Is professional tax advice worth it in Switzerland? A guide for expats

You can complete a Swiss tax return yourself or use inexpensive tax software. So why would anyone pay a tax adviser CHF 2.000 or more? 

For a straightforward financial situation, there may be no reason to get help from a tax advisor. But as income and wealth grow, professional advice is often less about filling in the tax return and more about identifying what sits behind the numbers. 

A typical expat financial profile

Consider a fictional couple living in Zurich earning a combined income of CHF 280.000. They have built an investment portfolio of CHF 700.000, one receives employer equity shares, they own an apartment abroad, and both contribute to their pensions. This is a typical profile among international professionals working in Switzerland.

In this scenario, Fuchs & Partner explain five options that a tax advisor would consider looking at.

1. Optimising Swiss investments & capital gains

Switzerland generally does not tax private capital gains on movable assets, making an investment portfolio appear straightforward at first glance. However, there is far more to review than just your year-end portfolio value. 

To start, Fuchs & Partners would review your dividends and interest, foreign withholding taxes and whether refunds such as the DA-1 have been claimed correctly. 

For more active investors, it is also worth considering trading frequency, holding periods, leverage and derivatives when assessing whether professional securities trader status could become an issue.

Importantly, failing one of the tax authorities' commonly referenced safe-harbour criteria does not automatically make someone a professional trader. The overall circumstances matter. That distinction can be extremely valuable when significant capital gains are involved.

2. Maximising pension deductions

Suppose our expat couple in Zurich is considering a CHF 50.000 voluntary contribution into their Pillar 2 pension fund. Calculating immediate tax savings on the contribution is only step one. 

A tax advisor will ask the following questions: Has the client made previous purchases? Are lump-sum withdrawals planned? Could the three-year restriction following a pension fund purchase become relevant? Would spreading purchases across several tax years produce a better result? Is a move to another Swiss canton being considered? 

A tax deduction is useful, but a deduction that fits into a wider financial plan is better.

3. Taxing international assets and cross-border property

Now consider the apartment abroad. Foreign real estate is generally not directly taxable in Switzerland, but its value and income can still influence the tax rates applied to Swiss income and wealth. 

Mortgages, debt interest and the allocation of liabilities can add another layer. This is one reason Fuchs & Partners do not simply copy figures from a foreign tax return into Swiss tax software. We look at how the foreign asset interacts with the tax return in Switzerland.

4. Navigating dual tax filing

For US citizens who pay tax while living in Switzerland, the picture can become even more complicated due to citizenship-based taxation. 

Fuchs & Partner provides both Swiss and US individual tax services, allowing the two sides to be coordinated and managed together rather than handled independently.

5. Preparing for life changes

Perhaps the most important question is one that does not appear anywhere on the current tax return: What is changing next?

A move from Zurich to Schwyz, a larger pension purchase, selling investments, buying property, retirement or leaving Switzerland are all things that need to be considered.

Once a transaction has happened, tax planning options may be limited. Discussing it beforehand provides the opportunity to calculate alternatives before a decision is made.

Fuchs & Partner: More than filing a tax return

At Fuchs & Partner specialise in Swiss and US individual taxation for private clients, expats and executives. They prepare tax returns, deal with the tax authorities, review assessments and tax bills, and advise clients on decisions that can affect their future tax position.

If your finances have become more complex than when you first arrived in Switzerland, your tax advice should probably have evolved with them.

Before you simply file another return, talk to Fuchs & Partner. There may be more to review than you think.