This question has been discussed already:
I used to be paying the full amount as soon as possible.
With interest rates near zero or below, there wasn’t a point in delaying.
If I can get a higher interest rate somewhere else (at a bank or broker) than from the tax administration, I may reconsider.
In ZH it costs 0.25% p.a. to pay up to one year late. Even on my savings account I get more than what I pay there.
And IMO having that money invested and paying the tax bill by adjusting the savings rate shortly before the due date of the final bill, has a higher expected return than 0.25% p.a.
If you’re fortunate that your tax bill is low enough that you can simply adjust the savings rate shortly before the due date, sure.
That would not be possible for me, especially as my due dates for the final state tax bill and the provisional federal tax bill (which can’t be ignored) are only about a month apart. I certainly could tweak the timings of my investments to be slightly longer in the market in average. However, I don’t want to effectively leverage my portfolio. Especially as I’m self-employed, so my income is not as safe as it may be for others. That said, I currently transfer the tax owed monthly to a savings account as that pays more than 0.25% p.a.
I don’t think this kind of optimization is worth my time. I’m going for automatic solutions. A back of the envelope calculation for my case yields 200-300 per year, after tax. I don’t think that translates in a good hourly rate.
A few suggestions:
- Divide the expected tax bill into payments into monthly rates. This is what I am doing. It’s super easy to budget and time saving.
- Do the above, but stop your automatic investment during the months prior to the tax bill until you have accumulated enough to pay for tax.
- If you have a 13th salary, use that to pay larger chunks.
- If you have a bonus that you can count on, use that to pay the entire expected bill. A friend of mine’s doing it this way. He gets his bonus in March and uses it to pay his tax bill which arrives at the same time. Peace of mind.
I recently got my C permit and no longer taxed at source.
With this, I got the additional responsibility of figuring out how to best utilize the additional resources that are temporarily available at my disposal.
I don’t want to end up in a situation where it’s stuck in a down-market when my taxes come due nor do I want it to just sit idly.
What’s the recommended way to handle this money?
Depending on the size of your assets and your savings rate, you could use margin loans.
I pay my taxes with margin loans and with the savings of 2-4 months I pay back the loan.
Can you detail how you do it?
What exactly do you want to know?
I have a portfolio at IB with a margin account. My CHF cash account is almost empty (everything is invested), I withdraw e.g. CHF 6’000 to my Swiss bank account and pay my taxes with it. Leaving me with a negative cash balance at IB, this is the margin loan. I then deposit e.g. CHF 2’000 every month from my savings rate and after 3 months my cash balance at IB is back to 0 and I have no margin loan anymore.
I’ve just received my monthly invoices for 2023 - I’ve moved from B to C back in March.
I live in Geneva and I’m wondering if it is mandatory to pay this monthly “estimations” or if I can just put this monthly amounts on my Yuh account, get 0.75% interest on it, and in November just pay that last November invoice “estimate” with the expected annual amount?
Anyone has that experience?
For Federal tax it is different. If I recall well payments on account during 2023 are optional and no interest is accrued if you don’t pay then. In Feb 2024 you should receive a provisional bill for 2023 Federal tax. That needs to be paid within x days otherwise interest accrues from day x+1 and the rate is 4%.
But I’m not clear if those 3% interest are due on these monthly estimation invoices or if it’s on the lump sum for the cantonal tax amount after you do the 2023 tax declaration (i.e. in Jan/Feb of 2024).
Because looking at the QR code invoices that were sent to me, there is no “Due Date” on them…
Yes it is. It is explained in the Geneva tax site linked above
“The law states that interest on arrears is charged on late paid or partially unpaid ICC installments.”
If in doubt you can send them a question via edmarches they are usually very helpful
If you want to optimize your personal treasury situation, don’t pay the Federal tax installments in 2023 and instead invest the money at 0.75% (or as you see fit depending on your global risk profile). Wait until you receive the bill in Feb 2024 before paying
You dont even need to ask for a new one.
Just change the amount paid on the existing one.
But why pay taxes at least one year “too early”, if the penalty of paying them later is only 0.25% p.a. (ZH)?
Thanks! I see that in the website indeed
And btw - I still feel that they need to do some re-work on these estimations.
Since I only moved to C permit on March 1st, I was taxed at source in Jan and Feb.
And they didn’t include those already taxed amounts in the estimations…
You can ask for them to update it and take into account the amounts you paid via Tax at source as well as any other changes such as change in salary, loss of employment etc.
Some commune will directly send the amount above the provisional tax bill back to you, if you transferred too much. In such cases it helps to request an updated provisional bill.
What one could do, would be to ask for a new and low estimation and recieve provisional monthly bills accordingly.
You pay thoses bills in time so no fee is asked.
Then, when you receive the tax delaration you make your correct tax estimation and pay the rest (total tax minus what you allready paid 12 times) and that amount stayed invested for a year or on an account with interests.
Got the response from the tax service in VD and sounded OK to to so as long as you pay your monthly bills. Is it in anykind illegal? Am I missing something?
Hi all. I also just got the Provisorische Steuerrechnung from my Steueramt. The thing is, they sent me an estimate for 2021, 2022 and 2023 all together, each for 33’000 CHF, and a payment deadline of 2023-09-15. So I have a month to pay 100’000 CHF .
What happens if I don’t pay on time? Will they start levying the Verzugszins of 4.5%? Or does this Verzug apply to the deadline in the final bill?
Why did they send this only now? I never got this before. Last year I paid the tax for 2020, and didn’t get an invitation to pre-pay in advance.