While on the same note - I will continue receiving income from rent from current country of residence, should this be taxed in CH or where income is received? Do tax authorities in CH communicate, exchange this info with tax offices of EU members (all or just specific ones)? I strongly doubt, but perhaps they coordinate on my behalf?
Hi, I am EU citizen, starting a new job in CH, hence relocating in mid August. As part of employment agreement I received a relocation bonus beforehand. Any ideas whether it should be taxed in CH as it is paid under employment agreement governed by CH laws? Or should I pay taxes in the country of current residence, as I have not officially moved to CH?
Yes and yes; to both.
All income including relocation payments are taxed. These will be reflected on the official salary certificate you will receive early next year from your employer and must be filed with your tax return.
CH charges tax on world-wide income including rental income abroad but also has dual tax avoidance treaties with EU so effectively you will not pay double tax but you will do well to declare it all.
And yes; CH and EU now exchange more information on citizens residing in each other’s territories than some would like.
Welcome in CH. It is still a beautiful place.
In Switzerland the income from your foreign real estate will contribute to the tax rate but will not to the taxable income. Same applied to deductions and same applies to value of the property in terms of wealth tax.
Regarding whether you will still pay taxes on it in the country where the real estate is located: that depends on the rules of that country.
So for example:
Your real estate generated 10k income of rent but you also had 2k deductible expenses (mortgage interests and maintenance), you other income in Switzerland was 100k.
You real estate value is 200k but you also have 50k deductible value (mortgage), your other liquid assets are 500k.
Your income tax rate will be calculated as for someone who earned 108k, but then this tax rate will be applied to 100k.
Your wealth tax rate will be calculated as for someone who owns 650k but then this tax rate will be applied to 500k
Hi Nordic,
Welcome, all payments to you normally get taxed. However as you will learn in CH there are local variations.
You need to ask your new employer if the relocation bonus is going to be taxed.
Some larger companies in some cantons have reached agreements with the tax authorities locally so that such one-off payments are treated as tax-free for you (supports business growth of valuable employers in canton etc etc).
If there is not a agreement you will be taxed (and it will be automatic as you will be taxed at source).
If your new employer really wants you, you can of course ask them to "gross it up" to cover tax - never hurts to ask
B
It depends on the employer and the canton. You can read more about it here.
https://taxsummaries.pwc.com/switzer…-determination
One should always ask about the tax implications of relocation packages before signing anything and before accepting any money.
As already mentioned relocation bonuses can end up being heavily taxed as the tax rate is based on monthly income and they could end up including the bonus as income, in addition to your regular salary.
I'm a bit confused though by the bit about it already being paid before you take up residency in Switzerland.
Which part surprises you? I mean its called relocation bonus, shouldn't it be paid before relocation?
If it is paid before you come to Switzerland it would only be taxable in the other country. Reason: Swiss taxation starts only when you take up residency and not before.
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By the looks of it I will have to pay income tax in my current country of residence. Yet no other deduction related to salary will be made.