Income tax for spouses working and living in different countries

Taxes
#1

Hi folks,

I will be starting a 9 month contract in Switzerland soon, earning less than 120k
Wanted advise on the following situation: my wife will keep her job in Rep of Ireland and will continue to pay taxes there. The Irish tax office can provide a letter stating she is a tax resident in the Republic of Ireland
My new employer asked me to fill in a form asking if my wife is employed in CH or abroad earning more than 2000chf a month. No mention of double taxation on the form
Basically I am trying to:
Avoid paying tax on her already taxed income.
Avoid paying an unnecessary health insurance for her as she will not be in Switzerland
Should I be taxed as a single individual in this scenario ?
Any advice is appreciated.
Thank you,

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#2

You will be taxed directly at income level. So your net salary is already tax-reduced. Nothing to worry about, you’ll pay taxes seperately.

#3

I see the online salary calculators have higher withholding tax if I mention my wife is employed
Nowhere can I mention she is already paying tax to a different country
I see the following table for witholding tax purpose:
image
Basically will I be assessed under B or C ?
Thanks!

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#4

I am in same situation. Spouse living and working in Germany. I have been assessed under ‘C’ since I got married. The final tax rate is identical to when I was single and working (at least in my case). I was also on quellensteur before and after marriage.

#5

@covfefe can you provide an certificate from the German tax office stating your wife is a tax resident in Germany? Would that change anything ?

#6

I honestly don’t know. When i got married, I told my employer that my wife is living and working in Germany. Few weeks later I got the code C0N (married). The tax rate remained same as before. Searched it once and found this to be the case (can’t find it anymore!). That went on for 4 years. I did apply for correction / refund of quellensteuer for year 2018 for first time and attached my spouse’s annual income and tax statement along. Let’s see if they come up with some different results. in 2019, I got a C permit, so now I have to learn new tricks :wink:

#7

I am in a slightly similar situation. Non-EU and moving to Switzerland on income >120k CHF and a permit B. My spouse works mostly from home in a non-EU country and so will join me in Switzerland for part of the year and stay abroad in her country of employment for part of the year. The salary will be paid by my spouse’s employer abroad into her foreign bank account.

I am not sure how we will be taxed. Some tell me that my spouse’s income will not be taxed at all due to a double tax agreement exempting “income from foreign establishments”. Others tell me it will be taxes normally at the combined applicable income tax rate as if the income was sourced from a Swiss employer. Others still tell me that only my Swiss income will be taxed by progression, at a tax rate equal to that applicable to the bracket of our combined income.

Any guidance on how our income would be taxed and how to declare it, would be much appreciated as I am unable to find clear info on this over the internet. Also, does it make any difference how long my spouse will physically stay in Switzerland (days/yr)? She will be joining me on the basis of the B permit, not as a visitor.

#8

That will depend on the country anyway I think (DTAs have some similarity but are not identical).

That said there’s often the concept of center of vital interests to tie break things, and where you spouse lives can be a good sign indicating where that would be when spending close to half the time in two countries.

(But other things like whether you have a stable residence in each country, etc.)

And as a visitor (EU or non EU), I don’t think you can really “do work” while in Switzerland unless you have the appropriate work permit. (I might not be very heavily scrutinized, but you could be in trouble if there’s an audit).

#10

It was my case before my wife find a job in Geneva. My withholding tax was higher as they were expecting her to earn over 65kchf. Therefore my tax rate was higher.

In February, I had to declare her real revenue to calculate a more accurate and lower tax rate. In the end I got some money back from tax office but she was not taxed on her revenue.

#11

Thanks so much. That sounds like the tax by progression to me? It just resulted in a higher applicable tax rate to your income, but no tax on hers? May I ask if she spent more than 180 days /yr in Switzerland and whether it mattered at all? The comment above is very valid in my understanding - my wife will need to spend the 180 days at least to avoid losing the B permit.

#12

Yes that’s what I told my wife to stay at least 185 days just to be sure.
First year she was without a job and the year after she started in the middle of the year so she earned less than 30kchf.

#13

If she’s a swiss resident for 180 days+, seems hard to argue why it wouldn’t be taxed (or at least declared). And then not having a swiss salary certificate will raise questions (and potentially trigger more investigation).

I wouldn’t advise to work in Switzerland without a swiss contract or similar (consulting company, etc.).

#14

[/quote]

If she’s a swiss resident for 180 days+, seems hard to argue why it wouldn’t be taxed (or at least declared). And then not having a swiss salary certificate will raise questions (and potentially trigger more investigation).

I wouldn’t advise to work in Switzerland without a swiss contract or similar (consulting company, etc.).
[/quote]

Thanks a lot. We are definitely going to declare it for sure. My question is more around, how will they apply income tax to her/me given that the income is foreign sourced, from a foreign establishment in another country and whether it will create any issues given that she has spent 180+ days of the year in Switzerland.

#15

My point is that I’m really not sure this is possible in the first place. You generally can’t be employed abroad while you’re living in Switzerland (except for border commuters), normally you need a local contract.

All the people doing “remote work” for a company abroad have a local contract (there’s companies that provide that kind of payroll management as a service, they take a cut for it of course) or their own company.

This makes sense, since you need to pay employee and employer contributions, unemployment insurance, retirement fund, etc.

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#17

Did you talk to your wifes employer already? I mean does the employer know that your wife is going to be a Swiss resident? If not, I would highly recommend to do it. The problem is that having an employee working abroad might lead to tax problems for her employer. It could even go as far as creating a “virtual entity” in Switzerland for her company.

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#18

We have spoken to my wife’s employer. Conceptually they agreed, but are checking the tax impact/liability. Been a couple of months now without a clear response on the tax question. To be honest, I’m not sure there is a clear understanding on how this could be managed, if there is indeed a way.