ARRIVING IN SWITZERLAND

Starting A New Life

The Swissential Team would like to wish you a warm welcome for this new adventure for you and your family. Switzerland is a great place to live and work but has unique customs and rules that are not always straightforward to understand for those arriving from abroad.

Now that you have moved to Switzerland, as Financial Planners our job is simply to:

1. Help you understand the New System you are part of
2. Help you understand the opportunities available for you optimize your situation (save on taxes, grow your savings, etc…)
3. Source and Present suitable solutions
4. Implement the solution selected
5. Keep you on track and assist you with your questions on an ongoing basis.

We specialise in bringing clarity on the questions below and many more you might wonder about.

As a Swiss resident and a valid permit holder, you have rights provided by and obligations to fulfil towards your new host country. Some of the rights most relevant to you are: State Pension Benefits, Mandatory Company Pension Coverage, Accident insurance, Child Benefits, Unemployment Benefits, as well as the right to access all or part of your pension in cash when leaving Switzerland. In terms of your obligations, you have to: enter into a contract with a private healthcare provider, pay your taxes (at source or not) and voluntarily declare all your wealth / assets to the cantonal tax authorities, whether you have been formally asked to or not.
Find out exactly what all this means for you personally.

1st Pillar, 2nd Pillar, 3rd Pillar, Mandatory contributions, Sur-obligatory contributions, lock-in period, buy-back, buy-forward, AVS bridge, tax-optimization, access to property using pension funds (primary?); according to a latest survey a third of Swiss Nationals do not know how their pension system works; who can blame you for not understanding it yourself when parachuted in from abroad. The Swiss pension system went from the basic social system established after World war II in 1948, to voluntary pension contributions in the 1960s and finally to the current mandatory company pension plans system established in 1987. Whilst robust and strong, the Swiss Pension system has been rated 12th (out of 39 countries) form the 2019 Mercier studies. The system is set for major changes in the coming years to sustain its current position. Your most important financial asset is your 2nd pillar statement – understanding how to read it and how to use it to achieve your financial objectives is key.
Find out exactly what all this means for you personally.

Would you get into your car to go on holiday with your family, without a specific destination in mind? The same concept applies to financial planning – a good starting point to achieving a personal financial goal is to have one (a destination). Whilst it might be difficult for internationals to project themselves in the future (especially nowadays), it is not impossible to still plan efficiently for the future. With a specific goal in mind, you are then equipped to plan and prepare a roadmap (personally, professionally, financially). This plan is by no means set in stone, but whilst your goals change over time, so will the road leading to your goals. Your advisor is part of your team. You set the goal, they will help you find the quickest and safest way to get there.
Find out exactly what all this means for you personally.

OASI / AVS / AHV, Maternity Insurance, Unemployment Insurance, Non-Professional Insurances, Obligatory Pension, Extra-Obligatory Pension, Specific company savings plans (ISOP, etc..), Tax at source; whilst it is easy to find definitions of these terms on Google , it may not be clear why they are deducted from your payslip and what entitlements they offer in return. To add further confusion, if you work for a mid-size company your payslip will almost certainly be in French or German, making it difficult to understand.
Find out exactly what all this means for you personally.

Most people we meet tend to think about tax efficiency after having been in Switzerland two to three years already. Some have taken the necessary steps to be tax-optimized but have forgotten to notify the tax authorities about it. Unfortunately, there is no way to turn back time. Every passing year is a lost opportunity to save on your taxes. Utilizing the system smartly and legally to reduce your tax burden, whether through buy-back in your second pillar, buy-forward, a smart strategy between husband and wife, starting a third pillar, renovating part of your house or drawing your pension from a different canton can be extremely rewarding. Why should you wait? Why not act in the knowledge of the options available to you? Remember, we don’t’ know what we don’t know.
Find out exactly what all this means for you personally.

Once a year it is mandatory for employees to receive a Salary Certificate from their employer, which is a confirmation of income (salary, benefits) received during the year. This document is to be provided to your relevant tax authorities. Many people do not fully understand such statements – some benefits are taxed, but others aren’t. Some benefits are subjected to social contributions, but others aren’t. Also, many international employees are caught with an “higher than expected” tax bill, when they have not fully understood benefits such as “private school” payments form their employer are considered taxable benefits, which can cost then up to a further 25 to 40% extra in taxes.
Find out exactly what all this means for you personally.

When you arrived in Geneva you were an AO, then you got married and became a CO, your wife had a child and you became a B1… does this make sense to you? The tax at source system is sophisticated and whilst the general concepts may be understandable, why are you paying your taxes at source, whilst your colleague who owns a house does not? You earn the same as your colleague who lives in the Vaud Canton – you pay taxes at source, he does not. The same colleague tells you about solutions he found to optimise his tax bill, but they do not apply to you. The tax at source system can be a true maze. However, with the right advice you can not only understand but potentially benefit from it. Also, from 2021 the tax at source system will drastically change; what does this mean for people previously taxed at source ? What does this mean for people who think they are taxed at source but should not be any longer? There are specific deadlines you cannot miss.
Find out exactly what all this means for you personally.

As of 2022 (on your income of 2021), the Tax at Source system is changing. Before, even if you were taxed at source you had the option to request some deductions to lower your tax burden, such as child care deduction, contribution into a third pillar or buying back into your second pillar. This is no longer the case from 2022 – this means you will have to make the right decision between remaining taxed at source or not?
Find out exactly what all this means for you personally.

Antonio has the following assets / accounts after a twenty-year career with a multinational:

• Italy, country of birth – EUR  (1 house, 1 savings account, 1 investment account, 1 state pension account, 1 workplace pension plan, 1 company share savings plan)
• UK, worked for 10 years – GBP  (1 flat, 1 savings account, 1 investment account, 1 state pension account, 1 workplace pension plan, 1 company share savings plan)
• Switzerland, worked for 5 years – CHF  (1 savings account, 1 current account, 1 state pension account, 1 company pension plan, 1 company share savings plan in USD)

Each of those accounts has a specific advisor attached to them, a set of individual log-in and password details to access and review the account and multiple documents provided at year end for tax purposes. When asked, Antonio is struggling to remember when he last spoke to his advisors, how his assets are performing, the type of assets he owns and of course the charges applied to each account. Can you blame him? This scenario, or similar, is far more common than you might think, especially in a high-end labour market such as Switzerland. Sound Familiar? As a general rule, it is advised to work with a Financial Planner in the country where you are tax-resident, as this is where you have the most opportunities to optimize your situation, unless you are a US citizen, which is completely different.
Find out exactly what all this means for you personally.

This topic is extremely complex and exposed to regularly changing regulation. Some countries, such as the UK, allow you to take your pension out of the country under certain conditions. Managing your pension whilst being abroad can be an inconvenience. However, being abroad can also open doors and opportunities previously not available to you. If you have full confidence in the economic and political stability of the country where your pension is being managed, then you should leave it exactly where it is. If, however, you have concerns regulatory change may negatively impact your pension pot in the future, you might then want to discuss your options with a professional. Leaving aside the concern of regulatory changes in the county pensions may be domiciled, there may be a more efficient system in Switzerland or you may simply benefit from easier tracking and management if you consolidate different pension pots.
Find out exactly what all this means for you personally.

UBS, Credit Suisse, Raiffeisen, Post Finance, Credit Agricole … and so on. Selecting a bank which you are comfortable with and best meets your needs is a key decision which should not be taken lightly. Every institution has its strengths and weaknesses: the fee structure, the service provided, the solidity of the bank’s capitalisation, the location of the nearest branch, the charges applied to your credit card (especially relevant for International Professionals travelling often); each factor should be considered. When considering bank institutions, Neo-Bank with an online-banking-only approach must also be considered – their cost structure is unbeatable, but what else should be considered.?Clients at banks and security dealers authorised by FINMA additionally benefit from the protection of government-backed deposits up to a maximum of CHF 100,000 per client in the worst-case scenario of institutional bankruptcy. For “successful” savers who have accumulated more than the guaranteed deposit value, the question of deposit security becomes a crucial topic, especially when many banking institutions have been charging negative interest in recent years.
Find out exactly what all this means for you personally.

Wouldn’t it be a lot simpler if: AXA was the only insurer offering “Car insurance”, Generali “Home & Content insurance”, SwissLife “Life insurance”, Helvetia “Health insurance” and Zurich “Legal protection insurance”. Despite being simple, the lack of competition would end up resulting in extra cost for the consumer. So sadly, for each of us individual consumer benefits, we have to make life altering decisions based on comparing products that are not always easily comparable or actually comparable at all. Often, we realise too late we did not read the fine print or understand the exact what conditions we committed to. Often, we also understand too late why insurance A was half the price of insurance B for what at first glance seemed to be the same coverage and conditions. Whether we like it or not, protecting our family and our assets / belongings is one of the most important part of our financial lives. Our brains are not designed to think “bad things” can happen to us – but sadly, it does – how prepared are you? With professional help, choosing insurance does not have to be a time-consuming exercise, nor an expensive and stressful undertaking.
Find out exactly what all this means for you personally.

Rising Healthcare cost is the primary issue of concern for Swiss Nationals. Cost of healthcare has doubled in twenty years, which is becoming a real concern: Mandatory Basic Coverage, Complementary insurance cover, deductibles from 300 to 2500 CHF, various options such as Telmed, HMO, family doctor; the cost for similar coverage can go from 250 CHF a month to 450 CHF a month. The Swiss healthcare system is a hybrid system striving to achieve the best of both worlds: basic protection for all, mixed with many options which can, at a cost, significantly improve the care and “service” provided to you in your time of need. If you missed the end of November deadline to switch from basic coverage, you can at least get yourself suitably prepared for next year.
Find out exactly what all this means for you personally.

By any standards, the Swiss childcare allowance system is very generous, ranging from 200 CHF per child to 500 CHF per child, depending on your canton of residence, their age as well as the number of children you have. The cherry on the cake is that your children do not have to live in Switzerland for you to claim these benefits. In addition, there is no time limitation on historical claims, so with the correct advice you can claim “unclaimed child benefits” dating up to a few years back.
Find out exactly what all this means for you personally.

At Swissential, we all-too-often meet clients recently arrived in Switzerland who have received a letter from SERAFE asking how long they had been in the country. In good faith, they answered truthfully only to receive a few weeks later a bill from the Swiss collection agency for radio and television fees. Nobody enjoys receiving a bill for CHF730 because they have been living in Switzerland for two years, with no TV nor radio but a computer which “has capability to receive TV and radio signals”. Therefore, make sure you are familiar with this beloved institution. At least you will not be surprised when they finally send you a bill. Also, be wary of the fact you might receive a bill that does not apply to you, but was sent to your home because the previous tenant forgot to de-register form this address. Unfortunately, there isn’t a lot we can do about this one other than provide you this link to SERAFE  so you’re prepared!