Foreigners settling in Switzerland: new country, new rules!

People arriving from abroad and settling in Switzerland often stop at the first formalities of obtaining a residence permit, joining a health insurance company and choosing their accommodation.

At the tax level, on the other hand, many of them miss out on the opportunities offered to them by our federal system, just as many of them also do not think about it update their testamentary provisions.

When arriving in Switzerland, these people must realize that many things put in place in the past have lost all validity, or even all tax efficiency.

The objective of this newsletter is not to be exhaustive on the subject, but rather to attract the attention that it is up to them to take charge of their financial future. At Impact Financial Engineering, we unfortunately too often see the lack of information available to these people. Worse, they remain in ignorance of important points for many years.

We will particularly consider:

Pension system

Switzerland stands out, in international comparison, by one pension system particularly robust, efficient and offering significant opportunities for economic and tax optimization.

It is based on 3 pillars;

1. L’AVS, public welfare system;
2. The 2^e pillar, professional pension provision organized by employers but regulated by law; And
3. The 3^e pillar left to the free discretion of each individual, but also containing significant tax advantages.

In particular, new establishments in Switzerland will be well advised to take a particular interest in both^e and 3^e pillars. They are the royal road to the’tax optimization. And something that is not trivial: each franc injected into these two systems belongs to them!

Inheritance provisions

Many of them also think that arrangements made abroad before taking up residence in Switzerland remain valid. Far from it. A person of foreign nationality who takes up residence in Swiss territory will see Swiss law apply to their inheritance by default. The rules often differ significantly from those that prevailed abroad.

They are sometimes more flexible and allow more adjustments. Conversely, they can also be more restrictive for the testator.

Cohabitees are sometimes protected abroad but are no longer so at all under Swiss law. People in civil partnerships abroad may be surprised to learn that their contractual union has no effect here.

Taxation

Switzerland is a federal state with three tax levels (municipality, canton, Confederation). Although tax rates can vary greatly from one canton to another, the avenues for optimization remain broadly the same.

When you settle in Switzerland, you generally obtain a residence permit (called "B"), renewable from year to year until you obtain the establishment permit (called "C").

During the duration of the "B" permit, the tax rules can vary greatly from one taxpayer to another: withholding tax without the possibility of claiming certain tax deductions, withholding tax with the possibility of claiming subsequent ordinary taxation (known as "TOU"). When obtaining the "C" permit, the taxpayer will automatically move to the ordinary roll.

In every situation, there are its subtleties and its tax optimization opportunities which too many ignore due to lack of information or sound advice.

At Impact Financial Engineering, it is important to us to provide comprehensive advice to anyone who takes up residence in Switzerland as close as possible to their interests. Do not delay! Come visit us and take advantage of all the opportunities available to you today.