Any good setups in Switzerland?

[Martin Everson]

Unfortunately in Switzerland the gymnastics are not worth it.

Exactly. As someone with 8 figure wealth I would not even bother with Switzerland. The 35% dividend is outrageous. It can be reduced under treaty to as low as 10% for an individual but why bother with Swiss bureaucracy.

Is it possible to setup a calculation for someone that earn 5000 EUR / month or 5000 CHF / Month. Living in Zug or living in Lugano (both have been mentioned here on the forum a number of times).

https://incometax.ch/

You rent a flat / house somewhere and live your live, how much would I get out of the 5000 CHF at the end of the month, if you consider all costs, insurance, tax etc, do you know that?

Around 2,000 CHF. A 5,000 CHF salary is quite common in Switzerland and most people can live on this comfortably if you don't get sick as like ambulance is 800chf and Rega air ambulance like 3,000chf. In Switzerland the unknowns are very high and Krankenkasse (Health insurance) does not cover everything sadly.

 

[clemens]

If not Swiss can someone mention alternatives in Europe, not the EU ?

 

[JustAnotherNomad]

@clemens Did you find any good and affordable accountants in Switzerland?

I found a PDF document with some sample calculations that showed extremely low taxes for Switzerland, by claiming lots of deductions. It’s quite a difference if you pay 20% on 100% or 50% of your income. But now I can’t find that PDF again.
Might be good to just talk to an accountant to get a very rough estimate.

 

[Konstanz]

Exactly. As someone with 8 figure wealth I would not even bother with Switzerland. The 35% dividend is outrageous. It can be reduced under treaty to as low as 10% for an individual but why bother with Swiss bureaucracy.



https://incometax.ch/


Around 2,000 CHF. A 5,000 CHF salary is quite common in Switzerland and most people can live on this comfortably if you don't get sick as like ambulance is 800chf and Rega air ambulance like 3,000chf. In Switzerland the unknowns are very high and Krankenkasse (Health insurance) does not cover everything sadly.

The trick with Switzerland is that you can get an agreement with tax authority to have lump sum tax annualy. Somethiling like 100-300k annual tax depending on expense/wealth. All other income is tax free then.
So, many rich people move there. Here is the source: Lump-sum taxation

 

[Marzio]

The trick with Switzerland is that you can get an agreement with tax authority to have lump sum tax annualy

Italy has a similar deal, it's also cheaper to live there but with all those migrants the place is quickly becoming a shithole

 

[JustAnotherNomad]

Yes, I’m well aware of that, but I’m not on that level yet.
By Swiss standards, I probably wouldn’t even be considered high income, lol.
My question rather is how much you can lower your income by claiming regular deductions. I believe you can claim expenses for food (business lunch) without any documentation etc. - but I don’t know if there are any other good deductions.
If you can lower your taxable income by 50% on paper, then paying 20-25% in taxes isn’t that bad actually.

 

[Konstanz]

Yes, I’m well aware of that, but I’m not on that level yet.
By Swiss standards, I probably wouldn’t even be considered high income, lol.
My question rather is how much you can lower your income by claiming regular deductions. I believe you can claim expenses for food (business lunch) without any documentation etc. - but I don’t know if there are any other good deductions.
If you can lower your taxable income by 50% on paper, then paying 20-25% in taxes isn’t that bad actually.

20-25% is high. Why Switzerland?
Why not just Cyprus non-dom?
I don't know much about your project. Maybe you can do it remotely or just keep residency of other country

 

[Martin Everson]

The trick with Switzerland is that you can get an agreement with tax authority to have lump sum tax annualy. Somethiling like 100-300k annual tax depending on expense/wealth. All other income is tax free then.
So, many rich people move there. Here is the source: Lump-sum taxation

That program has been around forever and is a waste of time in 2020. There are other programs and places you can live with better weather and people with common sense. It is a bureaucratic place with pedantic processes and mind set. A place where you cant drive a nice car without receiving unlimited speeding fines from speed cameras hidden in dustbins and neighbors reporting you for not separating your garbage etc. The Swiss don't know the meaning of the word enjoyment unless you consider ringing cow bells fun . People that move there are people that can't get into Monaco.

 

[Konstanz]

That program has been around forever and is a waste of time in 2020. There are other programs and places you can live with better weather and people with common sense. It is a bureaucratic place with pedantic processes and mind set. A place where you cant drive a nice car without receiving unlimited speeding fines from speed cameras hidden in dustbins and neighbors reporting you for not separating your garbage etc. The Swiss don't know the meaning of the word enjoyment unless you consider ringing cow bells fun . People that move there are people that can't get into Monaco.

Well, actually Monaco is cheaper to move than to Switzerland. If a person can afford to pay 100-300k flat tax annually in Monaco he can rent a big apartment for that amount.

 

[Marzio]

Why Switzerland?

Mainly because of the same things that Martin Everson is bashing againts. Some see pedantic processes and speeding fines others see security and privacy. There's a reason why every year Swiss cities like Zurich, Geneva, Basel and so on are ranked in the top spots on the quality of life rankings.

 

[JohnLocke]

People that move there are people that can't get into Monaco.

We may open a new thread about Monaco if it offers low tax for people moving there and if it offer a better live standard compared to Switzerland.

 

[JustAnotherNomad]

20-25% is high. Why Switzerland?

20% is high like 35% is high in Malta.
The nominal tax rates don’t necessarily mean very much. I saw some calculations that showed you might be able to claim substantial deductions. If you pay 20% on half your income, it’s just 10%. Thus my question if you can really do it. Unfortunately I can’t find that document anymore. I doubt that it would work if you don’t actually have high expenses.

And as mentioned, I have received an offer for a project in Switzerland that would require me to work from the client’s office most of the time. I wouldn’t move to Switzerland to save taxes. I’m just trying to calculate the net value of this offer. I also like Switzerland, I think they’re getting many things right. I could imagine moving there when I have kids later anyway, I don’t think I’d want to send my kids to a school in Cyprus just to save some tax.

 

[Marzio]

I could imagine moving there when I have kids later anyway

Consider Ticino then, imho is the cantons with the best climate.

 

[Martin Everson]

Well, actually Monaco is cheaper to move than to Switzerland. If a person can afford to pay 100-300k flat tax annually in Monaco he can rent a big apartment for that amount.

Sorry I didn't mean unable to get into Monaco financially but get in integrity wise. Monaco does good due diligence and does not allow criminals like Switzerland. Monaco don't take scum or rich criminals that are likely to get assassinated outside Cafe De Paris in Monte-Carlo during lunch hour by rival mob bosses.

 

[Martin Everson]

Mainly because of the same things that Martin Everson is bashing againts. Some see pedantic processes and speeding fines others see security and privacy. There's a reason why every year Swiss cities like Zurich, Geneva, Basel and so on are ranked in the top spots on the quality of life rankings.

I have lived and worked in Zurich, Geneva, Schaffausen and Luzern. The place is depressing especially in German speaking Switzerland. Healthy people are having heart attacks all the time due to stress of the swiss society. Even the Swiss Health Observatory found 8% of the Swiss population have contemplated suicide. I personally had a neighbor commit suicide and two people in the company I was working for suffer stress related heart attacks. Suicide is even legal there lol. If you think thats a normal healthy society with quality of life where people want to kill themselves then fair enough. One needs to dig below the surface and experience a society first hand sometimes.

 

[JustAnotherNomad]

I have done some more research.
It seems that if you pay out dividends from a company of which you own at least 10% (may vary from canton to canton), you will not pay income tax on the full amount of dividends, but only on 20-70% of theamount.
The biggest discount is in the canton of Glarus. If you live there and pay out CHF 1M in dividends, you will only pay tax on CHF 200k - the other CHF 800k you can receive tax free.
If your Swiss company makes a profit of 1.176M you pay around 15% corporate income tax, which would leave about 1M in the company. You pay out that 1M, but only 200k is taxed. The tax would be some CHF 50k. So on a profit of 1.176M, the total tax to be paid would be about 225k or 19%.
It’s not zero, but it’s far, far less than what many other countries would charge.
No guarantees for the exact numbers, I only gathered this information from different sources on the internet.

There are also some deductions for companies with a lot of liquidity, as well as special tax breaks for IP.

 

[JustAnotherNomad]

And the 19% above would be with 15% CIT.
The tax on the dividends would be a mere 5%.

I’m wondering if it would also work with a foreign company. Say you have a Malta company that pays only 5% CIT. If you could receive the dividend deduction in that case at well, you would be looking at a total tax of 5.5%. So then @marzio might be kind of right as well...

Just one thing, I believe there are some minimums. For Switzerland not be categorized as a tax haven, the cantons have defined some minimum percentage of your income that must be subject to tax. I believe it’s something like 30%.

 

[Marzio]

you will not pay income tax on the full amount of dividends, but only on 20-70% of the amount.

Can you please put the source of this information?

 

[JustAnotherNomad]

I didn’t find “one source,” you need to google a bit. It seems like it was implemented as part of the corporate tax reform II and the new regulation entered into force in 2009

You can find some information here for example:

“A withholding tax of 35% is levied on dividends, interest from publicly offered bonds, debentures and other instruments of indebtedness issued by Swiss residents; and on bank interest. However, with respect to dividend income, if the individual recipient holds at least 10% of the share capital of the distributing company, only 60% of the dividend is taxable for federal income tax purposes. Switzerland does not levy withholding tax on royalties.”
https://www2.deloitte.com/content/d...uments/Tax/dttl-tax-switzerlandguide-2015.pdf

But it seems like that has been changed again this year (and the 80% discount that I found was apparently only given on cantonal taxes):

“Private “qualifying shareholders” (i.e., those holding at least 10% of the share capital) previously benefited from a privileged dividend tax treatment at both cantonal and federal levels.

As of 1 January 2020, such dividend income will now be taxed at a rate of 70% (previously taxed at a rate of 50% or 60%) at the federal level, regardless of whether the shares are held as a private or as a business asset. On a cantonal level, the taxation of qualifying dividends ranges between the rates of 50% and 70%.”
https://home.kpmg/us/en/home/insigh...rm-implications-for-individual-taxpayers.html
So it’s not/no longer as good as I hoped. Sorry for getting your hopes up.

Here is a specific calculation for salary vs. dividends in German:
https://www.vermoegenszentrum.ch/ra...rung-fur-unternehmer-lohn-oder-dividende.html
It shows that it is now better to pay out profits as a salary after all.

At least it seems like it also applies to foreign companies. Note that there are no CFC rules in Switzerland. So you could probably still make use of the deductions if you own a company with economic substance in another country.

 

[Martin Everson]

The biggest discount is in the canton of Glarus. If you live there and pay out CHF 1M in dividends, you will only pay tax on CHF 200k - the other CHF 800k you can receive tax free.

Glarus? Have you ever been there? There is absolutely nothing there but sheep and mountains. It's high up and is completely dead end.

Just one thing, I believe there are some minimums. For Switzerland not be categorized as a tax haven, the cantons have defined some minimum percentage of your income that must be subject to tax. I believe it’s something like 30%.

Yes there minimums and for some its very small.

https://www.ezycount.ch/en/tax-calculation/