.
The government of Switzerland requires each vehicle owner to annually pay tax. The amount of tax required and the way it is calculated differs from one canton to the other.
Inheritance tax in Switzerland is payable to the government by the heir who inherits the estate or property. Personal household goods are not taxed; spouses, children and stepchildren or foster children do not need to pay inheritance tax. The tax rate differs depending on the size of the inheritance and the relationship to the deceased person. A close relative of the deceased will pay lower tax than a distant relative. To file for inheritance tax it is advisable to contact the tax administration in the canton where the testator lives or owns property.
If you own a house, land or real estate property you are obliged to pay cantonal or communal tax. The tax is usually payable by natural persons and legal entities recorded in the land register. The property is usually taxed by its location; the tax is calculated based on the full value of the property without taking into consideration related debts or mortgages.
Strange as it might sound dog owners must pay tax for their dogs. You must register your dog in the commune of residence, the Swiss government requires dog owners to pay an annual amount for each dog you own, based on the size and weight of the dog. If you move away or your dog dies, you must notify the commune. You are not required to pay taxes for guide and rescue dogs, nevertheless some cantons might charge reduced tax for such dogs.
Paying Tax As An Expat
If you are a foreigner residing in Switzerland with a permanent residence permit C, or a foreigner married to a Swiss citizen you will need to file a tax return each year. Moreover, if your gross salary exceeds CHF 120,000 per year you are obliged to file a tax return for worldwide income and assets. The tax year-end is December 31, tax returns must be filed within three months after the end of the tax period. If you do not pay your tax on time you might be subject to default taxation, it is advisable to pay your taxes on time. Depending on the canton you live in you may also be required to pay a penalty if you fail to pay your taxes.
FERZ SA will guide you through the process of filing tax returns, our experienced team offer a wide range of tax services explaining all the legal requirements for paying taxes in Switzerland, call or email us for a consultation.