We strongly recommend that if you have any doubts or questions about your tax filing situation as a US expat living in Switzerland that you contact a US expat tax specialist.All tax-resident individuals are taxed on their worldwide income and wealth. Catching upĮxpats in Switzerland who are behind with their US tax filing because they were unaware that they had to file from abroad can catch up without facing penalties under an IRS amnesty program called the Streamlined Procedure, so long as they do so before the IRS contacts them about it. You can find information on Swiss income tax rates using the tool here. Residents pay Swiss tax on their worldwide income, non-residents only on their Swiss sourced income (and wealth). It’s also compulsory to purchase medical insurance in Switzerland.Īmericans will be considered residents in Switzerland if their permanent home or center of interests is there, or if they stay 30 days working (or intending to work) during the tax year, or 90 days not working or intending to work. The details differ depending on which canton you live in. Returns should be filed by March 31st, though extensions are available (some of which you have to pay for). If you are employed by a Swiss company, tax will be deducted from your income at source, and if this is your only income and you don’t earn over CHF 120,000 per year (CHF 500,000 in Geneva), you don’t have to file a Swiss tax return (although you still might want to, to claim deductions). The total, cumulative rates range from 0% of income to 48%. Switzerland has federal, municipal, canton, and church, income taxes. Swiss residents are taxed on their worldwide income, while non-residents are just taxed on income arising in Switzerland. Which country they pay depends on how long they will be living in Switzerland. Expats’ contributions made while in Switzerland can be credited to either system. The US-Switzerland Totalization AgreementĪ separate agreement called a Totalization Agreement helps US expats in Switzerland not to pay social security taxes to both the US and Swiss governments. Expats who can claim a provision in the treaty can do so by filing IRS Form 8833. Expats should consult a US expat tax specialist to check. Some Americans in Switzerland, for example students and retired expats, may be able to claim a provision in the United States – Switzerland Tax Treaty (besides claiming US tax credits). The US – Switzerland Tax Treaty also allows the Swiss government to share US expats’ Swiss tax information with the IRS, as well as their Swiss bank and investment account details and balances. The United States – Switzerland Tax Treaty covers double taxation with regards to income tax, corporation tax, and capital gains tax, however, a clause called a savings clause in Article 1 section (2) states that “the United States may tax its citizens (including its former citizens) as if this Convention had not come into effect.” This means that US expats are still liable to file US taxes on their global income. The United States – Switzerland Tax Treaty Don t forget though that even if you don’t owe any tax to the IRS, if your income is more than the IRS thresholds mentioned above, you still have to file a federal return. The Foreign Tax Credit is often a better option if you pay more tax in Switzerland than you would owe to the IRS, as you can carry the excess credits forward for future use. The two primary ways are the Foreign Earned Income Exclusion, which lets you exclude the first around US$100,000 of foreign earned income from US tax so long as you can demonstrate that you are a Swiss resident, and the Foreign Tax Credit, which gives you a dollar tax credit for every dollar of tax you’ve paid in Switzerland. If you pay income tax in Switzerland, there are several ways you can reduce or null the tax due on the same income to the IRS. “The amount of tax you have to pay (in Switzerland) depends on your income and savings, your civil status, church membership, where you live and how many children you have.”