I currently working 100% in Vaud with a B permit, and I have an opportunity to work 3h/w for a Canadian startup, that would make me earn in total just above 120k.
I have 3 different options and wonder where I should declare this second activity and how it will change my taxes.
Option 1: being paid in €, declare in Switzerland with a "raison individuelle
Option 2: I’m already auto-entrepreneur in France, so use this status and being paid in €
Option 3: I could choose to be paid in CAD, and I guess I could declare it in Canada.
However naive my grasp and however limited my knowledge about cross-border matters of international taxation, I am going to say this:
the payment currency will be one of the least determining factors for your tax residency and tax obligations
while there might be circumstances setups allowing you to “steer” your tax obligation towards one particular jurisdiction, you’re generally not free to simply choose
With your residence day job and main occupation (supposedly) in Switzerland, and your actual place of work (for this job) probably as well and the customer/employer in Canada, I can in particular imagine no (legal) way to pay taxes in France, in lieu of both other countries.
First, congrats! It looks like you are doing very good for yourself!
I’m absolutely no specialist but a few questions I’d ask myself:
Where do you plan to live / retire?
Are you familiar with the legal and tax systems of the those three countries?
As for Switzerland:
I’m sure you’ve done it already but check your contract with your current 100% employer. It may limit other paid occupations you may have outside of that job and/or force you to inform them of what you’re doing.
If the start-up is active in the same field as your current employer, I’d definitely check with them if what you intend to do is OK with them: you may put your main job at risk and/or face legal consequences if you are competing with your employer.
Since your gross revenue would be >100’000 CHF, you’d probably have to register to the trade register and be subject to VAT/TVA. The AVS/AHV situation would have to be sorted out with your local agency.
Since there’s 120K at stake and the legal/tax implication are pretty complex, I’d definitely search for qualified professional advice before jumping in.
There are bilateral treaties (between two countries) for avoiding double taxation. These go into detail where one should pay his income tax. Things that are taken into account involve (but are not limited to):
your residence and the center of vital interests
the location of your workplace
the residence of your employer (the one who pays)
how many days you spend in a country (usually the country with at least 183 days in a year “wins”)
In the end, if countries do not have a treaty, you may find yourself being forced to pay your taxes in both.
I will give you an example: I used to be employed in Poland but send weekly to Germany. My company was also registered in Poland and my domicile was also in Poland, but if I found myself spending over 183 days per year in Germany, I would have to pay income tax there. That is why we counted the days and were not allowed to stay in Germany for the weekend.
These issues are complicated and it will probably be hard to find a definite answer on the internet.
To answer your questions:
The plan is to live in Switzerland for the next couples years but I don’t really know where I will retire.
And yes, I have checked with my current employer, which allow me to work 3h/w on this second job.
It’s not my second job who will be > 120k only but the total of my 2 jobs. (I have edited my first post to make it more clear)
So let say I’m making 110k with my first job and 15k with this second job.
Is it even mandatory for me to register it somewhere? Or can I just add it in my simplified tax declaration in other revenues?
I have just been in Switzerland for less than a year, but yeah I saw everywhere that when you have a B permit, it’s not the same to report your tax if you are over 120k. So I might find a qualified professional for advice.
As other people already said, you (most probably) have to declare your income in the country you are living in. It doesn’t matter if you are paid in CAD, or if you’re an entrepreneur in France already.
The authorities usually check where your main place of residence is located. That’s where you (usually) have to pay taxes.
As @Bojack already said, for most countries there are bilateral treaties to avoid being double taxed. I know the double tax treaty between Germany and Switzerland pretty well, and even though the standard cases are usually clear, for special cases you have to seek professional advice.
One thing I noticed: you really have to make sure you get professional advice from someone who is specialized in international tax laws. In German, that would be a tax adviser who has the qualification “Fachberater für internationales Steuerrecht” = expert adviser for international tax law
Most of the Swiss tax advisers (Treuhänder) I met so far don’t really know about international treaties.
Another thing to mention: since you are working completely from home for a Canadian company, this could lead to tax problems for the company as well. Unless they hire you as a freelancer. Also, if you’re working remote: in Germany, you are not allowed to work more than 25% of your work time from home if you are a border-crosser. If you do, you will have to pay all taxes/health insurance etc in Germany.
I think you don’t need to register and can just add it as additional income in your tax declaration. But I’m just an anonymous guy in an internet forum, so don’t take my word for granted
Search for someone who is specialized in international tax laws. Best would be someone who is targeting US/CAD expats, from my point of view.