When considering a move abroad to become a US expat? If you have the luxury of deciding where you would like to live, there are certain details you’ll want to think about. While many cities welcome expats with open arms, a recent report named Zurich, Switzerland as the second best city for expats. The locale offers a high quality of life and an easy transition for US expats. Here’s what you should know about life for an expat in Zurich.
The Expat Lifestyle in Zurich
Zurich offers Americans an unforgettable experience and some incredible amenities. Though, some of these benefits come at a price. Let’s take a closer look at the advantages and disadvantages of the lifestyle of this Swiss city.
Take Your Pick of Languages
Zurich has four official languages (German, French, Italian, and Raetoromansch). Additionally, many locals speak English.
Live Abroad in a Safe City
Zurich is a very safe city. The crime rate is 28 points better than New York City. Safety is a common factor when determining where to reside, but that very much depends on the type of city you’re hoping to live in.
One thing the Swiss pride their country on is the excellent health care, made up of a public, subsidized private and totally private system that provides its residents a very extensive network of qualified physicians and hospitals, the most equipped facilities and zero waiting lists.
The Drawback: High Prices
Zurich’s spectacular medical care comes at a price. US expats will find that around 10 percent of their Swiss salary will be set aside for health insurance premiums if they live in the country for three months or more.
In general, if you intend to live very simply while abroad, Zurich may not be the best city for you. The cost of living is very high, with consumer goods prices around 25 percent higher than those of New York City – a place many consider prices to be quite outrageous!
Working Abroad in Zurich: Authorization Requirements
When it comes to taking on work in Switzerland, there are some intricacies you should know. You must have a work authorization in order to work anywhere in Switzerland, and obtaining these work permits have become quite difficult. This is due to a growing anti-immigration sentiment within the Swiss government, which led to a reduction in permits for both citizens of EU and non-EU countries.
An EU resident has the ability to freely enter Switzerland, but will need to apply for a work authorization. A non-EU resident, including a US citizen or national, will need to get a special residence permit with authorization to work in Switzerland – they will take into consideration existing work quotas, your education level and work experience, as well as determine if there are no EU candidates available for the position in question.
A very important factor to know as a US expat: you are required to have the authority to work in Switzerland before you can move to Zurich. This means you can’t enter as a tourist, visitor or on a business trip and take on work afterward. You must apply from your home country in order to accept a position and move to Switzerland to work. There are exceptions for certain types of persons, such as students, retirees and investors.
Filing Taxes in Switzerland
A big factor that often gets overlooked is the affect living abroad will have on your tax situation. In most cases, Americans living in Switzerland will have to file and pay taxes in both the US and their host country.
Paying Swiss Taxes as a US Citizen
While living in Zurich, your taxes will be levied by the Swiss government, the Canton (a region of Switzerland, in which Zurich is the capital) and the city itself. There is an income tax as well as a wealth tax that you will be responsible for, in addition to a church tax, if you become a member of one of the major churches.
Like US expat taxes, your Swiss taxes follow a regular calendar year. The maximum Federal tax rate is 11.5%. The maximum Federal, Canton, and municipal combined rate in Zurich is 21.15% (in 2021 this amount decreases to 19.7%).
How to Save on Your US Expat Tax Return
While you will be required to file income taxes in both Switzerland and the US, fortunately there are certain protections in place to help prevent double taxation. These include:
- Foreign Earned Income Exclusion– This allows you to decrease your taxable income on your 2019 US expat taxes by the first $105,900 of foreign earned income (and $107,600 for 2020).
- Foreign Tax Credit– This allows you to lower your tax bill on any remaining income (above the FEIE excluded amount) by certain amounts paid to a foreign government.
- Foreign Housing Exclusion– This allows for an additional exclusion from income for certain amounts paid for household expenses occurring from living abroad.
Is Living Abroad in Switzerland’s Largest City Right for You?
When considering a move to Zurich, it’s a good idea to factor in the pros (top city for expats, low crime, great healthcare, etc.) with some of the cons (high cost of living, hard to obtain a work permit, etc.) in order to determine if it’s the right place to live. When it comes to your US expat taxes, consulting with an expat tax professional before a big move will help you understand the impact you’ll see on your US tax return.
Also, be sure to check out our tax guide for Americans living in Switzerland for ways to save on expat taxes, tax deadlines and more.
Planning a Move But Not Sure How Your US Expat Taxes Will Be Affected?
Our team of expat-expert CPAs and IRS Enrolled Agents can help you understand the intricacies of US expat taxes while living abroad, so you’ll be prepared when tax season comes around. Contact us today to learn more!