I am an American studying in Lausanne, and having some issues with my Swiss tax return. I’m hoping there might be some people in similar situations who have been through this before or might otherwise have some helpful advice. Thank you guys in advance!
As a foreigner, I have previously paid taxe d’impôts (withholding tax) without filing any return, but this year my university administration suggested that I file a tax return form which could reduce my Swiss tax burden. I thought this form was a simplified tax return known as the “simplifiée” (or “declaration d’impôt simplifiée”). Unfortunately, the form which I filed was actually a request for a full tax return (known as the “demande de taxation ordinaire ultérieure (TOU)”).
This was a big mistake as now I am required to file the full “TOU” return, which will drastically increase my Swiss taxes by around 30%. I’m still trying to find the money to pay this...
Has anyone been through something similar? Or have any useful information about filing the "TOU"?
I have sent an email to the office. Per your advice, I will call soon if not go in person.
It is maybe a unique situation for students (I'm not sure), but the withholding tax we pay is I guess something based on "average" expenses. When I input the manual tax return (TOU) it seems to be that my specific situation has maybe below average expenses (e.g. rent, health insurance), so while my withheld tax was originally ~4400 CHF, the VaudTax software is now asking for 5600 CHF...
It may be that I have below average expenses (but I still would not expect such a drastic increase), so my colleagues have suggested I need to go through and carefully input all applicable deductions (e.g. bike, transportation costs, meal costs).
Tax at source is based on flat rate deductions and also a cantonal average tax rate. If you reside in the city of Lausanne you will suffer from an above than average tax rate if you file a TOU.
With tax year 2021 the simplified return no longer exists.
You will also have to do an ordinary declaration for all the following years! Who ever suggested to request an amendment is a complete idiot. One has to do a calculation first if it is worth or not.
Be sure you do not miss any standard deductions (See also the “Annexes”). Local travel pass/costs to get to work and/or Bicycle (in some cases and is possible) Health insurance (capped) Meals at work (check if subsidized or not) Books/Training (there is a CHF 2000 flat rate deduction) Social/low deduction (its a Vaud thing) Rental deduction (its also a Vaud thing) Banking costs. (CHF 100) Donation (might need proof)
Also be sure you start with the net income (“Nettolohn/Salaire net”, item 11 on income certificate).
TAS Gross 52800->4400, Net: ~47160, TOU taxable 37200->5600, TOU taxable 31000 → 4400
If I see it right you are now down to a taxable income of CHF 37’200 and the goal would be down to CHF 31’000. Looks like you already applied most deductions (around 10k in deductions). Not sure if you could shave of an other 6k that easily.
For future years this could be done with a pillar 3a saving account Frankly, VIAC, Selma, etc. ( stay away from insurances )
That is really helpful feedback. I completely agree. I believe the administration thought they were sending me the simplifiée without realizing it was the TOU request...
I have been looking through the software all day for the list of deductions you've mentioned. It's a very stressful way to learn French... I will also hopefully have the help of some colleagues next week.
Your numbers are all very close. Indeed I am not sure I will be able to get down to the average tax levied with "impôts a la source" (which begs the question of either: why are so many people paying incorrect amounts of tax as "impôts a la source"? or why is not possible to unregister from the TOU?)
Thanks aSwissInTheUS! Maybe in the US you're having similar issues with TurboTax/HRBlock...
First of all, as others suggested - you should check with the tax office if there is a possibility of revoking your request for ordinary taxation and then do nothing else. But in general yes - once you filed a return, you have to file it always next years.
Look at it from the tax authority point of view:
Foreigners pay tax at source because they can't be "trusted" to pay later. This tax at source is imperfect because everyone's situation is different - different deductions and especially different communal tax (your commune is not part of the calculation for the tax at source). However, correcting the withholding with a proper tax return is expensive in terms of work needed: both the taxpayer and the authority employees, so the question is: when to force the taxpayer to do a full tax return? The answer is: when there is a high chance that the taxpayer is paying significantly less tax at source than they should pay with ordinary taxes. When this is not the case, you can let the taxpayer not to do a full return (because they will be on average correct, you win some, you lose some - and you save some work to everyone).
When a taxpayer has a high chance to have to significantly beneficial tax at source?
1 - their income is high. Higher the income, higher the error in estimating the tax obviously. So you have to file a tax return if your income is high (>120k CHF)
2 - non-taxed-at-source income is high. If income is not subject to withholding tax but should be subject to taxes, so as soon as there is some significant amount it's better to do the math. E.g. in ZH you must file a tax return if had > 3k of income not subject to Swiss withholding tax, regardless of all other criteria
3 - significant wealth. If your actual wealth tax is high you are underpaying your taxes at source. E.g. in ZH you must file a tax return if you have > 80k wealth, regardless of all other criteria
4 - they filed a return in the past. Think about it: they surely did it because the actual tax bill was lower than the withholding. So they are type of people who do the math. This year they don't want to file? This likely means that this year they underpaid their taxes, so you force them to do the proper tax return
You're right it does make sense for certain situations. I have to say though that for my situation (foreign PhD student) it is a bit awkward because the majority of PhD students are probably paying less than they would with the full return (many are single with low expenses).
So I am now in the unfortunate situation of being paid 3% less than my colleagues in the same job for no other reason than I was unlucky enough to be sent a poorly researched email by administration (I know for certain that my colleagues would pay even more tax for me with the full return). It is somewhat discouraging...
If you are in a situation where your tax bill is being increased by 30% when you submit a full tax return, then chances are very good that you should have been paying taxes in the past. So it is very likely that they will seek to revise precious years assessments as well.
I wanted to follow up on my personal case: I have fully input all applicable deductions and now my "TOU" tax is nearly the same as what my "impots a la source" is (e.g. no massive tax fee anymore!). Thanks for all the helpful replies which helped me find deductions.
For anyone who might look at this later who is similar to my situation (PhD student living near Lausanne, no dependents, average to low expenses, no large fortune, etc): if you have normal expenses, do nothing (e.g. just pay the withholding tax aka "impots a la source" which is automatic). The only exception might be if you have higher than usual expenses (dependents, debt, etc) and/or want to use a tax-privileged savings account in Switzerland (the pillar 3a) which is a good way to save money. If these cases, it MIGHT be a good idea to request the full return aka the "TOU" -- but FIRST you should calculate what your tax will be! Asking for the TOU is permanent and could make you owe more than the "impots a la source" (heavily dependent on your situation, commune, etc). You could try online websites, or ask someone who has the VaudTax software to test what your taxes would be.
Here are the four largest/important deductions for my situation:
1. (code 140) Transport costs -- e.g. bike or travelcard