In most countries, income while working in another country is not taxable. So if you had residency in Switzerland, income from not working here is not taxable. This is what the people working on (cruise) ships do, they earn their cash on the Bahamas or the philippines and are technically taxed there and de facto not taxed.
Regarding tax, I think you need a lawyer for OECD-Steuerrecht
If you get your Abmeldung in Switzerland, you also file an unterjährige Steuererklärung declaring until that date. My uncle has done it countless times. (And banks canceled his contracts countless times for his failure to declare a new residency).
Your broker will apply withholding taxes based on your stated domicile. Most countries have a dividend withholding tax of 15% for Swiss residents. Notable exceptions are the UK and Ireland. For UK stocks, you pay a substantial transaction tax of 0.5% but then you can receive UK dividends without any withholding tax forever. The UK stock market has not performed well for several years, but it has offered great dividend yields of around 3%. Another interesting example is Greece, which charges only 5% dividend withholding tax. However, given that dividend yields are modest nowadays, most of your returns are capital gains and the withholding tax issue is not too important.
The worst case is that a broker or a bank asks you for proof of address, for a residence confirmation or even a tax return. If you cannot supply this documentation, they may cancel your relationship. You failed to fulfil your contractual obligation to inform them about address change. But you have not caused any damage and your are in compliance with Swiss law. The worst that can happen is that the bank throws you out. But it will not take you to court, or anything like that. IB shows in their FAQ what kind of documents they accept as proof of address.
To prevent problems like this, it is a good idea to open accounts with several banks and brokers. Keep them as backup, in case you ever lose your main account. There are many offers without fixed costs (Neon, N26, Zak, etc). Swissquote does not charge custody fees if you only have cash and no securities. A UBS savings account also has no fixed costs.
If a bank sends you a letter to an invalid address, the bank will investigate your domicile. To prevent this problem, create an online account with the Swiss Post office, using your name and your parents’ address. A registered letter will be sent to you to confirm the address. Now you have full control of letters sent to your name and address. Even if your parents move. You can divert letters to any other address in Switzerland, for example to friends or a scanning service such as Peax.ch. The mail forwarding service costs about CHF 200 per year. Just keep paying this bill and do not inform the Swiss Post about your whereabouts.
If the Swiss tax authority conducts a major investigation, insist on your Swiss tax domicile, and you take them to court, then yes, it will turn out this way. This is what the federal jurisprudence has repeatedly stated.
The practice is a little different. The Swiss tax authorities accept the vast majority of deregistrations. There are hundreds of them every day. You show up in person, say that you are permanently moving abroad, fill in your new address, sign the Abmeldeerklärung and file your final tax return. You are not required to show documents that prove your new residence. Most cases are not subject to a major investigation by the tax authority, let alone by the federal jurisprudence.
In the remote event that the Swiss tax authority questions your case, you show them a long-term apartment rental contract in the other country. That will do. The Swiss do not ask for electricity bills with your name on it, as is common in the US, for example. What matters is not whether you pay taxes in that other country. But whether it is the “center of your life” where you have the “intention” of living permanently. What matter is the Swiss definition of residence, not the perspective of the foreign government.
That’s a great point. I have been looking for a way to keep making AHV/AVS/OASI contributions while retired abroad. I would have to earn at least CHF 4’800 per year in Switzerland.
One option is to be a member of the board of any Swiss company. But this compensation will be taxed at a high rate of 25%. Another way would be to be a “cleaning lady” to somebody’s private household, where the tax is only 5%.
Whether any actual work is done, either as a board member or a cleaning lady, does not matter. All that matters is that some AHV contributions are reported and paid on the stated salary. I could effectively pay such a salary to myself, without doing any actual work, as long as the AHV reporting and contribution is handled through a company or a person in Switzerland.
That’s not the case. As a Swiss national abroad, you have the option, but not the obligation, to make AHV contributions based on your wealth and income. Unless you have very minor savings, the terms of this voluntary program are not attractive. You have to make very large contributions for a minor increase in your future pension. In most cases, a board membership or a “cleaning lady” employment is the cheaper option.
And from where do they ever want to know this? You go to the local residents registration office tell them you want to deregistrate because you permanently leave the country for XYZ. That’s more or less it. You don’t have to provide evidence that you have now settled in the new country and registered with the local authorities. You don’t even need to communicate or register with the local Swiss embassy in the new country, that’s entirely optional and is only required if you want to vote. You can even move again from that country to another country without even telling the Swiss government - there is no requirement to tell them. You could basically be everywhere in the world without them knowing where.
As someone who is forced to pay I kind of hope the person treating the case would halve half a brain and ask you what happened to the contributions in the missing years - whenever you move back or when you claim at retirement
AHV contributions are not due because someone is a resident in Switzerland. They are due because someone earns an income in Switzerland that is subject to AHV contributions. Your employer is responsible for these payments, not you. Even a resident of another country such as Germany pays AHV contributions if he earns an income in Switzerland. So the residence simply does not matter. In some special cases, such as that of a student or a Swiss national living abroad, there is a possibility, but not an obligation, to make voluntary AHV contributions.
Absolutely not. It would be stupid to do anything illegal. Switzerland has a rule of law: The government can only do what the law prescribes. The government is forbidden from doing anything else. You can only be fined or otherwise punished if the code of law says so. It also means that a government employee has no discretion. Everything he does is prescribed by defined processes. You can observe this every time you interact with the state. And the government employee is not allowed to do anything else. If he observes a crime, he can alert the authorities, of course. But there is no crime here, and nothing illegal. We are only taking actions that are allowed, for which there are no fines and no legal consequence whatsoever. We are simply trying to find a legal way to protect our savings from undue taxation.
…which means you are subject to taxation in CH and (would) have to pay taxes here, wouldn’t you?
In „theory“? Let‘s be honest what the word means:
It means law and its interpretation by the courts.
…which, again, by your own admission you will not.
One stays tax-resident in Switzerland until they establish tax residence somewhere else. You said it yourself.
You‘ll deregister in Switzerland but will not establish tax residence somewhere else.
In fact, you‘ll even lie to the authorities about settling in Montenegro, when you instead plan on travelling the world without doing so. Again, you said it yourself.
You plan not to pay taxes in Switzerland, even though by law your Swiss tax residence will be upheld - as you said yourself.
Not paying taxes when you’re still tax resident (and have income) is illegal, isn’t it?
Please point out where I’m wrong?
Note: pointing out “…but they’ll never ask you about fact X, investigate circumstance Y and ask for proof Z” (as you did over the last couple of days) only substantiates why you’ll get away with things.
Is it illegal to tell the authorities you’re moving to Montenegro? No, it isn’t. But devising and executing a carefully crafted plan to mislead authorities about establishing residence elsewhere when you know you won’t become resident there, to escape taxation? As they about parts and sums of parts….