Tax Deductions for Expatriates Working in Switzerland Explained

Swiss tax laws define expatriates as leading, specialized employees with exceptional qualifications who are temporarily posted in Switzerland by their non-Swiss employers. This category does not include foreign employees who are employed by Swiss employers.

Foreign residents who fall under the expatriate category benefit from special tax privileges which are not available to other residents. Here you can find the primary tax deductions available to expatriates.

If you reside abroad but work in Switzerland:

The following deductions apply if you live abroad but commute to work in Switzerland. Up to 1500 Swiss francs of combined expenses can be deducted from your taxable income.

1. Cost of commuting to and from Switzerland. If your primary residence is outside of Switzerland and you commute to and from Switzerland, you can deduct the cost of traveling between your home and your place of employment in Switzerland from your taxable income for Swiss tax purposes.

2. Cost of housing in Switzerland. If your primary residence is located outside of Switzerland, you can deduct the cost of accommodation in Switzerland, within reasonable limits. In order to benefit from this deduction, you must prove that you maintain a primary home (house, apartment) in your country of permanent residence. Your primary home must be used exclusively by you, and cannot be rented out in your absence.

If you temporarily move your residence to Switzerland:

If you are moved to Switzerland temporarily by your employer, you can benefit from these tax deductions, up to a combined limit of 1500 Swiss francs per month.

1. Moving expenses. The costs of transporting necessary personal property to Switzerland at the start of your temporary stay, and the costs of moving away from Switzerland at the end of your temporary stay.

2. Travel expenses. Cost of traveling to Switzerland at the start of your stay (both you, and your family, if applicable). Costs of traveling from Switzerland at the end of your stay.

3. The cost of housing in Switzerland. If you can prove that you continue to own or rent a home in your primary country of residence during your stay in Switzerland and that home is used exclusively by you (not rented out or sublet), you can deduct the cost of temporary accommodation in Switzerland from your taxable income. You will need to provide the tax office with proof – in the form of a rental agreement or title deed, for example.

You can claim the following benefit in addition to the 1500-franc combined monthly limit for the above-mentioned deductions:

4. Private school fees. If Swiss public schools in your area do not provide schooling in your underaged child’s mother tongue and such schooling is provided by a foreign-language medium private school in Switzerland, you can deduct the costs of private school fees from your income. You may be eligible for this deduction if your minor child speaks a foreign language and the brief length of your stay in Switzerland makes attending a school which teaches in the child’s mother tongue a sensible option. In order to claim this deduction, you will have to prove that your child attends a private school (by furnishing copies of the contract, for example).

Criteria for eligibility

In order to benefit from the above-stated tax deductions, you will have to cover the deductible costs yourself. If, for example, your employer covers expenses related to your moving to Switzerland, then you cannot deduct those cost from your taxable income in Switzerland. If you live in employer-sponsored housing during your stay in Switzerland, you cannot deduct the cost of housing. The same applies to private school fees. You also will not benefit from tax deductions if you front tax-deductible costs and your employer reimburses them.

Costs which are not tax deductible

The tax deductions apply to direct expenses only. Fees for tax consultation or advisory are not deductible. Indirect expenses like furnishing your home in Switzerland and supplementary housing expenses (utilities, caretakers, telecommunication services, TV licenses and cable, for example) are not tax deductible. The difference between your current cost of living and tax burden and the (possible) higher cost of living or the higher tax burden in Switzerland is not tax deductible. You also cannot deduct the costs of accommodation outside of Switzerland (your primary home, for example).

How to claim tax deductions

If you have permanent residence in Switzerland, are married to a Swiss citizen or earn a reasonably high income (120,000 francs per year for federal tax), you can fill out tax returns and claim your deductions in the relevant fields. You will need to provide necessary documents proving your eligibility along with your tax return.

In addition to documents proving that you are an expatriate for tax purposes, you will also need to provide documents proving that you maintain a home abroad and/or send your kids to a Swiss private school as applicable. You may also be asked to provide documents (invoiced or receipts, for example) proving that you covered travel, commuting or moving expenses yourself, and that you cover the costs of your accommodation or private school fees in Switzerland, as applicable. Your employer may be required to provide documents stating which of your expenses they do and do not cover or reimburse.

If you do not meet the criteria for filing your own tax returns, your taxes will be deducted from your salary by your employer as a tax at source. In this case, your employer should account for relevant deductions by excluding them from the portion of your salary which is counted as taxable income and used to calculate tax at source. You may want to consider asking your employer about these deductions ahead of your temporary stay in Switzerland, or reviewing deductions if you feel that the tax at source deducted from your salary does not accurately reflect all relevant deductions.

More on this topic:
Swiss Tax at Source for Expats and Cross-Border Workers Explained
Expats In Switzerland: 7 Financial Tips For Newcomers
Leaving Switzerland? 7 Important Financial Questions Answered
Swiss International Health Insurance: How to Get Insured No Matter Where You Live
Swiss Bank Accounts For Foreigners

Disclaimer: moneyland.ch is not a tax advisory service. Taxes in Switzerland are legislated on federal, municipal and cantonal levels, and tax laws vary between cantons and municipalities. moneyland.ch provides general information as is for educational purposes. While moneyland.ch strives to provide accurate content, moneyland.ch accepts no liability with regards to information provided.