At Swissential, one of the regular questions we get at this time of the year from clients is: Can you help me with my tax return? Should I actually file a tax return?
The answer is of course YES – but, we are not tax advisors and only recommend established professionals as a service to our clients. The real question is in fact this: How much should you be paying for a tax return?
Let us give you some pointers so you can make the right decision for your circumstances. There are 3 main scenarios to consider.
A. You have recently moved to Switzerland & your company uses the services of KMPG, PWC or E&Y – grace period up to three years.
You therefore have a free pass for two to three years, before you actually have to pay for it yourself. In this case, we have several pieces of advice for you:
DON’T:
- Not pay attention to how the system works for 2 to 3 years.
- Start wondering towards March of year 2 or 3 (when it is your duty to file a tax return) “How does it work? How should I deal with this?
DO:
- Try to understand, if possible, what KPMG, PWC or E&Y do for you whilst it is a “free” service provided by your employer.
- The last year your tax return is covered by your company, start asking colleagues and trusted friends who they use for their tax return and roughly how much they pay. You would be surprised at the difference in price, from CHF100 to CHF2’000 for a simple tax return.
B. You are taxed at source – grace period up to five years.
Your employer collects your taxes straight form your salary on a monthly basis. This is simple and straightforward, but again, this will not last forever. This system only works until:
- your household income (you and your wife or registered partner) exceeds CHF500’000 (Geneva canton) or CHF120’000 (all other cantons) in general
- you purchase a property in Switzerland
- you get a C permit
- you get married to a Swiss person (a career opportunity can turn into a beautiful love story!)
Whilst you are taxed at source, you do not need the services of a tax advisor to help you file your “Rectification of Holding Tax document” at year end. A simple chat with your Swissential adviser will suffice – it is part of our service. This said, you should pay attention to the income thresholds described above to make sure you are starting to file a normal tax return when you ought to. If this is the case, please review the below:
C. You have a fiscal duty to file a normal tax return – no more grace period.
Whether you must file a normal tax return straight form your first year of arrival in Switzerland, or your grace period has expired (i.e. your company no longer pays for the service for you, or your tax at source status no longer applies), you should consider the comments below. Please also bear in mind if you were taxed at source and must now file a tax return, the taxes already paid will be deducted from the remaining taxes due to the fiscal authorities (or you might even get a tax credit, which is always a pleasant surprise).
DO:
- Use the services of companies tested by a trusted friend or colleague
- Pay the right amount for the service you need. Most people do not need to pay more than: – CHF250 to CHF300 for a simple tax return (single person, no children, on a C permit, with one property abroad).CHF500 to CHF600 for a more complex tax return (i.e. married with kids, two incomes, a property abroad and several bank accounts and investment accounts held abroad)
- Should you feel thrifty and up to the task, depending on whether your situation has not changed from one year to another, file your tax return yourself. You can use the work previously completed by your tax advisor last year. Speaking French, German or Italian certainly help depending on where you live in Switzerland.
DON’T:
- Be cheap and try to do it yourself because you think “it won’t be that difficult”. If anything goes wrong, you can waste a lot of your time and energy trying to fix it with the authorities.
- Don’t always think that the cheapest quote is the best. Paying too little can be as grave a mistake as paying too much. Make sure that everything you need is covered – half a job done is no compensation for the additional time you’ll need to spend on this.
At Swissential we advise pragmatism. Filing a tax return when using a professional means:
- you speak to a professional for 30 min to explain your situation and to get acquainted
- you send them the relevant documentation they have requested
- you speak another 30 min to confirm nothing is missing and that you understand the tax return that has been prepared for you – remember, once you sign, you engage your responsibility so please only sign what you understand everything
- your tax advisor will do a standard follow-up with you.
For something to be simple, you need to understand it first. We hope we managed to make this matter a little bit simpler. If not, let us know and we are happy to help.
The whole process can take two to three hours and therefore justifies paying CHF250 to CHF600.
