I never realized that I pay that much taxes for a second/holiday house in another country, that I rarely use (couple of time per year).
I wondering if it’s normal to pay the taxes in the country where the house is (because it’s not a primary house), plus it adds a good amount also to the taxable income in Switzerland.
To me it sounds like a double taxation.
In addition I read that if the utilization is really low or you don’t use some rooms, it’s possible to ask for a reduction.
Any experience on this topic?
It’s normal to pay taxes in the country where the house is located. Foreign real estate must be declared in Switzerland and affects the tax rate for both income and wealth (satzbestimmend), however, it doesn’t affect taxable income or wealth in Switzerland (steuerbar). With this approach, there is no double taxation.
If it does affect your taxable income, have you checked that there is no mistake in your declaration? Have you looked closely at the ‘Steuerausscheidung’?
It’s pretty clear in the “taxation decision”. In the taxable income there are salary, dividends, primary house and secondary house (deducted the expenses of maintenance and management)
Essentially the second house, that is in other country, is going to increase the taxable income in the same way the primary house in CH does. In the taxes declaration it’s clear that it’s in another country.
Regarding the wealth part it’s not a problem anyway since I have a mortgage in CH
This really shouldn’t happen, as I understand it. Taxable income and wealth can be affected slightly due to the proportional debt allocation as part of the ‘Steuerausscheidung’ that @Barto mentioned. However, net income (whether actual rent income or imputed rental value) of foreign real estate should never simply be added to your taxable in come in Switzerland like domestic real estate.
Does this mean that, according to the taxation decision, your taxable (steuerbares) income is exactly the same as your ‘satzbestimmendes’ income? Or is there a difference but not as much as you think it should be?
Does the taxation decision match the provisional tax calculation of the tax software or did the tax authorities ‘correct’ it? Could you post the relevant excerpt of the taxation decision?
I would talk to the tax person responsible for the decision.
I’m not living in a German speaking canton but it’s really clear. In one one row of the taxable income there is the primary house a the row below there is the second house. Essentially the calculated rental value for each house.
This is a good question, and I was wondering the same. Software and decision are the same value
For your information, the ZH taxation decision I got has 3 parts:
Berechnungsmitteilung: Calculation of global income and assets. Foreign real estate is included the same as everything else
Interkantonale / Internationale Steuerausscheidung: Global income and assets are distributed between ZH and the real estate country. Here the canton column doesn’t include foreign real estate.
Einschätzungsentscheid: Final numbers for “steuerbar” and “satzbestimmend” income and assets. Here the “steuerbar” numbers don’t include foreign real estate but “satzbestimmend” does include it.
Is your taxation decision similarly structured? In particular, did they also include a “Steuerausscheidung” (no idea what it’s called in French or Italian)? That part should be the most interesting one. In ZH also the tax software already generates a provisional “Steuerausscheidung”. Is this also the case in your canton?
If they didn’t include a “Steuerausscheidung”, ask for that.
Edit: “Internationale Steuerausscheidung” might be “Ripartizione fiscale internazionale” in Italian and “Répartition fiscale internationale” in French.
Mine is structured in this way. There is a recap page for Canton taxes.
-Rental value house 1
-Rental value house 2
-Total rental value (1+2)
-Maintenance expenses for houses
-Total rental value minus Maintenance expenses for houses
-Total income value
everything I could deduct and nothing regarding houses
it’s 0 due to the mortgage in CH
Then there are pages similar to what you mentioned and they should be the Steuerausscheidung, because I have a breakdown of two cities in CH (where I work and where my wife works), then the foreign country.
First part is wealth the second is income.
In the income there is house nr 2 as well and it’s under the foreign country and it’s definitely considered in the total.
For federal taxes are exactly the same.
There is another part that I don’t understand. In the recap of the income there is rental value that is adding to all the rest, while in the breakdown actually there are also the passive interests deducted.
Finally in the main page there is the “taxable income” and the “taxable income decisive for the rate” that is 3k higher. So the second value is considered to calculate the percentage of the taxes, then the percentage is used on the first value (I did some reverse engineering since I had no idea).
The second value comes from the recap while the first value comes from the breakdown pages.
I have three columns, “Total Satz” (total to determine the rate), “Kanton Zürich” and the foreign country. In your case I’d expect four columns: total, the two cantons/cities and the foreign country. And I’d expect income from house 2 in the foreign country column and the total column but not in the columns for the Swiss cantons/cities. Is this correct?
Is the difference between the total column and the sum of the Swiss columns 3k here as well?
Do the 3k roughly match the net income of the foreign real estate (imputed rental value - mortgage interest and other real estate deductions)? Due to the proportional application of debt interest, it will likely not be an exact match but you can hopefully follow the calculation on the page with the breakdown between the Swiss cities and the foreign country.
There are 5. Total, Total in canton, city1, city 2, abroad, but essentially it’s what you mentioned
After your inputs and checking again the calculations…I finally figured out
The "taxable income decisive for the rate” is including house nr2, then in the breakdown I got confused because the total is considering also house nr2, but then for the "taxable income” is reported only the Swiss part.
The calculations are correct, so no mistakes.
Now I have a question related on why there are two values, and not just one?
Essentially why there is a value to decide the tax rate that includes also house nr2?
It’s to avoid an unfair advantage when income is split across countries.
Let’s imagine there is another country that has the exact same income tax brackets as your Swiss town, and a part of your income is taxable in that other country.
If each country taxed you individually on the local income without adjusting the rate for global income, you’d likely pay less tax than if you had exactly the same total income but all your income was taxable in Switzerland (because you’d benefit from lower tax brackets). Such a discount would be unfair to people whose total income is taxed in Switzerland.
With Switzerland’s tax rate approach, you’d pay in total exactly the same amount of taxes to the two countries in this hypothetical example, no matter how your income is split across the countries. I think it’s a reasonable and fair approach overall. The proportional allocation of global assets/debt may be a bit odd in some cases, though.