Are you paying the tax you owe… or the tax you were told to pay?

A question few people dare to ask

Picture Marc, a senior executive in Lausanne, who discovers he has paid thousands of francs too much in tax simply because he was not aware of the deductions available.

This situation is more common than people think.

In Switzerland, the complexity of the tax system can lead to costly mistakes for taxpayers.

Understanding the Swiss tax system

A three-level structure

The Swiss tax system is structured on three levels: federal, cantonal and communal. Each level has its own rates and rules, which can make taxation complex and variable depending on where you live.

Withholding tax vs. ordinary taxation

Foreign residents without a C permit are generally subject to withholding tax, deducted directly from their salary. It is possible, however, to request subsequent ordinary taxation (TOU) in order to benefit from specific deductions, such as 3rd pillar contributions or childcare costs.

Tax deductions that often go unnoticed

Pension provision and deductions

Pillar 3a contributions are deductible from taxable income, up to a certain ceiling. In addition, buy-backs into the 2nd pillar can also offer significant tax advantages.

Professional expenses and deductible charges

Costs linked to carrying out your profession, such as travel, meals or continuing education, can be deducted from your taxable income. Childcare costs and mortgage interest are also often deductible.

Common mistakes to avoid

Not checking your tax assessment

It is essential to check your tax assessment carefully to make sure no error has been made. Omissions or mistakes can lead to paying too much tax.

Ignoring changes in your situation

A change in your personal situation, such as a marriage, a birth or a move, can have a significant impact on your tax position. It is important to report those changes to the tax authorities in order to benefit from the appropriate adjustments.

Conclusion

Swiss taxation, complex though it is, offers plenty of opportunities for optimisation to those who take the time to inform themselves. By being proactive and consulting experts where needed, you can make sure you pay only the tax you actually owe.