Self-employed in another country but living in Switzerland

Finance, Taxes, Banking, Insurance and Retirement
1
Hello everyone,

I am moving to Zurich with my husband and 18 month old daughter to work as a postdoctoral researcher. My husband is self-employed in our home country (Brazil) - he has an e-commerce. He will continue to work on his business, but remotely, and we have no plans to send his earnings from Brazil to Switzerland. My question is if he is considered unemployed under Swiss law or if he can register as self-employed. In this latter case, is it necessary to pay taxes even if the money is not sent to Switzerland?

His working status is especially important because we want to apply for a childcare allowance, but we cannot apply if they are registered as unemployed.

2
Which childcare allowance are you referring to?

In principle if you are resident in CH you need to declare worldwide income and pay taxes on it and then there are some treaties to avoid double taxation.

Whether you move earnings from a Brazil account to a Swiss one has no bearing on whether tax needs to be paid.

3
So if i understand you correctly you wish for the government to pay you a child allowance but you want to avoid paying taxes to the government.

How does this work in reality, apart from the fact all us taxpayers have to support you with no contribution from your side.

4
Thank you, Kri. I'll take a closer look at the double taxation deal with Brazil. I'm referring to the contribution offered by Zurich city based on the Ordinance for Childcare in the City of Zurich (Verordnung für familienergänzende Betreuung der Stadt Zürich). From what I understand, my husband and I should be employed to request such financial assistance. If one of us is unemployed and not looking for a job, the city assumes that the child could be taken care of at home. Another possibility is to request assistance based on the claim that we want our kid to learn german (language integration), but in this case, the city of Zurich only provides financial aid for up to 3 days of childcare per week.

5
Hi, Biro.

I apologize if I sounded arrogant or a mere profiteer of benefits offered by the government without due consideration. I am happy to pay taxes on my salary and on the goods I consume in the country. My question is in relation to paying taxes on money that is earned and spent completely in another country since we are not going to send this money to Switzerland (after all, converting a salary from reais to francs results in practically no money).

6

Whilst you say you are not going to send the money here, you still want to benefit from all the infrastructure here, yet avoid paying taxes.

What matters is where you live as it is here you consume !

You want to live here, travel on the buses and the roads, use the health care system, take child benefit yet not pay taxes on money you earn.

You pay tax where you live, not on where the money is earned !!

7
Sounds to me like a cultural difference, ok. In Brazil I'm used to paying most of my taxes on the goods I buy and the infrastructure I use (bus tickets, grocery shopping, paid health insurance, etc). Kri was polite enough to explain to me that this is not the case in CH

8
Unless you are a US Person, then you may have to pay the US piper too.

9
You pay taxes on your world wide income and assets, which means you have to declare the income abroad.

10
So in the end, is my husband considered unemployed, self-employed, or something else entirely?

11
Until proof of the contrary, your words portrait a bitter retired that lives out of the taxes of the young people that actually work.

12
You can’t be self-employed in another country - it is physically impossible to be in two places at once! If you are self-employed you are subject to tax on the income in the country were you reside regardless of whether the money is transferred to Switzerland or not. If you had a company it would be a different matter.

Your husband’s reunification permit is dependent on you being able to support him, it is not the intention that you become a burden on the state. If you are intending to claim social benefits on the basis of a lack of income the authorities may reject or revoke the permit because it is an indication that you don’t fulfill the permit requirements.

13
I forget what the answer is but if I post maybe there'll be a reply motivated by someone wanting to correct me.

If he's honest and admits he's working then he's not unemployed.

Usually if you're doing the work here you pay tax and social security here, regardless of where the money is made. Maybe that comes under self-employed.

I suppose some people might be tempted to work 'in hiding' and claim to be unemployed, not ever declaring the foreign income.

14

I suggest you talk with the university you’re going to be working at to see what advice, if any, they can give and also contact the cantonal migration office of the canton you’ll be living/working in to see what they say. Because I’m not sure that a Post Doc non-EU permit would allow a spouse to be self-employed or not.

15
It is a general principle that countries tax individuals on their entire income and assets, there are in general no borders on fiscal matters. What it matters most is where one resides ("fiscal residence") and from there one has to look up the local law, then the treaties with all the other countries where the person has businesses and interests.

In your case you will be both living in Switzerland and taxes must be paid in Switzerland for your entire assets and income. If some of the income is generated in Brazil and the Brazilian state applies taxes on it, there are procedures to make the Swiss authorities aware of it so that you don't pay taxes twice.

I have a foreign bank account and I must declare it in Switzerland even if I only use it when I visit that country and pay in that currency.

16
Tax questions aside you need to establish whether his residency permit will allow him to work while he is in Switzerland. Him being remote is irrelevant to that.

Often, third country (i.e. non-EU) residents' spouses may not work.

17

Ah, couldn't be much further from the truth !!

18

Just to integrate the above comments, here’s the BRA-CH agreement on tax rules:
https://www.fedlex.admin.ch/eli/oc/2021/210/it
(IT-FR-DE only, no english copy, but the Brasilian administration will have a Portoguese version with the same number and date of entry into force)

This does not help regarding the question about how the husband can actually entry Switzerland and register, but assuming both spouses move here then the above agreement will apply on how to be taxed on the e-commerce activity.

19
Quite possibly/probably the other way around - you need to apply to Brazil to not pay taxes there. All depends on the agreements I guess.

20
OP, welcome to the forum, and well done for doing your research about the realities of the move. Good to ask questions here, about how things work here. I'm posting this while I know nothing at all about the way things work in Brazil. This is just about Switzerland.

Tax

Here, a married couple is regarded as one tax unit. Therefore, for the tax here, all of your earnings (in Switzerland and worldwide) plus all of your husband's earnings (in Switzerland and worldwide) must be declared. Your joint tax will be calculated on that total sum. This includes all parts of your and his income generated in Brazil.

You'd have to consult the agreement, linked to above, about preventing double taxation, to see which of the two countries might exempt part of your income from tax because it was already taxed in the other country.

It will be relevant to your and your husband's tax situation whether your husband's business is a separate legal entity from him as a person. That might be a good route to follow, so that the business stays in Brazil even though the man is moving to Switzerland.

Permits and permission to work

If your work is secure and you have a permit, that's good for you. You will probably need to apply for permission to bring your husband and child(ren) with you. This is not automatically granted.

The reason for this is that the Swiss government is carefully trying to avoid letting people into the country who will get into financial difficulties such that the state will have to support or repatriate them.

You will need to demonstrate that you earn enough to support your husband and child(ren), and that you have large enough accommodation for each person to have some space. For example, a one-roomed apartment is not considered okay for a family.

If your husband gets a permit to live here, it will specify whether or not he is allowed to work here, too.

He cannot be classified as "unemployed" because that status is only for people who have worked here and contributed to the mandatory unemployment insurance for over a year or two. Accordingly, he will not be eligible for unemployment benefits.

For help in applying for a permit for him and your child(ren), I second with the suggesiton above that you ask at the support office for staff and students, at your Swiss university, as they may very well be used to these kinds of questions.

Child allowance and care

There's a small amount paid each month, on top of your salary, per child. It is a few hundred Francs. As far as I know, this is simply paid to all people legally living and working in Switzerland.

Child-care is a separate issue. Children are often cared for fully by one parent or by both parents each working part-time. There are some government and many private child-care institutions. Their fees are high. Please see the other threads on this forum, also about schools, if your child(ren) are of that age.

Good luck as you plan things, and soon welcome to Switzerland!