Tax implications for 250k salary

Finance, Taxes, Banking, Insurance and Retirement
21
While I don’t disagree with what you are saying in theory, in practice I haven’t come across any large companies who pay the minimum on the coordination salary and nothing on the extra. I’m sure it happens for lower paid employees and contractors, but generally it seems to me that the more you get paid, the better the benefits become.

22
Are you sure it is not more but on the coordinated income only?

23
Are you moving with the same company or a different one?

If same company they should do a salary curve transfer and put you on the same spot in the Swiss salary curves, not simply give you the same.

If a different company then of course they offer what they think you will accept.

Be aware that for year 1 all relo costs (if paid by the company) will be taxable as well.

K

24
I don't know where I picked up 1.5% - its actually 2.6% - sorry Company puts in 9.2%

25
You can find such (70sqm) nice apartment close to Zug for 3000-3500/month and in Zurich mountain view for 2000-2500. There are nice apartments around Zug where you have approx. 10% marginal tax benefit vs Zurich (marginal in ZH around 41.5% and Zug around 30%). So for your income it may be around 20k/year (check the number, haven't done the calculation). Worth considering if you can do homeoffice.

Check homegate.ch and comparis.ch.

I do not like Zug city myself but that's a personal (non)preference.

1000/m sounds right for a pair for insurance. I usually pick to be able to choose private + own doctor with a high deductible as we rarely visit doctors but don't want to waste time with family doctors/call centers/etc. + personal and many acquittances' experiences with doctors in Switzerland are very far away from great. Usually a top insurance for a single person shouldn't be much above 700/m. As others mentioned, it can be an OK healthcare for as low as around 200/m. It is a personal preference what to pay for. (btw insurance amount also differs for municipalities - ZH is high).

26
It's a bit off. We have roughly the same gross income, but we own a house (which means we deduct roughly 25K a year in renovation and maintenance, although we get taxed a bit for it) and we have 3 kids (which are a decent deduction). We pay about 28K/yr in taxes. And yes, you're overestimating health costs, although that won't move your gauge.

27
Thanks everyone for your feedback. Some people have rightly critisised my treatment of pension as an "expense" - it affects take-home pay but ultimately it's my money that I will eventually receive. So here's an alternate comparison where I don't deduct what I pay into my own pension, and I add employer-paid pension to my total income (going by what I found on the company intranet for my swiss pension, I don't have final confirmation).

Current:

GROSS__250,000

Tax_____-37,500__-15%

Pension_+19,000___+7.5%

NET___231,500

Zurich:

GROSS______250,000

Federal______-14,577___-5.8%

Cantonal_____-16,450___-6.6%

Municipal_____-19,575___-7.8% (assuming living centrally for now)

OASI________-12,813___-5.1%

Unemplment___-2,139___-0.9%

Accident________-593___-0.2%

Health ins____-12,000___-4.8% (for two people)

Pension______+30,000___+12%

TOTAL_______201,853

So overall about 30K or 13% worse off, better than the original estimate of 25%. I would still take an additional hit (around 10-15K) on the higher rent though.

28
It's the same company, but it seems that the salary bands in Asia are higher than the equivalent ones in Zurich, so unfortunately I may actually be looking at a gross salary cut if we can't make some exception.

Thanks for the heads-up about relo costs, I didn't realise that!

29
A friend of my flatmate has developed this website where you can check your tax burden and a few other things at the same time as looking for apartments, it's called woni.ch . I think it's still work in progress and you have to bear in mind that his native language is German (before anyone comments on the often unusual English) but I think he is on to a good thing with this. Might be worth checking out.

30
Have you taken into account my comments about your significant other?

31
I think the quality of life is equal to where do you stand compared to the average. I was living in a poor country and still I was quite happy (except when traveling to the UK or France spending my monthly saving in just few days).

To me Switzerland has so many benefits. I pay the health insurance which actually helps me, I pay retirement contributions which build up my retirement (are not just a void tax), I can call the police and they react, and above all the country is beautiful. I love mountains!

Can I ask what is the average middle class income in HK? In Switzerland it seems to be 180-240k for a family from what I have heard.

32
That‘s a can of worms you are opening there. I‘ll get my deck chair and popcorn ready.

Hint everyone has a different idea of what middle class is (and generally it‘s them).

33
That is a really weird thing as normally CH has the highest salary ranges. Are you moving within the same pay grade or to a lower one? Can you ask your HR to provide you a gross-to-net comparison for both locations?

Also whilst the cost of living sites are not 100% accurate, I find their cost estimate of "how much you need in CH to live like in X when earning y" pretty accurate, especially for a single/couple etc. Have you had a look?

34

Yes I did, thank you for that. I didn't want to make the thread too complicated by adding this dimension to it - the number above are assuming only I work, but in reality she definitely also wants to work and will look for a job. I understand the unfavourable tax treatment in Switzerland, as we would essentially be taxed at our combined high marginal rate - over in HK, we are taxed separately and so she typically pays extremely low tax (anything from 0 - 10%). Another disadvantage.

35
Same here, this is the main draw for me. Better quality of life, and I love mountains too!

Can of worms indeed. Hong Kong is a hugely unequal society. Minimum wage is a measly 4 CHF/hour. Estimates for mean/median monthly salaries vary, but tend to be around 2000-2500CHF/month. Lack of space means private housing is extremely unaffordable and eats up most of that income, so half the population lives in public housing and/or crams a family of 4+ in a 40sqm apartment (often complete with grandparents). At the extreme lower end you even have "cage homes".

On the other hand, this is the home of many of Asia's super rich (competing with Switzerland for number of billionaires per capita). Expat circles tend to be very well off, and although I am privileged to earn 250k+, I don't feel rich in comparison. It's truly plenty to live off, I certainly can't complain as I don't come from a privileged background - but I still feel that immediately around me are people earning (or inheriting) multiples of that.

I don't want to put a label to "middle class", but I think a comfortable life in Hong Kong where you can breathe a bit and not worry about money, would probably start at around 50-60k CHF. But even this is a controversial statement as you can get by with less (and many do) - similarly, many expats pay more than that in rent alone, so there is really no upper limit. All just my opinion of course.

36
I was surprised too. The new role should be on the same level as my current one (same title initially, more responsibility).

I've lived in Switzerland before, and it is definitely more expensive for just about everything (comparison sites say about 20% more so) except rent. I think there are a few factors at play: rent is one of the primary considerations in "cost of life" and so bands are higher here because rents are on average higher (not my case). Also, there is a lingering idea that you need to pay more for expats to be willing to uproot and come to Asia - and paired with a smaller job market and smaller candidate pool here, it results in higher salaries. Just speculation on my part, but I don't see another explanation.

37
Be careful not to discount Zug too quickly. The tax benefit cannot be overlooked and depending on your company, you may be working from home a fair bit. Both my wife and I work in Zurich (me on the outskirts, her in the center). We’ve worked from home since March and my company will be adopting a hybrid model post pandemic, so there will be no 9-5 mon to fri moving forward.

Even before, the commute was not too bad. We both drive and the time can vary, but we have also taken the train previously and while it can be an hour, it’s the quality of the journey that counts.

If you live outside of Zug (I live in Walchwil) you can get some great places to live with amazing views and close to outdoors activities.

Also, we pay about 500 each for health insurance. It’s the top coverage, but I have never regretted it. I’m not sure the details, but I understand that if you choose a lower tier insurance initially it can be difficult to upgrade.

38
Seeing as you lived here before, and on your salary you can well afford the services of a tax consultant (or a financial planner), but since you are openly asking for advice, I see it as a "no brainer" - you should probably stay where you are, unless that is no longer an option.

It appears you are married and your wife will be the one looking for work here, which at the moment could be a huge challenge.

39
Staying or going are still both options - in fact I have a new role proposed in both locations. We're in the discussion phase, although I have to decide soon.

Good point.

40
Surely it's a question of lifestyle more than money? You can't really compare a thriving international city like Singapore with risk-averse, conformist and hierarchical Switzerland. Sounds like you've lived in both countries before so you should have a decent idea of which culture you prefer. The money sounds about the same (give or take a few percentage points) so I'm not sure why money would be the deciding factor.