Wealth tax optimizations?

Taxes
1

Hi,

I recently moved to Zürich and really like the experience so far. So thank you to all the great people living here.

We’re close to the years end and I’m doing a bit of tax simulation with real numbers now and basically I have a net worth of around 7M CHF and my wealth tax is calculated at 0.64%, or around 36K CHF.

I saw the pauschal 6K deductions but … hmm it doesn’t really do much for the number above.

Any recommendations on how to reduce this without moving to another canton? Am I missing some super simple things?

This is wealth tax only specific question.

I talked already to a professional and they didn’t have creative options so someone here might have an idea.

2

Besides 2 and 3 pillar and real estate fund with direct ownership, don’t think there are ways to reduce it.

(But it’s a pretty small number, there’s many cantons with a much higher wealth tax, and it’s a good incentive to be decently invested)

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Agreed. I’m not looking to change my investment strategy, but would be interested in the RE funds with direct ownership? I was reading about it, do you have a few good examples?

Carving out 0.64% a year tax free to pay for this is not a big deal. I see it as a Swiss wealth management fee :smiley:

4

UBS is currently merging four of their direct RE funds . So DRPF or CSLP could be an option. Eventually both of them will be part of the same fund.

There are also a few on French side, ERRES for example.

But I think you need to think about if you want to own them for long term. In short term they can be quite volatile.

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5

There is a thread about Swiss real estate funds with direct ownership, that includes the link to a good brochure by Credit Suisse Direct Residential Real Estate Funds in Switzerland - #82 by nabalzbhf (see page 13 for a list of funds with direct/indirect/mixed ownership).

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6

Thank you for this. Really helps!

7

The other one not mentioned is to buy a home to live in as the tax value is often lower than market value. However, I think Zurich has proposed (or already implemented) rules to revise this valuation so you have to see if there is a still value in doing that.

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8

As others have said, could be (much) worse/higher - see Part 1 below

This is good article summarising all the optimisations that may be possible:

I have a question myself - has anyone in AG, BS, BE, LU, VD, VS or GE made us of this “wealth tax optimisation technique”? I’ve seen this field in the tax declaration, but hadn’t really understood it up till now.

“Bei der Beurteilung der Vermögenssteuersituation ist allerdings nicht nur der ordentliche Vermögenssteuertarif zu beachten. So sehen die Kantone Bern, Luzern, Basel-Stadt, Aargau, Waadt, Wallis und Genf eine Belastungsobergrenze vor, bei welcher die Gesamtbelastung durch die Einkommens- und Vermögenssteuer einen bestimmten Wert nicht überschreiten darf. So können zum Beispiel Steuerpflichtige in BS, deren Steuern auf dem Vermögen und dem Vermögensertrag 50% des Vermögensertrages übersteigen, eine Herabsetzung der Vermögenssteuer auf diesen Betrag, höchstens jedoch auf 0.5% des steuerbaren Vermögens verlangen. Um von der Belastungsgrenze in BS profitieren zu können, wäre somit das Vermögen möglichst so anzulegen, dass ein tiefer Vermögensertrag (Dividenden, Mieterträge) und ein hoher Kapitalertrag (Kapitalgewinne aus Veräusserung von Wertschriften) resultiert, dies wäre jedoch im Einzelfall zu prüfen.”

Basically, for example, in BS 10M wealth will hit you with about >1% wealth tax, as well as income tax on the dividend/ interest etc income of this wealth. If the sum of this is above 50% of the income from the wealth, one can apply for the wealth tax to be reduced 50% of income from wealth, but not below 0.5% wealth tax rate

Person Hans Muster
10M wealth, in stocks with 4% dividend yield
1% wealth tax (100’000) + 25% income tax on 400’000 (100’000) = total 200’000
no reduction as total tax not > 50% of income from wealth

Person Heidi Bitmünz
10M wealth, in Bitcoin and gold
1% wealth tax (100’000) + 0 income tax = total 100’000
Reduction to 50’000 = reduction to the minimum it may be reduced to (rate of 0.5%), since income from wealth is zero

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9

In Vaud this is automatic. It happend to me on a specific year. It is just a maximum of the sum of the cantonal + municipal tax to 60% of net income

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So to use my (over-) simplified example

  • Hans has a tax drag of 2% on his portfolio.
  • Heidi has a tax drag of 0.5% on hers (not 1% as a look at the wealth tax per wealth Franc for BS would suggest)

Well-known is/was “focus on capital gains, not dividends, as the former is tax-free”.
But my assumption that the difference is 1% is wrong. The difference will likely be 1.5%.
An added reason to focus on CG more.

Of course it doesn’t have to be Bitcoin and gold, BRK and other low dividend / high capital gain stocks will do too.

Note: doesn’t apply to Zurich, only some cantons.