I am Swiss and 35 years old. After 13 years of working in Zurich, I am going to retire within the next months. To reduce my living costs, I am going to live in Southern Europe. My tax advisor has worked out a plan that allows me to end my Swiss tax residence without setting up a new tax residence anywhere else. For this, I will need change country every 90 days.
The plan involves checking out from the Gemeinde, stating a future address in a country outside of EU/EEA, without actually moving there on a permanent basis. I have organised an address in Montenegro where I can even receive physical mail if necessary.
In theory, Switzerland upholds your Swiss tax residence until you have set up a new tax residence somewhere else. What matters is not the tax perspective of the foreign government, but the somewhat vague Swiss definition of having the “center of life” in the new country, and the “intention” of living there on a permanent basis. If you merely go on a long trip around the world and intend to come back to Switzerland, Switzerland will maintain your tax residence.
In practise, every canton and every Gemeinde has a different process for checking out residents. Some cantons require official residence confirmation or even a tax return by the future country before they end your tax residence in Switzerland. But my Gemeinde does not require any documentation to end the tax residence, other than my signature. Government employees follow processes. They have no discretion to make arbitrary decisions. So, as long I do not arouse any suspicions during the checkout process, I do not have to file tax returns anymore.
For the benefit of all users of this forum, I wanted to ask you:
Has anybody else here succeeded in setting up a life without tax residence?
What was your experience with the emigration process from Switzerland? Any difficulties?
Did the Swiss tax authorities require any further documentation before they checked you out?
Did they audit your tax residence anytime after you left Switzerland?
Please keep me up to date on this one! I recently read an article regarding this. I wonder if it actually works in practice, the more difficult rule is the 90d on average over 5 years. So you can’t stay more than 450 days in one country for over 5 years and not more than 90d at once.
May I ask you about your FI number, just to get a reference?
Oh and I am not sure if I am allowed to say this, but everyone can get a residency with government stamp and all in the Balkan for a lot less than 100€ so yeah…
In my experience having lived most of my life abroad in many different countries, there is no further documentation or auditing involved, once you deregistered. They do normally ask you where you will be moving to, but that’s it. Once you are gone it’s generally an “out-of-sight-out-of-mind” setup.
It can be worth having an address in Switzerland (friends/family) for mail to be forwarded to, so you don’t get surprised with debt claims from unpaid bills, or old tax issues, etc. If you want to reclaim Swiss withholding tax, you will have to send proof of tax residence in a country with a Swiss DTA. Some retirement and vested benefits foundations (include WIR used by Viac) require you to provide this before they pay out your assets, but Swiss law only requires you to show proof that you are leaving Switzerland (e.g. your deregistration which states a foreign country as the place you are moving to). You can simply transfer your benefits to another foundation which does not have that requirement and then withdraw.
One thing I would recommend is that you check into how this will affect your OASI pension when the time comes. From what I understand, the OASI makes you cough up a sort of history of where you have lived in the years leading up to your retirement. I would recommend registering at the Swiss embassy in each country you stay in, so you have a record. In my experience, you do not need to prove residence in that country. Just tell them you live there.
I’ve never had an issue with registering at a Swiss embassy. It was always just a matter of showing my passport. Doing this also furnishes you with proof that you moved countries every 90 days, which is beneficial if you ever need evidence for tax offices.
You should ask a lawyer to see if what you are proposing is even legal, it seems what you will try to do is try to mislead the government that you will be living in Montenegro. Also can you even get a residence visa for Montenegro?
Cyprus: I think that if you live in Cyprus for 90d every year you can set up tax residency there. Cyprus will not tax you on income not sourced from Cyprus (e.g. dividends from non-Cyprus companies).
Finally, I am not familiar with the Swiss system but I am familiar with my home country’s system. My home country also had a “center of life” test and that included stuff like:
My children are not going to public schools in my home country
Proof of residency, proof of owning or renting a house, proof of paying electricity/water bills
I am financially dependent on the foreign country (e.g. work there) or my spouse is a citizen of that foreign country. So if I said I am single, and planning to live in Cyprus and not get a job there, most likely they would not grant me the status.
Sounds interesting. I read about the flag theory but I never thought it could work in real life. I left Swiss tax residency several times and it was as easy as just de-registering with city hall. I never faced any scrutiny but I always had “valid” reasons for leaving the country (studying & working). Even stealthy living in CH without tax residency for a couple of months worked out.
Are you not going to withdraw the money in your pension fund? A tax domicile could help you get back the Swiss tax at source, while paying the corresponding tax abroad (which can be a low as zero in the case of Thailand)
Great point. Yes, I will try to withdraw the pension fund. To keep things simple, most likely I will just pay the Swiss withdrawal tax. It is not very much in my case. Depending on the amount of pension capital, it may very well be worth it to set up residence in a country such as Thailand.
By the way, I learned that if you have the capital paid out from endowments in two different cantons, they tax each withdrawal separately at a lower rate. If the endowments are in the same canton, you can spread the withdrawal over two years to lower the tax rate.
I got confirmation that the plan is compliant. After you state that you intend to country X, you are not legally obligated to go there. You are free to change your mind. You may even have to, in case your application for a residence permit is refused.
You are paying all your taxes and are not causing any damage. The only advantage you achieve for yourself is that you can withdraw your entire pension capital. It is your own property, you earned it in the first place.
Just my small experience here, TBH my 3O-something year old me would be jealous of your plan, my current self… a bit less
I once left officially Switzerland to go off travelling for a year. Main reason to deregister officially was to skip paying health insurance. In Zurich they only asked what was the first country I would visit and that was it. I was on quellensteeer back then so I had no tax debit, a friend on C permit instead had his tax returns very quickly processed and his final bills produced before he left.
May I ask: what are the benefits of being a nomad in comparison to being a tax resident in a tax haven? Some places have relatively low requirements. And then you don’t need to worry about hopping from one place to another.
COL is usually the problem in tax havens. You can live really cheap in asia f. e. reducing your withdrawal rate and future wealth + it’s an adventure!¨
I love the idea. You are basically forced to only have a couple of clothes, a laptop, phone and hygienics. So you are automatically adapting a non materialistic lifestyle - the travel part can be a two sided sword though.
But there are tax havens which only require you to spend 90 days in a year to retain your residency. Buy a property in some place like Panama (or not, I don’t remember the actual list of countries where this is possible), I guess some places require as low as $100’000 “investment”?
And how did you insure your health worldwide? Are there some good services which cover you globally, without having to cough up more than you pay for the Swiss insurance?
Sure, it all depends on the countries you are living.
The major benefit of being a tax nomad is that the travel is potentially cheaper than the taxes and COL combined in a fix destination. But this ofc. depends a lot on the concrete execution of this strategy.
Doing this in Singapore, Korea, Japan and Switzerland is going to be a lot more expensive than Vietnam, Thailand, Costa Rica and Germany f. e.