Switzerland is an unlikely nation – most think that long-standing national unifying factors would be a shared language, or culture, or even wars. And yet in over 500 years, Switzerland has had practically none of these qualities. A country with with four official languages (French, German, Italian, and Romansch) set in the rocky and inhospitable Alps, the Swiss people survived and endured as a collective of people living under a social contract for mutual benefit.
And it has benefited. Switzerland is one of the richest countries in the world, acting as global banker to much of the corporate and upper classes, and excels in manufacturing, goods, and even tourism. And for tourist destinations, there are few more pleasant and beautiful cities in the world than Geneva.
Geneva in the summertime boasts mild weather, beautiful gardens, outdoor cafes along the lake of the same name, with a Gallic laissez-faire attitude that it shares with France, as well as her mother tongue. In the winter it is home to world-class skiing resorts and spas, making it a year-round destination for visitors. Due to its perfect setting, idyllic quality of life, and, not to mention, hub of international business, finance, and politics, it’s no wonder that many of these visitors have decided to stay; indeed, foreigners make up about 45% of the population – with more than 180 nationalities. It truly is an global hub.
For US expats working in Geneva, there is much to know about the tax system. For example, there are four types of taxes in Switzerland – income tax, wealth tax, tax on succession, capital gains tax. Furthermore, they fall on three levels: the federal, that of the Canton of Geneva, and the municipality of Geneva. There’s also a church tax levied on citizens.
That said, there are benefits to the Swiss system. As for the income tax, there’s no difference between the income from your salary and from your investments. In fact, both of them rely on the same progressive rate of taxation. Switzerland offers an great system, with an annual tax rate around 25% while it is about 40% in most of the other European countries. In addition, the rate on individuals is modified depending on the number of dependant people and the size of the family and some private spending.
Several tax advantages increase the profitability of Switzerland for expatriates (possibility to deduct professional spending, indemnity to compensate the cost of living, deduction of school fees paid by the employer).
Now…what about Uncle Sam? Paying Swiss taxes and satisfying the needs of the US government can be tricky. There are, however, options to avoid getting hit twice by the taxman.
Such an option is Foreign Earned Income Exclusion. For other information about expat tax laws, consult one of the professionals at taxplannercpa.com. Tax Planner CPA specializes in filing taxes for US expats, and can be contacted at any time of the day by email. Quotes can also be requested here:
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