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It’s that time again at the end of March: You have to fill out your tax return – and most of us have a hard time with it. What is taxable? What can I deduct? And: What can happen if the details I provide are not entirely accurate?
In Switzerland, all natural persons from the age of 18 are required to file a tax return if they have their permanent or temporary residence in Switzerland or if they own real estate here. This also applies to people in training (school, apprenticeship, university), even if they have little or no income.
A different rule applies to foreign employees who work in Switzerland and do not have a permanent residence permit (C permit). They pay withholding tax on their income from employment and substitute income. If their income does not exceed CHF 120,000 gross per year, they do not need to file a tax return. However, if they exceed this income limit, they must file a tax return (subsequent ordinary tax assessment).
In many cantons, the tax return must be submitted by March 31 of the following year. This deadline can be extended to the end of November or even December in most cantons.
If you miss the deadline, you will be sent a reminder and a late payment fee may be charged. Here as well, practice varies considerably among the individual cantons.
To complete your tax return successfully, it’s best to proceed step by step. First, you should collect all the necessary documents.
In order to complete your tax return, you will need the following documents, among others:
Information on income and assets, for example:
For deductions:
As a general rule, you should keep bank records and general tax documents for ten years. But there is no legal obligation to do so. In any event, it is advisable to keep records and documents until you receive the definitive tax assessment or estimate. We recommend you keep property documents for at least 20 years. In particular in the event of a sale, you will need to be able to furnish proof of all investment costs.
As part of your tax return, you must enter your income and your assets.
Your income is composed of capital income from employment, income from self-employment and any secondary income.
In other words: You transfer the net salary amount from the salary certificate to the corresponding field on your tax return. In addition, you must also enter income from alimony, gambling winnings, and other sources of secondary income. As a pensioner, you must also enter AHV/OASI and occupational benefits.
From this income, you still have to deduct expenses (travel costs to work or meals away from home), general deductions (private debt interest, healthcare costs, etc.) and social security deductions (children’s or AHV/OASI deductions), to determine your taxable income.
In addition, to complete your tax return, you must declare various assets, including:
You arrive at your taxable assets when you deduct debts from your assets – for example mortgages or consumer loans. Most cantons also grant other social deductions and know the respective tax exemptions. The exact amount you can deduct varies from canton to canton.
You will receive the tax return from the cantonal tax authorities and submit it to them as well. It is now possible to complete your tax return electronically or directly online.
You can have a tax advisor complete the tax return. If you have any specific questions, you can also contact your cantonal tax administration. In addition, you will find various online tools to help you complete it.
You can extend the deadline by submitting a corresponding application. Here too, practice varies from canton to canton. Most cantons prefer the extension to be completed online via the website of the respective tax administration or by means of a QR code printed on the tax return form. Information about the different options can be found in the insert included with the tax return forms or on the tax authority’s website.
If a tax return is not completed and submitted despite the reminder, the tax authorities will assess you ex officio and at their discretion. In addition, a fine is imposed for failure to comply with procedural obligations.
If you fail to pay the tax amount, enforcement of the tax claim will be initiated. In this connection, it must be borne in mind that the tax assessment carries the force of a definitive title to set aside an objection under debt collection legislation.
A power of attorney is not enough for a tax return . The tax law requires taxpayers to complete and sign their tax return themselves. The signature by a contractual representative (power of attorney) is not permitted. This does not apply to cases in which the taxpayer cannot sign in person , for example if they are unable to use their hands due to illness or accident.
If the taxpayer is a minor or is under full or advisory guardianship, the legal representative or guardian must sign the tax return in person in their place.
In the case of spouses to be assessed jointly, the personal signature of both spouses is required for the tax return.
If the tax return is not signed in person, the tax declaration obligation is not formally met. If the taxpayer has not personally signed the tax form, he or she will be asked to sign it within a reasonable period. If the person required to sign does not sign despite being reminded to do so, they can be fined for a violation of procedural obligations.
If you own or buy residential property, the following can be deducted from your rental income by third parties when you complete your tax return:
Maintenance costs are considered equivalent to investments in energy saving and environmental protection.
The taxpayer can claim a flat-rate deduction for private property instead of the actual costs and premiums. As a rule, the choice between a flat-rate deduction and the actual costs can be made each year. In most cantons, the flat-rate deduction amounts to 10% of rental income or of the rental value if the building is no more than ten years old at the beginning of the tax period – or 20% of rental income or of the rental value if the building is more than ten years old at that time.
A distinction is made between maintenance costs and value-adding investments, which cannot be deducted on the tax return as maintenance costs. Value-adding expenses are those that permanently improve the condition of the property.
In the event of tax evasion, you can expect a fine of 100% of the tax evaded. Depending on whether you acted negligently or intentionally, the penalty can be reduced or even increased by up to three times. Tax fraud carries a fine or imprisonment of up to three years.
It is important that you fill out your tax return carefully, because even small mistakes or inaccuracies can lead to prosecution. Negligence is also punishable.
These are the most common mistakes:
Note: Winnings from Swiss casinos (not online) are tax-free, but they must still be declared on the tax return.
Below we have summarized other frequently asked questions and answers for completing your tax return.
Provided these costs are not covered by insurance, the bill – together with all other medical expenses (health insurance deductibles and excess, optician’s fees, etc.) – can be claimed under sickness and accident costs. However, there is a deductible of 5% of net taxable income.
Essentially, earned income is still taxable after reaching retirement age. Tax law does not provide for an exempt amount such as that under AHV/OASI (CHF 1,400 per month or CHF 16,800 per year).
When declaring the pension plan for Pillar 3, it matters whether it is a Pillar 3a or 3b pension plan.
Pillar 3a contributions can be deducted on your tax return up to the maximum annual amount stipulated. On the other hand, the assets accumulated do not have to be declared – they are exempt from wealth tax. Income from accrued assets is also tax-free during the term.
In the case of pillar 3b insurance plans, it depends on what type of investment you have opted for (surrenderable insurance, pure risk insurance, or mixed policies). Different tax liability rules apply here. Payments into redeemable endowment insurance policies cannot be deducted from tax; the surrender value is taxed as an asset during the term. On the other hand, the entire assets including all income are tax-free when paid out. Every year, the Swiss Federal Tax Administration publishes a list of the different insurance products as a help when completing the tax return.
Tax liability applies to the overall potential to earn. This means that global income and assets have to be declared on the tax return. Accordingly, there are no exempt amounts. Even a bank account with a zero balance needs to be declared for the sake of full disclosure. Especially in light of the Automatic Exchange of Information (AEOI), which requires that foreign bank accounts and life insurance policies are reported to the Swiss Federal Tax Administration, it is highly advisable to declare all accounts to the tax authority.
Nadine Graf is a theme manager and writes texts for AXA on topics related to insurance and beyond.
