Am I the only one who feel discouraged to invest because of the tax declaration?

I recently moved to Switzerland (ZH) to work (B permit, <120k).

I’ve started reading about FI and with that I started to think about investing (open a 3rd pillar account, buy some ETFs, etc), but after seeing a lot of people with several difficulties regarding the tax declaration, I don’t feel very encouraged to invest mainly because of the language barrier since I don’t speak german.

Am the only one thinking like this?

Filing taxes is not fun, period. On the other hand, it would be worth for you to do this quick calculation :

  • Say you save 1’000 CHF every year.
  • in scenario A you just save the money and don’t invest it because you don’t want to file for taxes. After 20 years you have 20’000 CHF
  • in scenario B you invest it in the stock market which averaged around 7% per year. After 20 years you have 40’995 CHF. So you more than doubled the money. Plus most of it was capital gains so they were not taxed.

So your fear of filing tax will cost you a lot in the long turn. Up to you to see if taking a few hourse every year to file your income tax is worth doubling your money :wink:

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Since your income is under 120k, why worry about tax declaration? You wouldn’t have to file it in, would you?

The declaration sucks, sure, it took me a full day to crack it. But for buy and hold of ETFs it really isn’t that complicated.

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Even tough I’m taxed at source, from what I’ve read, I think I need to declare everything in that form for the assets (and possibly the DA-1 one).

Am I the only one who feel discouraged to invest because of the tax declaration?

Don’t be an idiot, compared to some other countries I could name filling a swiss tax declaration is a walk in a park. The attitude to taxes is very relaxed here, it’s not a crime to make mistakes (or even lie) on tax declaration. Language on the forms could seem intimidating at first if you’re not a native german speaker but you’ll get used to it

Even tough I’m taxed at source, from what I’ve read, I think I need to declare everything in that form for the assets

Not unless you have 200k+ wealth (ZH)

(and possibly the DA-1 one).

Not unless you need to pay swiss tax on the same dividend, which you don’t if you don’t need to file a swiss tax declaration

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Interesting.

So if I’m taxed at source (income <120k income) and don’t have >200k wealth, I don’t need to fill anything even if I start investing?

After reading a lot of posts here in the Taxes section of the forum, I had the impression that every dividend needed to be declared.

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I was thinking a look into the Wegleitung for canton Zurich would clear things out, but it doesn’t. On page 8 they write:

Grundsätzlich unterliegen ausländische Arbeitnehmer, welche die Niederlassungsbewilligung
nicht besitzen (z. B. Jahresaufenthalter oder Kurzaufenthalter), der Quellensteuer auf ihrem
Erwerbs- und Ersatzeinkommen und haben dementsprechend keine Steuererklärung einzureichen.

Which translates into: “if you don’t have a permit C and withholding tax is paid from your salary, then you don’t have to file a tax return.”

However, later they write:

Eine ergänzende Veranlagung wird durchgeführt, wenn ein ausländischer Arbeitnehmer neben
den quellenbesteuerten Einkünften über weitere, nicht quellenbesteuerte Einkünfte verfügt
(z. B. Erträge aus Wertschriften und Liegenschaften, Ehegatten- oder Kinderalimente, Einkünfte
aus selbständiger Tätigkeit, Renten der AHV, Lotterie-, Zahlenlotto- und Sport-Toto-Gewinne
etc.) oder Vermögen besitzt.

“An additional assessment will be conducted, if you have other income, like from securities, real estate, etc. or if you have wealth”

Not sure how we should interpret it. Like, who will make this assessment and based on what? At any point, are you legally obliged to give them a hint or do you only ever need to file a return when they send you one?

I googled further and found this.

3 Ein ergänzendes Veranlagungsverfahren wird nur durchgeführt, wenn das der Quellensteuer nicht unterworfene steuerbare Einkommen mindestens Fr. 2’500 oder das steuerbare Gesamtvermögen mindestens Fr. 200’000 beträgt.

“Additional assessment is conducted when the withholding tax is under 2’500 or when the total taxable wealth is over 200’000.”

Not sure how they would know what’s your wealth unless you told them? But as usual, @hedgehog got it right.

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They should have sent you a survey form when you register in Zürich asking among other things how much money you have, that’s how they’d know. The law prescribes you to contact them proactively in any case if you qualify for the ergänzende Veranlagung and not knowing the laws is not an excuse, but as i said the general attitude to taxes is very laid back and i doubt they’d punish you if you don’t

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I understand your discouragement. A relative is very similar, and I talked her through filling out this bit of the tax declaration in the first two years in a few minutes. It’s usually copy-paste after that. It’s really only a small initial effort, and always less after that.
Investing in the “3rd pillar” adds absolutely no complication to your tax declaration. One field to fill out, and attach the payment confirmation which you receive from your bank.
For “buy some ETF’s”, in the tax declaration, filling in the value and income of an ETF or 3 in the Vermögensverzeichnis is really not more complicated than filling in the value and interest of a normal bank account. The DA-1 form is an extra “complication”, yes, but you could leave that away in the first year or so, as for “small” amounts (say ETF of CHF 10’000), leaving away the DA-1 form will “cost” you about CHF 30 to 50, so “losses” are, let’s say, limited.

What complication? The only difference between putting a stock into it vs. WV is that you need to fill in a percentage of how much of the dividend withholding is reimbursable from double taxation agreements. Looking that up is not much work and if you stick to US equities you only need to remember one number, 15%. It’s 15% for most (but not all) other countries too.

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For you and me it’s not complicated at all.
But someone else is keeping their money in a bank account because they feel the tax declaration will become too complicated with 3a and/or one or a few ETF’s.
A few extra lines to fill in should be do-able. An ETF is similar to fill in on WV like a savings account.
But the DA-1 form is an additional form with words on it like “Pauschale Steueranrechnung” and “Zusätzlicher Steuerrückbehalt USA”. It can be intimidating for a beginner & I’d say leave that for year 2 if we’re talking about “only” CHF 10’000 or so.
Or ask a knowledgable friend!

No. I’m afraid of this crap as well.

Yes, but they have also a dividend limit. In my case, in Canton Zug the tax office said:

If your married couple’s income from assets is less than CHF 2’000 and your joint taxable assets do not exceed CHF 202’000, a supplementary assessment may be waived.

Unfortunately, I’ll most likely exceed that dividend limit this year, so next year we will have to fill these crappy forms.

If you’re really that afraid of the tax declaration, hire somebody to do it for you. It will be 1-200chf or so, but it’s better than not investing. The next year you just copy and paste and that’s it.

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Last few years i completely skipped the DA-1 form (or rather my tax consultant did). So you don’t HAVE TO submit the complicated parts. My tax consultant said i’d have to pay more for the work, he was super grumpy about it and so I decided to just drop it. He also said my US Brockerage wasn’t preparing the forms very clearly for CH tax purposes so it would be complicated. He already charged 300 for the tax return (and made a ton of typos and mistakes as well that I had to keep pushing him to correct). So fun haha.

Does anyone recommend a good tax service that likes doing DA-1? :slight_smile:
Or any DA-1 nerds want to teach me how to do? :slight_smile: Maybe we can do an event with others who want to learn and then we pay your fee or drinks if you prefer

I had about 2000 in dividends 2018, and expect about the same for 2019.

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Which canton? I find it super simple :slight_smile: do you feel comfortable doing the rest of your taxes yourself?

I am also discouraged with the whole tax return process.
I used 3 services so far and none of them even asked me about the DA-1 form, even though I gave them copies of my brokerage accounts so they can enter my dividend income and wealth. In fact one of them (who tried to charge me the most) was pretending to be an expert in tax returns!
I am pretty sure I got taxed on the full dividends, including the 35% withholding tax.
But as was mentioned already, the benefits of the potential return far outweigh the hassle.
Also, if you invest in UK dividend stocks, you don’t have to worry about withholding taxes, since the don’t have one (and UK stock pay high dividends in general - just try to avoid those who are in danger of cutting it!).

I am wondering if there any examples in this forum for filling out the DA-1. If not, I would be glad to contribute my experience.

DA-1 is exactly the same as Wertschriftenzeichnis, with only two additional fields a) how much % of tax refund you want per tax treaty. The program will fill this automatically for you in most cases, usually 15%, b) field to declare extra witholding from swiss brokers’ if you suffered any, so 0% if you don’t bank with shitty swiss brokers.

That’s what happens when you’re incompetent to check the output yourself and/or go with cheapest option. You want it done right - (learn enough to) do it yourself or don’t cheap out.

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I used etax.ch, which is free. The form for each security has a checkbox that, if checked, generates the corresponding DA-1 entry. I still have to get an answer from the tax authorities about the forms I submitted this way (started in 2019 for the 2018 tax year).

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