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TAXES

EXPLAINED: What can I deduct from my tax bill in Switzerland?

Switzerland is approaching a major tax deadline on March 31st. Taxes are as inevitable as death and each canton does things differently. But here’s how you can try and reduce your tax burden.

Pencils and paperwork sits on a desk ahead of tax time
Here are some common tax deductions in Switzerland. Photo: Photo by Nataliya Vaitkevich from Pexels

Each and every year, those liable to pay tax in Switzerland – i.e. most workers – will need to complete a tax return. 

The deadline for filing individual tax returns falls on March 31st for the 2021 tax year. 

Due to the complicated nature of tax returns, many internationals will often opt to have their return completed by an accountant or tax professional. 

It is also possible to do it yourself – and has gotten easier in recent years with tax declaration software and online returns. 

For those who have decided to do their own return – or are considering it – here are some common tax deductions you should know about. 

Keep in mind however that there are variations from canton to canton, so check with local authorities. 

The amount you will pay will also depend on whether you are married or not, with married couples – or those in registered partnerships – expected to complete their tax returns together (how romantic). 

Also if you are a cross border worker, some of these deductions will apply to you but some will not. 

READ MORE: Tax rules cross-border workers in Switzerland need to know

Covid-19

The Swiss government has made several changes to the tax rules as a consequence of the Covid pandemic. 

In addition to delaying the deadlines for when your tax is due, one major change impacting your 2020 return has been the rules around working from home. 

Although working from home was made mandatory in Switzerland and is still recommended for anyone who can do it, Swiss employees will not be stopped from claiming work-related expenses. 

That means that even though you may have worked from home for some or all of the year, you will not be prevented from claiming travel expenses, meal expenses and standard expense deductions. 

READ MORE: What freelancers in Switzerland need to know about paying tax

You can also claim for training expenses, provided it’s related to your work (no, your online sourdough course isn’t deductible, unless of course you’re a baker and in that case congratulations on working from home). 

On the other side however, you are not allowed to claim costs for working from home – i.e. rent, electricity etc for your ‘home office’. 

Lunch

If you have not been working from home, then you are allowed to deduct a flat rate for lunch. 

You are allowed to deduct CHF15 per day, which adds up to over CHF3,000 in a standard year. 

If you’ve got a work canteen or your boss otherwise provides subsidised meals, you can claim 7.50 per day – around enough to buy you a cup of coffee in most Swiss cantons. 

Childcare

The high costs of childcare are a frequent complaint of many a parent in Switzerland. 

While this of course varies dramatically from canton to canton, the average cost of a day in childcare in Switzerland is CHF130. 

The average Swiss family spends 41 percent of their net income on childcare, three times the OECD average of 13 percent. 

Fortunately, you are able to deduct childcare costs, including the costs of a private nanny. 

In order to do so, you need to provide proof of payment. Parents can deduct a maximum of 10,100 francs per child per year (federal tax), according to Swiss finance comparison site Comparis. 

Completing a tax declaration (Steuererklärung in German, déclaration fiscale in French or dichiarazione fiscale in Italian) can be incredibly difficult. Photo by Markus Winkler on Unsplash

Kids

Having kids in Switzerland can be an incredibly expensive exercise. 

Estimates suggest that a child will cost you around CHF200,000 from birth until it turns 20. 

READ MORE: How much does it cost to raise a child in Switzerland?

Fortunately, you can deduct some of the expenses – at around CHF6,500 per year per child. 

If you have a disabled dependent who is of age, you can also deduct the same amount per year, provided it costs you that amount or more to care for them. 

Health insurance – and other forms of insurance as well

Another cost which some foreigners find difficult to swallow at first is health insurance. 

Fortunately, you can also deduct this. 

In fact, you can deduct most of your insurance premiums from your tax in Switzerland, including health, accident, pension and life insurance. 

The maximum you can deduct is 1,700 francs as an individual, or 3,500 francs for registered partners/married people. 

Medical expenses

In addition to health insurance, you can also deduct medical expenses from your tax. 

While Swiss healthcare is such that most of your standard expenses will be free as a consequence of your medical insurance, expenses for additional treatment can be deducted. 

In the most cases, this will be expenses related to dental care. The amount you can pay here is capped by the cantons, but is usually not more than five percent, according to Comparis. 

Pensions

Switzerland always has one eye on the future, which is why money paid into the pension fund can be deducted from your tax in Switzerland. 

Money paid into your pillar 3a account is tax deductible, with a maximum deduction of CHF6,883 in 2021. 

You can also deduct payments made into your second pension pillar. 

READ MORE: How much should you save for a comfortable retirement in Switzerland? 

Donations

If you’re thinking of making a charitable donation, don’t just be motivated by the kindness of your heart – think of the tax benefits!

You can deduct charitable donations made in Switzerland, provided they are to public or non-profit organisations. 

You can deduct these donations up to 20 percent of your total income. 

Travel 

Now we’d all love to deduct the costs of our trip to the Canary Islands, unfortunately this is limited to work-related travel expenses – but that includes travelling to work in some cases. 

While these are likely to have been down on previous years, they can still be deducted as per usual. 

You can deduct the cost of travelling to work provided you do so via public transport, cycle or scooter. You are allowed to deduct up to CHF3,000. 

If you travel to work via car, you can only do so in certain circumstances. 

If you have a disability which prevents you from travelling via the above methods – bike, moped or public transport – then you can deduct your car expenses.

You may deduct car travel if you save more than an hour travelling by car (when compared to the other methods listed above), or where your home and/or your place of work are more than one kilometre from a public transport stop. 

Debt

You are allowed to set off any debt you have against your savings for the purposes of tax. 

You are allowed to deduct the interest paid on personal loans or credit cards, but not for car payments. 

We’ve tried to delve into how this works, but we don’t really understand it at all, so speak with a tax advisor for more information. 

As with all of our tax and financial summaries, this is a guide only and should not be taken to constitute specific and tailored financial advice. For tax advice which is personalised to your situation, please contact an accountant or tax specialist. 

Member comments

  1. Please double check the deductibility of medical expenses. My understanding it that they are no capped, on the contrary: they need to be higher than 5% of your income to be deductible.

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For members

HEALTH INSURANCE

How to save money by changing your Swiss health policy

Switzerland’s compulsory health insurance is notoriously expensive, but you can lower the cost of premiums substantially by changing your company or coverage.

How to save money by changing your Swiss health policy

The cost of health insurance premiums usually represents at least 7 percent of a typical household budget.

An adult spends nearly 4,600 francs a year on average on the mandatory basic coverage (KVG / LaMal) alone – covering only medical care, not dental. If any extra policies are taken out, the cost is even higher.

Not only that, but premiums have been rising practically each year, and look set to go up again in 2023, possibly by as much as 10 percent — the sharpest hike in 20 years.

READ MORE: Why Swiss health premiums are set to rise — and what you can do about it

Even though these costs are high and climbing, many people keep the same health insurance for years.

However, significant savings — to the tune of thousands of francs a year — could be made simply by switching carriers or plans, from the more expensive to the cheapest ones, according to a new study by the cost comparison site Comparis.

How much and where

The amount of the savings varies depending on policyholder’s place of residence, because rates are determined by cantons.

However, Comparis calculated that over a 10-year period, people living in Zurich could have saved 33,396 francs in premium costs and for those living in Bern this amount is 30,064.

Lausanne residents could cut their costs by 36,494 francs over 10 years, 31, 032 in Geneva, and 33,490 in Basel-City.

“With the strong premium increases expected this fall, the savings potential is even greater,” said Felix Schneuwly, health insurance expert at Comparis.

So how can you save money? Here are some of the ways:

Increase your deductible

In Switzerland, the deductible (franchise) ranges from 300 to 2,500 francs – this represents the medical costs that you have to pay out of your own pocket before your health insurance kicks in.

As with most types of insurance, the lower your deductible, the higher your premiums, and vice-versa.

If you are young, healthy, and are not on any long-term medication then you can save substantially with the highest franchise.

Keep in mind, however, that if you choose the highest deductible and end up having an accident or falling sick and needing medical care, you will have to pay a greater proportion of the costs.

Switch to a less expensive plan.

The standard model for healthcare in Switzerland is that you can consult any medic that you want, and you do not need a referral to see a specialist.

However, there are some types of health insurance plans that have cheaper premiums, but impose certain limits on your access to non-emergency medical care.

For instance:

Health maintenance organisation (HMO)

Under this model, policyholders are required to consult a particular HMO practice. Two disadvantages of this alternative is a limited choice of doctors and you also need a referral to see a specialist.

However, the benefit is a premium reduction of up to 25 percent compared to the conventional insurance.

Family doctor model

Your family doctor, a general practitioner, will be designated by your insurance company and will be in charge of all your non-emergency medical treatment.

He or she will refer you to a specialist if necessary. 

If you opt for this option, you could save 20 percent on your insurance.

READ MORE: Five tips for getting cheaper health insurance in Switzerland

The Telmed alternative

If you choose this option, you have to call a telephone service and get a referral to a doctor or hospital.

This does not apply to medical emergencies and there are other exceptions, such as eye exams and annual gynaecological check-ups.

Total savings could range between 15 and 20 percent. 

Cancelling or changing your policy

If you want to cancel your current insurance policy and take up a cheaper one , you have to do so by registered letter before November 30th.

By then, you will know what your premiums will be in 2023 because your carrier must notify you of the new rates by October 31st.

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