There are an estimated 40,000 Americans living in Switzerland.
Living in Switzerland is a fantastic experience for a variety of reasons – the mountains and skiing, the high-quality healthcare, public transport and education, and the food to name but a few, not to mention the fact it's a perfect base from which to explore the rest of Europe. As an American expatriate living in Switzerland though, what exactly do you need to know regarding filing Us expat (and Swiss) taxes?
The good news is if you are paying income tax in Switzerland, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If you earn over US$10,000 (or $400 if you're self-employed), you have to file form 1040. While taxes are still due by April 15th, expats get an automatic filing extension until June 15th. This can be extended further online until October 15th.
"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."
- Swiss Federal Tax Administration
If you have foreign assets worth a minimum of US$200,000 (per person), excluding your home if it is owned in your own name, you should also file form 8938 to declare them.
If you had a total of at least US$10,000 in one or more foreign accounts at any time during the tax year, you are also required to file FinCEN form 114, also known as a Foreign Bank Account Report or FBAR.
The US and Swiss governments share taxpayer info, while Swiss banks pass on US account holders' account info to the IRS, so it's not worth not filing or not fully disclosing your finances on your return. The penalties for tax evasion for expats are horrible, to say the least.
If you're a US citizen, green card holder, or US/Swiss dual citizen, and you've been living in Switzerland but you didn't know that you were required to file a US tax return, it's OK: there's a program called the IRS Streamlined Procedure that allows you to catch up with your filing without facing any penalties. Don't put it off though, in case the IRS come to you first.
Swiss residents are taxed on their worldwide income, while non-residents are just taxed on income arising in Switzerland.
There are federal, municipal, canton, and church, income taxes. There is also a wealth tax on assets. 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 return (although you still might want to, to claim deductions). Returns should be filed by March 31st, though extensions are available (some of which you have to pay for). The details differ depending on which canton you live in.
It's also compulsory to purchase medical insurance in Switzerland.
Americans will be considered residents in Switzerland if their permanent home or centre 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.
Although the Swiss tax system is relatively complex, tax rates are generally quite low, ranging from around 1% to around 13%.
You can find information on Swiss income tax rates using the tool here.
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.