The tax deadline in Switzerland is March 31st. Did you miss it, or were you ahead of the game? If you haven’t filed your expat tax returns yet, don’t worry! We have the info you need to get caught up no matter how behind you are on your taxes, along with cost-effective tips for filing US taxes from Switzerland.
Swiss Taxes: The Basics
US taxation follows expats around the world, no matter where they move. So, if you are an American citizen living in Switzerland, you are still required to file annual Federal Tax Returns. Beyond that, you must also follow the Swiss system of taxation, which is slightly more complex than in some other countries due to its tiered system of taxation. There are four levels of taxation, though you may only be subject to three:
- Federal tax: the marginal rate is 11.5%; this is only due on income.
- Cantonal tax: this tax differs between cantons and applies to income and wealth.
- Communal tax: this tax is different depending on which community you live in. It’s applied to income and wealth. Typically this tax is based on your cantonal tax.
- Church tax: this tax is levied in many different cantons on both income and wealth of those associated with the three official Swiss churches: Roman‑Catholic, Christ‑Catholic, and Swiss protestant. Those affiliated with different religions or who are agnostic are exempt.
Your taxation in Switzerland is based on whether or not you’re a tax resident. This is determined by if your tax home is in Switzerland and you spend 30 consecutive days performing a gainful activity in Switzerland or 90 consecutive days in Switzerland without performing a gainful activity. Luckily, the US has a tax treaty with Switzerland, which can help mitigate double-taxation.
Swiss Expat Tax Returns and Extensions
In Switzerland, the canton in which you reside determines the length of an extension you can get on your Swiss taxes. You can enter your municipality on the Swiss taxation website to find out more information about applying for an extension. If you need an extension, typically you’ll need to submit an application in writing to the cantonal tax administration or the tax office in your commune of residence.
For your US expat tax returns, expats receive an automatic extension until June 15th, but can request an additional extension until October 15th. Keep in mind that interest starts accruing April 15th even if you received an extension. So, the sooner you complete your US expat taxes, the less you may have to pay. If you’re many years behind, the IRS offers an amnesty program called the Streamlined Filing Procedures to help you get caught up penalty-free. To use these procedures, you will need to file three years of delinquent expat tax returns and six years of FBARs.
How to Save on Your Expat Taxes in Switzerland
The US offers the following provisions to help protect you from double taxation, including:
- The Foreign Earned Income Exclusion, which allows you to decrease your 2019 taxable income by the first $105,900 earned as a result of your labor while a resident of a foreign country (and by $103,900 for your 2018 taxable income);
- The Foreign Tax Credit that could allow you to lower your tax bill on your remaining income by certain amounts paid to a foreign government; and
- A Foreign Housing Exclusion that allows an additional exclusion from taxable income for certain amounts paid for household expenses that occur as a consequence of living abroad.
These provisions can help lower your tax liability! But remember, even if they eliminate your tax liability completely, you will likely have to file an informational return annually.
Let Greenback Take Care of Your Expat Tax Returns
Greenback accountants are ready to help you file your taxes, no matter how many years behind you are. Find out how easy it is to work with Greenback’s expat experts!