Tips to pay less taxes

Sorry for the clickbait-y title… I have no tips. :frowning:
Anyone knows a way to pay less taxes other than moving to other cities/cantons?

put money into 2nd & 3rd pillar saves you taxes. also, check out the tax declaration software of your canton, it lists all the deductables. knowing them you can optimize for them throughout the year.

having your depot abroad saves you Stempelsteuer

consuming less saves you VAT, especially alcohol and tobacco

however these are quite one-sided points, especially the 2nd and 3rd pillar. there is more than tax savings to total savings :slight_smile:

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Wire some money to a poor relative you can trust (to give it back). Up 6500 Fr per year can be written off federal taxes in this way, less for cantonal - 15-20% profitability or so.

The person however has to be really someone you can absolutely trust with the money, most poor people aren’t very trustworthy, especially relatives

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Must be a relative?

Also I was wondering if we can do some kind of trust fund or I should become independent contractor and ask my boss to pay me that way. I suppose the latter isn’t worth it.

Actually not, it can be anyone who can use your financial assistance and can’t work. Can be even multiple persons, 6500 limit is per each head. But I wouldn’t go pick a random guy off the street for this. The money for all legal intents and purposes will be unconditionally his after you wire. The arrangement to pay it back if any will be strictly informal. So, ideally, it should be even someone you get to get inheritance from if worst comes to worst.

Another tip: marry a non/low-earner (or divorce a high earner). Marriage of equal earners is heavily penalized by the tax system at the moment, whereas “traditional family” model with a single earner is encouraged. But this might change in a few years

With only one regular client they won’t treat you as self employed. And then self employment income is taxed just like a regular personal employment income, and you’ll pay AHV all the same. You can save on pillar 2 contributions (and even crack the whole fund open in fact), and maybe some other things though.

If you incorporate, become employee of your own company and sell services to your old employer there’s maybe some hope. You can write off quite a lot more expenses and choose to take some of the earnings as a dividend instead of highly taxed and AHVed salary, but there’s double taxation: company will pay corporate taxes first, and then you personal income taxes on dividend although at a reduced rate. And if you retain earnings in the company and reinvest, then you’ll face capital gains taxes - not great for buy & hold.

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Is what you’re describing legal? It sounds really shady. I mean, if they really get to keep the money then all is fine, just a tax evasion trick, as I understand this makes use of the progressive tax? But if you get the money back “under the table”, then it can’t be legal, can it?

Ha! That’s an interesting idea. Where did you learn about this? I should really consider this.

I work as a de facto freelancer. My boss has a small company, where I am technically an employee with a fixed salary. The client where I work has a contract with my bosses company. At the end of the year, the money that I billed is higher than my salary, so I get it paid out as a bonus. Alternatively, the company can put this money into my 2. pillar, which means I would not be taxed on it, and no AHV either. Now this idea with dividend, that’s something really interesting.

So how would it work? Would I need to have some shares in the company? I guess for this to work, the company would need to be registered in Schwyz or Zug? How much corporate taxes are we talking about then? Something like 3%?

Btw, when you work as a freelancer, then things like GA, work laptop, mobile phone, business lunches can all be billed as company costs, so you will also not pay AHV or taxes on them. Let’s say you buy a laptop for 2000 CHF. It lowers your gross salary by 2000, which in the end means, you will save something like 800 CHF in taxes. Laptop has effective cost of 1200 CHF.

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It’s a gray area. The money’s meant for the receipient to keep and spend. But nothing’s really prevent him from just giving it back to you under the table. Perhaps as part of your inheritance - now that would be even perfectly legal

The two main types of companies are GmbH and AG. AG is a stock company, yes you issue shares for ownership, you can keep a registry of shareholders or just make and print paper certificates - bearer shares. Owners (shareholders) in principle are anonymous - only the directors are registered. It’s not cheap however, you need a minimum 100k starting capital. Much better is GmbH: only 20k capital needed, you need to show it but can spend on business things right away as soon as everything’s done. No shares are needed - owners and proportion of ownership are directly registered in the commercial registry.

Finding a bank might be tricky, they’d all very much would like to know who they’re dealing with (KYC) and about your business plan and don’t have to give you an account. You might have to ask quite a few banks before some accepts you.

There’ll be some formal obligations, reporting and accounting, you’ll likely need an accountant at least initially to do the necessary paperwork for you

Better yet - Meggen LU, the #1 place to incorporate in today, 11.2% tax rate, lower than SZ and ZG. But SZ has lower personal income taxes, so better live there and rent a mailbox or something for your company in Meggen. Dividends from a company in which you own at least 10% are taxed at reduced rate, roughly halved, but exact details vary by canton,

It’ll become a 2000 CHF asset on your balance sheet first, then you’ll depreciate/amortize it off over a few years as expense

I did this exact thing - moved my UK employment to being a Swiss employee of my own GmbH and UBS set up my business account with very few questions. If you don’t speak ‘business’ German you will need somebody to help ou incorporate (which i had) and it was a relatively quick process. I have an accountant for advice and taxes but i do my own management accounting with business accounting software which is very easy once your accounts are set up. You must buy all the requisite insurances, pay social insurances and taxes quarterly. After Year 1 it gets much easier once you know what to do when. I think the big bonus is that you should be charging your employer much more (in my case it is 2.5x my former salary) to make this all worth it. You would take a ‘normally’ acceptable salary and then as much divident as your account recommends. Tax rate in Basel-Stadt for me was still >20%.

So… let’s say that my sister (who’s French) is studying in Switzerland, completely dependent on my parents. I (Swiss, thanks to my wife) am working in another canton and my parents are in France. If I were to support my sister (instead of my parents supporting her), I could deduce up to 6500 CHF per year (edit: in Aargau it seems to be 2400 CHF) from my income, correct? edit: which proofs does the administration require?
Now, if my parents reimburse me, I should declare this as an income (not winning or losing anything in the process), right?

What you are saying is that this can me advantageous if I don’t declare what my parents would give me as an income (which I’m not willing to do), OR, if this payment is part of an inheritance. How does this latter option work? My parents declare a gift (or advance on heritage) on their French tax declaration to me and I declare it as received inheritance from my parents on my swiss tax declaration?

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It’s not clear what you should show to the tax office though. Bank statements maybe?

The transport cost deduction can be quite good for lowering taxes.
In my case I can deduct both a part of the bike and the AG (Reference for french speaker https://www.tdg.ch/suisse/Velo-et-abo-de-train-deductibles-des-impots/story/22418518)

Otherwise regarding health insurance, if you spend more than 5% of your taxable salary in non-reimbursed-cost you can deduct it. I’m more the kind who never go to the doctor but my girlfriend (who works at 80% + full 3rd pillar) can get a substantial discount there. To make this work it’s better to choose the 2500chf deductible.

Do you know exactly what you have to do? What kind of proof you need? I am helping my gf so I suppose I can legitimately do that.

Payments from your parents to you is not income, it’s gift or inheritance. It’s taxed differently and there’s usually a very large tax free allowance. 6500 fr is deduction limit for federal taxes, and you need to wire at least 6500 to claim it. Limit for cantonal taxes and deduction is lower yes, but still worh it

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Read the Merkblatt from your canton’s tax office about this deduction - google Unterstützungsabzug. Generally the person you’re supporting must not be able to work and support himself (due to young/old age or disability/illness) and have low wealth and income. Payment must be made via wire transfer in the name of person you’re supporting, not cash payment, bank payment receipt is required

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BundessteuerVoraussetzung für die Gewährung des Unterstützungsabzuges ist eine Unterstützungs-leistung mindestens in der Höhe des Unterstützungsabzuges von CHF 6’500.Dieser Abzug kann nur für die Unterstützung von Personen gewährt werden, die infolge Alters oder körperlicher oder geistiger Gebrechen ganz oder teilweise erwerbsunfähig und unterstützungsbedürftig sind. Der Abzug kann auch gewährt werden für Unterhaltsleistungen (Alimente) an Kinder, die am 31. Dezember 2014 volljährig sind, in der beruflichen Ausbildung stehen und nicht in Ihrem Haushalt leben.

Well apparently she must be disabled then. ;(

Bojack,

Setting up a LLC (= GmbH or Sàrl) could be advantageous to you, since you could deduct a lot of expenses. However, note that the seat of your company is not the only element determining where you will be taxed. Indeed, the effective place of management is a more decisive element from a tax perspective. It will mainly determine where the profit of your company will be taxed. Needless to say that if you register your company in Luzern but don’t undertake the management from there, you face the risk of being taxed in your residence canton.

Small tip: Did you know that you could withdraw your whole 2nd pillar to “fund” your company. You may want to withdraw the whole amount and then invest it yourself. The rate of return on 2nd pillar accounts is quite deceiving nowadays… Moreover, there is a quite significative political risk associated with it, i.e. minimal interest rate, conversion rate, issue of the withdrawal in capital, etc…

It could be some aspects that you want to take into account before making up your mind :wink:

Thank you for your thread, I really enjoyed reading it!

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Renovations and repairs: If you own a house or buy an old one you can deduct all maintenance expenses. So do not plan all renovations at once but spread them over the years. Even if you build a totally new kitchen, you can set a percentage “werterhaltend” for each cost item as this will be tax-deductible, while “wertvermehrend” investments are not.

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Under “Freiwillige Zuwendungen” (donations) I declare 200 CHF as “Haustür- und Gassenspenden” (Donations at my front door and on the street). That saves me around CHF 60 tax. The guys in Zurich accept this, however not in every place this will work.

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Where does it specify the low wealth/income requirements? I can’t see it in the zurich tax office website.

Did you actually manage to have it deducted? I do send money to my mum every year, she is old and does not work, but then she has a pension…

I did copy the law from Zurich. That long word I copied means that she needs your help. I suppose it will be a bit of a hassle to demonstrate that your mother needs your money to survive because her pension is not enough.

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