Its name is Inflation, and it’s one of the most underappreciated forces that can impact your life financially.

So, what is inflation? To put it as simply as possible, it is the decrease in the purchasing power of your money over time. For instance, think about what you can buy from the supermarket for 100 CHF today, and then what you might be able to buy with the same 100 CHF, but in 10 years’ time.

Each franc is worth less because the price of goods and services is more expensive. Even a low rate of inflation, if persistent, can have a significant impact on the long-term purchasing power of money. At just 2 percent per year, if sustained, inflation will double the price cost every 35 years. So, in reality, a franc would lose half of its purchasing power. Imagine what the effect would be at 5 percent per year or 8% like we are seeing in parts of Europe or the US now.

If someone took out a fixed-rate, 10-year mortgage at 1 percent and inflation turned out to be 2 percent over the life of the mortgage, the debtor (borrower) would end up paying a real interest rate of negative 1 percent. That’s a good deal for the debtor, but not for the creditor (lender). As you can see from this simple example understanding inflation and its effects can have a significant bearing on your financial assets.

For those that may remember Switzerland, which is now considered a low inflation rate country, has seen multiple occasions of high inflation rates most notably in December 1973 when the headline rate hit 12%, far above where we are today. As the world recovers from the effects of Covid-19, we are starting to see a rapid acceleration in inflation for advanced and emerging markets, driven by firming demand, supply chain shortages, and rising commodity prices.

As the cost of oil rises, the cost of fuel increases which has a knock-on effect on just about everything we purchase. This is especially scary for retirees with large holdings of lower return assets, such as cash and bonds. Fortunately, a common secondary effect of inflation is rising interest rates, as upward price pressure eventually prompts Central Banks to increase borrowing costs and dial back bond-buying programs to cool a heating economy.

To ensure your investments can weather the effects of rising inflation, one should always seek the advice of an industry professional. For more information and advice contact a qualified adviser at Swissential on tel. 022 786 2020 or email info@swissential.com

You do however also have to meet a number of other requirements which can vary across the cantons but which typically include:

• demonstrating written and spoken knowledge of a Swiss national language
• integration into Swiss life and culture
• compliance with Swiss law and customs
• not being considered a threat to Swiss national security
• no time spent on Swiss social welfare in the last 3 years, unless you pay back the money received

What parameters do you check or tick? Is it something that you would consider for you and your family in the near or longer term future…? It is really a beautiful country and is most definitely worth it! Count me in!

I remember it vividly… Driving to the alps for a ski weekend. Happily going about my daily routine like nothing was happening. Fresh in Switzerland and excited for my new adventures. We were hearing these murmurs, rumours, whispers… that there was this outbreak on the other side of the world… There is no way this is going to end up worldwide, more like an isolated scare … That certainly was not the case, as came to be apparent very quickly, no this was an outbreak of unparalleled size. How was I going to believe that this was just the beginning of a GLOBAL Pandemic? The start of shutting down, my first thought, ABSOLUTLY NOT. But in reality, life as we know it was about to completely change! Entire industries shutting down, the economic effects long lasting. How could countries, suddenly have complete control over the way their populations move, live, interact?

Many of these changes have now become the norm, a complete change in the way we go about life, unfathomable amounts of hand sanitizer, masks for every occasion and social distancing… what next, who knows?! But one thing I have come to realise is, life is short, very short, and these events no matter how big or small, can occur at what seems, like the drop of a hat… Overnight. And they have long lasting effects, the extent of which we do not yet know exactly but we have had a taste of. Almost as if we have just scratched the surface. For me at least I will not be so naïve in the sense that this could so easily happen again. And I for one will be much more prepared, set up for the future, protected… because if the next one personally affects me, I want to be in the best position I can be to head-off the negative effects.

…and who knows, I may have a family of my own to look after by then and even this, as I have come to learn over the last year and a half, is not beyond the realms of reality.

Try not to compare everything!

Avoid comparisons between your present situation and what you have left behind. I must admit that within days of arriving in Switzerland I was missing my local pub with a pool table and an “abusive” barman who could within a heartbeat provide a plate of food for a carnivore. As newcomers we tend to over-use the expression, ‘Back in the UK…..at home we have…’. Having made this mistake too many times the advice is simple – focus on what’s in front of you and talk about that; ask questions and seek to understand why melted cheese and bread are so wonderful to share! Remember, the locals here barely acknowledge that cheddar is even a cheese!

Be patient, settling in will take time

The general rule of thumb is to give the ‘settling in’ process at least a full four seasons. Be kind to yourself and others around you!

Arriving in Switzerland during the spring or summer, it is impossible not to be impressed with the country’s natural beauty. The flowering meadows and small streams, soaring snow-capped mountains, lakes and rivers you can dive into and fields strewn with bell-jangling cows all make it feel like you have stepped into a giant jigsaw puzzle scene.

Go hiking in spring and summer, discover the local traditions in autumn, learn to ski or sledge in winter, there is plenty to do and you’ll love every corner of Switzerland. Once you have discovered all there is to offer you will realise that it really is paradise on earth.

Switzerland’s population can fit inside a bomb shelter.
Although many are filled with wine, equipment to climb the mountains or ski down, the swiss (by law) are ready to hide away from nuclear threats!

Animals have their rights
Our fury dog friends are permitted in restaurants and are commonly seen as such. Social animals must be kept in pairs. The law says if your guinea pig loses his comrade then you must buy or rent (yes you can rent one just for this purpose) another to keep company until his/her time comes. Things went so far in 2010 that a referendum arose questioning whether animals should have lawyers. It did not pass.

Clocks: The swiss don’t just make them – they follow them.
Swiss punctuality is more than a punchline. The Swiss take a lot of pride in their punctuality, in fact,  it’s rooted in a deep respect for their fellow countrymen. By showing up on time, they are saying ‘I value you, and therefore, I value your time.’ So what does this mean for you in Switzerland? For one, if you make plans with a Swiss national, don’t be late or you could offend your hosts; for another, their trains leave on time, so don’t miss your connections!

No domestic Sundays
In Switzerland there are laws that make it illegal to move, hang out laundry, wash your car or recycle bottles on Sundays. So, enjoy the Sunday instead of working.

Above are just some of the things I`ve seen written about the internet, social media, & the influence it has on modern society. Especially these days… There is certainly much stigma around the fact that anonymity allows any of us to pretty much write & post whatever we want & not be held accountable for it no matter how offensive the content, derogatory the comments & in some extremes cases, even the outright defamation of character.

Well… I`m here to talk to you all about the good side of the internet & social media, how it can be used for good, & how here in Switzerland in can help you when it comes to learning about the country, settling in, & even making big decisions about what steps to take for you as an individual or as a family. I shall use the cantons of Vaud & Geneva as an example, as that is mainly where we work & live at Swissential SA.

Many internationals come to Switzerland having not ever visited the country & knowing very little about it. The food, the culture, the work ethic, the language(s) etc. Now of course it`s easy enough to just Google “Everything I need to know about Switzerland” but the results will not only probably not be as accurate as you`d like, they also most certainly be written from only one individual`s point of view.

This is where those that have come together within Switzerland can help you save time as well as money. The first great example of this is diplomats from other countries living & working locally. They arrive for an unspecified/specified period of time & need to settle quickly. They will be sure to deck their homes out with everything one would normally need, but upon leaving to re-locate or return to their own country, they need to ensure these belongings (furniture, appliances, electronics, & many other household goods) are dispersed with quickly & inexpensively. In order to do this, websites such as www.glocals.com or www.facebook.com/marketplace are brilliant for selling these goods cheaply (or even advertising them for free) as well as even being able to take over the apartment or house they lived in with lots of these goods included as well. A great place to pick up a bargain!!!

Another area you undoubtedly need to know your stuff within Switzerland is when it comes to the rules. There are so many things that you need to know, & the best places to be able to ensure your finger is kept firmly on the pulse are the likes of www.swissinfo.ch/eng as well as www.ch.ch/en & also www.thelocal.ch where you can learn about everything from registering & de-registering from the area you live, to which health insurance to pick, to which upcoming popular vote is coming up next, to which public holidays are celebrated in your area.

Getting around & enjoying activities is also another big thing that is very popular here in Switzerland, & sites like www.sbb.ch for how to get around & pick up discount travelcards, to sites like www.getyourguide/ch are key to discovering what there is to do in & around the cantons that are local to you & beyond. Now, whether you want to find a nice restaurant serving local fare, or just don`t fancy cooking & want a nice night in front of the sofa watching TV, www.roughguides.com/switzerland/eating-drinking & www.smood.ch will soon see you feasting on something delicious.

You will find forums & specialist groups within all of these webpages with social media links that will offer you expert tips & guidance on how to be able to quickly learn the basics & not be hit too hard in the pocket doing it. Switzerland is well renowned for being an expensive place, but it`s also somewhere that value for money can be found if you`re willing enough to go & look for it!

All in all, it`s sites like these that people join for the benefits of being able to attain key information the can use very easily. I leave you with this thought: the fact that one our managers, who is undeniably challenged by technology, can easily find out all the information he needs when he wants to is testament to the fact that sometimes social media & the internet can be a very useful tool to all of us get the job done!!!

Happy hunting people!

Too often in people’s mind: Taxed at source = Nothing else to worry about. This is simply wrong.

The main reasons for this we have encountered throughout our daily work and interactions with international professionals are, in order:

1. Real ignorance of how the system works (the individual has no concept he/she is doing something wrong)
2. Faked Ignorance – due to a lack of interest or a potential loss from doing things right by the authorities (ex: increase in taxes when declaring a foreign property)

Switzerland is one of the very few countries that levy a wealth tax on its tax residents. To be precise, the cantons levy such taxes. You will therefore pay more wealth tax depending on the canton in which you live, and also the municipality where you live within that canton.

We thought we would draw your attention to a few things, so you cannot say you did not know. When you are taxed at source you should be declaring your wealth by filing a separate form when above a certain threshold …. so that you can unfortunately be taxed on your wealth if it is appropriate:

1. CHF82’839 for a single person living in Geneva
2. CHF165’678 for a married couple living in Geneva
3. CHF112’000 for a married couple living in the canton of Vaud

Your wealth is composed of all your bank deposits, investments and properties, in Switzerland or outside. The main problem of doing something wrong without knowing is that you then do it wrong all subsequent years increasing the likelihood of getting caught. Considering taxes can be backdated for 10 years and penalties applied, the price of one single repeated mistake can be dear.

In a new world, with automatic exchange of information and increased transparency, ignorance is no longer a medicine of choice.

Sorry to be the bearer of bad news, but it is for your own good.

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:

1. Not pay attention to how the system works for 2 to 3 years.
2. 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:

1. Try to understand, if possible, what KPMG, PWC or E&Y do for you whilst it is a “free” service provided by your employer.
2. 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:

1. Use the services of companies tested by a trusted friend or colleague
2. 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)
3. 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:

1. 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.
2. 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.

Setting aside love and feelings (we are a financial advisory firm after all), our consultants usually get the same question from our clients, “I have heard I will pay more taxes if I get married, is it true?”.

There are 5 parts to that questions: Administration, 1st pillar, 2nd pillar, your global income tax rate & Inheritance tax. As expected, the answer is both yes and no, depending on how restrictive you are with your answer and the structure of your earnings. Let’s look at why.

1. Administration: Married = 1 point
   Being married simplifies a lot of the day to day life. Consider just filing your taxes. Married couples file one tax return, unmarried couples have to file separate returns. This advantage, in case of divorce can also become a real Pandora’s box.
2. 1st Pillar: Unmarried couples = 1 point
   A full annuity for a couple after 43/44 years of contribution will never exceed 150% of a standard annuity for one person. Therefore, there is certainly a disadvantage for married couples in this regard.
3. 2nd Pillar: Married = 1 point
   Many pension foundations require at least 5 years of proven common living to offer the same benefits unmarried couples have than married ones. Often, too many foundations offer no benefits at all to unmarried couples, resulting in a significant loss should the worst happen to one of the members of the couple.
4. Global Income tax rate: We have a tie
   Depending on your canton of residence, the splitting of your income (50-50 or 70-30) and your total common revenue, you might pay more taxes should you get married. In general, the more you earn, the less beneficial it is to be married. For a combined income above CHF300’000, it is often better to not be married.
5. Inheritance Tax: Married = 1 point
   Forced heirship exist in Switzerland, it is therefore more difficult to protect a partner than a wife. Also, whilst there is virtually no taxes between spouses (up to 6% in Geneva above CHF500’000), taxes amount to 26% above CHF100’000 for partners.

All in all, if you are ready to pop the question, don’t let taxes prevent you from doing so as it is not a good enough excuse!