People arriving from abroad and settling in Switzerland often stop at the first formalities, such as obtaining a residence permit, joining a health insurance scheme and choosing their accommodation.
On the other hand, many of them miss out on the opportunities offered by our federal system in terms of taxation, just as many of them do not think about updating their wills.
When they arrive in Switzerland, these people have to realise that many things that were put in place in the past have lost their validity, or even their tax efficiency.
The aim of this newsletter is not to be exhaustive on the subject, but rather to draw attention to the fact that it is up to them to take their financial future into their own hands. We, Impact Financial Engineering, are unfortunately too often aware of the lack of information available to these people. Worse, they remain ignorant of important issues for many years.
In particular, we would like to mention the following:
1. Pension system
It is based on 3 pillars;
Switzerland has a particularly robust and efficient pension system in international comparison, which offers significant opportunities for economic and tax optimisation.
a. The AVS, a public pension system;
b. The 2nd pillar, an occupational pension scheme organised by employers but regulated by law; and
c. The 3rd pillar, which is left to the discretion of each individual, but which also offers significant tax advantages.
In particular, newcomers to Switzerland would be well advised to pay particular attention to the 2nd and 3rd pillars. They are the royal road to tax optimisation. And it is not insignificant : every franc injected into these two systems belongs to them!
Many people also believe that arrangements made abroad before they took up residence in Switzerland remain valid. Far from it. If a foreign national takes up residence in Switzerland, Swiss law will apply to his or her estate by default. The rules often differ significantly from those that prevailed abroad.
They are sometimes more flexible and allow for more arrangements. Conversely, they may also be more restrictive for the testator.
Cohabitants are sometimes protected abroad but are no longer protected at all under Swiss law. People in a civil partnership abroad may be surprised to learn that their contractual relationship is not effective here.
Switzerland is a federal state with three levels of taxation (municipality, canton, Confederation). Although tax rates can vary greatly from one canton to another, the avenues for optimisation remain broadly the same.
When you settle in Switzerland, you generally obtain a residence permit (known as « B »), which is renewable from year to year until you obtain a settlement permit (known as « C »).
During the period of the « B » permit, the taxation rules can vary greatly from one taxpayer to another : taxation at source without the possibility of claiming certain tax deductions, taxation at source with the possibility of claiming a subsequent ordinary taxation (known as « TOU »). When obtaining a « C » permit, the taxpayer will automatically switch to the ordinary tax roll.
Each situation has its own subtleties and opportunities for tax optimisation that too many people ignore for lack of information or sound advice.
At Impact Financial Engineering, we are committed to providing comprehensive advice to anyone who takes up residence in Switzerland in their best interests. Don’t delay! Come and visit us and take advantage of all the opportunities available to you today.