Viewing posts categorised under: Switzerland
An introduction to Switzerland’s savings and investment market
By Robbin Davies - Topics: Moving to Switzerland, Pillar 3a, Switzerland
This article is published on: 25th February 2020
Welcome to this first edition of our Blog, which by way of introduction is intended not only to bring a little clarity into the fiscal options for newly arrived resident tax-payers, but also to share our local knowledge on more family-orientated subjects.
Starting with the financial and tax issues, there are products that almost every household should be looking at, offered by both insurance companies and local banks. For someone working and paying taxes in Switzerland these are the “Pillar 3a” tax-deductible segregated savings accounts. Those issued by Swiss-based insurance companies offer a further benefit in that life insurance and disability cover can be included in the package, although the structure is slightly different. It is worthwhile getting independent advice to ensure you are getting value for money and that the product is suitable for your goal.
The amount that can be invested and remain tax-deductible changes each year, subject to inflation, but for the 2020 tax year it is CHF 6,826, available to anyone gainfully employed and who has a pension plan. For those who are earning and do not have a corporate pension fund, this allowance is increased up to CHF 34,128 this fiscal year, up to a maximum of 20% of net income. If this sounds a little complicated, it’s a sector where The Spectrum-IFA Group has plenty of experience!
Most expatriates set up supplementary retirement savings accounts – provided this is within the scope of the above restrictions – and still enjoy certain tax advantages. All the major Swiss banks are keen to compete in attracting new clients, and it really does pay to shop around. Having some professional and independent advice is obviously helpful, but various local government agencies are also able to point you in the right direction (although not always in English!).
As you probably already realise, dear reader, there are a myriad of local, regional and federal regulations which encompass everything from reduced price rail tickets given out by the commune where you live, to the requirement to pay for the refuse sacks which you deposit at the local collection point, down to local festivities which often include wine, food and of course music, offered by the commune (but paid for out of the tax you pay to the commune). Very little is free in this country.
Being centrally situated on the continent of Europe, travel for Swiss-residents looking to move around is both easy and usually punctual, but expensive. Splashing out for a 50% discount rail card can be well worth the while if you use the trains on a regular basis, and with the help of the internet, bargain flights, hotels and holidays are becoming far more reasonable and competitive. Having lived here for over 25 years, I am well-placed to give you some good suggestions and tips!
This Blog will be regularly updated with the latest news and any relative cultural and administrative events – we look forward to hearing from you!
Swiss taxes and various deductions
By Robbin Davies - Topics: Pillar 3a, Switzerland, Tax, wealth management
This article is published on: 1st February 2020
This document is intended for information purposes only and does not constitute tax advice. The intention is to highlight that there are a number of financial planning opportunities available and that professional assistance in completing your tax-return is a very good idea. The Spectrum IFA Group can assist you with Pillar 3a tax-deductable savings, arrange a mortgage that is tax-optimised and help you with other forms of financial planning that are tax-efficient. We have certified accounting partners who speak English and will take care of your full tax return from 500 francs, including questions throughout the year.
The calculation of tax throughout Switzerland is based on the net income of the taxpayer. As in most countries, there are several deductions that can be made on your tax declaration. These will, in turn, reduce your taxable income, and therefore the amount of tax you pay.
Although deductions for the direct federal tax are the same throughout Switzerland, deductions at the cantonal and communal levels are regulated differently. Together with all local tax rates, there are frequently large differences between communes, and this should be borne in mind when deciding on where you wish to live, even in the same canton. Switzerland has been at the forefront of internet-based dissemination of information, and generally the relevant information on deductible amounts for your canton and commune can be found on the individual canton’s website, and frequently in English.
Clearly, to claim any of the available reductions in tax-liability, the necessary and supporting paperwork must be submitted with the tax return.
The following are the most important and frequently used, fully compliant and legal deductions.
Work related expenses: Employed persons can deduct work related expenses such as the cost for commuting to work. As a rule, bus and train passes (up to a certain limit) and a flat amount for bicycles, mopeds and scooters are all included under commuting expenses. Under certain conditions, the kilometres driven to the workplace can be deducted when one is using a private vehicle, but there are usually limits both in minimum and maximum distances.
Other work-related expenses include the cost for meals during the working day. Provided one cannot go home for lunch (i.e. there is a minimum distance from the place of work and the tax-payers domicile) these expenses can be deducted from income up to a certain maximum amount, which in turn varies from canton to canton. Additional deductions are also possible for shift or night work. For further work-related expenses such as the cost for work-specific clothing (such as suits), tools or other professional requirements there is a flat rate deduction. If the actual costs can be proven to be higher than the flat rate deduction (which would therefor require receipts to be attached with the tax declaration as supporting evidence) the tax-payer may often deduct the actual costs.
Payments into a pillar 3a: Payments into pillar 3a accounts are tax deductible up to the maximum allowed amount for those residents in Switzerland who have a taxable income. For employees with an employer-provided pension plan, the maximum allowed amount for 2020/21 is 6,826 francs. Self- employed people, and those without an employer-provided pension plan, are allowed to contribute up to 20% of their net income, up to a maximum of 34,128 francs in 2020/21. These maximum allowable deductions are reviewed every 2 years in line with inflation. The tax savings resulting from paying into a pillar 3a are that the taxpayer’s gross income has been reduced by these amounts and are ergo “tax fee”.
Bank vs. Insurance: It should be noted that there are two principal types of 3a. Those provided by banks, where there is no obligation to make a payment during any tax year, and those offered by insurance companies, where the contractual agreement is for a regular annual premium to be paid (this can be made monthly, quarterly, semi-annually or annually). The advantage of the bank 3a is that you are free to pay in or not, depending on your financial circumstances. One down-side is that there is no guarantee on the value of your policy at a later date, as it is always subject to the performance of the bank’s 3a funds. One of the great advantages of an insurance-driven product is that it comes with added life insurance, and also a guaranteed minimum performance and future minimum cash-in values. These insurance policies are also accepted for the amortisation of mortgage debt. On the downside, as there are certain charges taken out of the first annual premium at the very beginning, they should not be entered into without discussion with a qualified expert, and never to be taken for an anticipated term shorter than 5-7 years. Both types of product have federally-governed restrictions on accessing these funds before retirement age, although transfers to other retirement pots are permitted.
Interest Payments: Interest – for example for mortgages or on loans – may be deducted from income. This would apply only to interest and not for repayment of principal used to reduce a loan (amortisation of a mortgage for example). Leasing costs on cars may only be deducted when the individual is classified as self-employed.
Expenses due to illness and accidents: Certain expenses for medical services, which were not covered by your health insurance, can be approved as being tax deductible.
Insurance premiums: Premiums for health, accident, life and pension insurance can often be deducted – up to a certain amount.
Reclaiming withholding tax: When bank or savings account interest is credited, under some circumstances only 65% is credited. In this case the bank transfers 35% of the interest to the tax authorities. On providing the account numbers on the tax declaration, the withholding tax is reimbursed. Withholding tax is applied only to accounts for which the amount of interest exceeds 200 francs. In addition to interest from accounts, interest from other sources such as bonds (including medium-term notes), lottery winnings (starting at 50 francs) and dividend payments are subject to withholding tax, but can often be adjusted to the individual’s marginal tax rate.
Contributions to political parties: Members of a political party may deduct contributions, up to a ceiling.
Contributions to non-profit organisations: Donations to non-profit organisations can usually be deducted. Ask in advance.
Disability costs: People with physical or mental disabilities can make certain deductions for additional expenses. Various organisations throughout Switzerland offer free consultation on this matter as to what might be covered, and at local communal level they are also able to give contact details.
Alimony payments: Alimony payments for children and ex-partners can be deducted in full from gross income.
Charitable donations: Provided the charity is Swiss-registered, the minimum donation is 200 francs, but you may make donations up to 20% of your income.
Deduction for children: Generally a deduction can be made for every child who is under the age of 18, or at further education or still in their initial professional training up to age of 25.
Finally, and this is a typically « Swiss » feature
If you pre-pay your taxes you receive some interest: You can benefit from paying your taxes in advance. This is because the tax authorities pay interest on pre-paid tax payments. This interest is generally higher than the current low interest rates of banks. Clearly not everyone has sufficient liquidity to be able to cover a full year, but even agreeing to pay a partial sum in advance is a good way to make a little extra money.
The Spectrum IFA Group: A corporate partner, a generous friend
By Spectrum IFA - Topics: Belgium, corporate responsibility, France, Italy, Spain, Spectrum-IFA Group, Switzerland
This article is published on: 16th May 2019
As a small NGO, Street Child EU is always on the lookout to build relationships with corporate partners as a means of strengthening our long-term fundraising ambitions. We are always grateful when, after approaching an organisation, they take the time to contemplate our vision and give consideration for the potential benefits of our projects. Yet, even with our proven track-record, this is a competitive industry, and securing regular funding is a painstaking and uncertain process. Thankfully, every so often, we encounter a corporate organisation that immediately identifies with our philosophy and subsequently demonstrates an admirable commitment to transforming our ambitions into reality – The Spectrum IFA Group is one such case.
Over the years, this Financial Services Organisation, has shown an unwavering dedication to providing hope to some of the world’s most marginalised groups and disadvantaged children, their donations to Street Child thus far reached 14,000 € . Street Child’s relationship with The Spectrum IFA Group stretches back to 2016, when they provided us with a generous donation for our Girls Speak Out programme. This project was set in the difficult context of post-ebola Sierra Leone and Liberia. Our mission aimed to support at least 20,000 girls to access and sustainably remain in quality education. When The Spectrum IFA Group provided us with 3,750 € we could immediately family business grants for the Street Child team in the capital of Sierra Leone, central Freetown. This meant that 65 individual caregivers were given the means to protect and nurture the vulnerable children in their care. The grant also enabled an extra 65 girls and 65 of their siblings to attend school – totalling 130 children for whom education had previously been out of reach. Moreover, the donation has had a wider impact of providing an additional 195 family members with access to an increased income. Overall, this has been a great source of optimism in the community, wedging open a door of opportunity for future generations of children in Freetown.
In 2017, The Spectrum IFA Group once again willingly answered Street Child’s call to action by providing support for our Breaking the Bonds Project in Nepal. Street Child was implementing an ambitious plan to reverse the effects that decades of discrimination have inflicted upon the Musahar community. With a donation of 5,000 € we made great strides in our efforts to free Musahars from bonded labour and disrupt this cycle of poverty. The donation has enabled 27 Musahar girls to complete our livelihoods support program which, through a careful combination of business skills training and life skills workshops, has given these Musuhars the resources and skills needed to propel them towards economic independence. In 2018, The Spectrum IFA Group reiterated their support for the Musahar community by donating an extra 3,000 € to the cause.
This organisation has always been interested in receiving project updates from the field, and we have always happy to oblige with photographs and case studies. They have kindly used these materials to show off during presentations at company events, encouraging even more donations by The Spectrum IFA Group’s staff. It is important for us that our corporate partners show off the projects they have funded with this kind of pride. It is important that corporate organisations engage with NGOs out of a genuine interest in social progress and The Spectrum IFA Group clearly does so.
All to often corporate partnerships cannot stand the test of time, but the relationship between The Spectrum IFA Group and Street Child is strong and looks set to stay. We have already shared positive initial conversations in relation to our new project in Afghanistan and furthermore, an extra 2000 € donation already indicated for a new Musahar project. We are tremendously grateful for the trust and support The Spectrum IFA Group has continuously offered us. Our experience with The Spectrum IFA Group is a testament to the fact that the NGOs and Corporate organisations can positively bridge the gap between these differing industries in order to pursue a common goal.
Soti, a Musahar in Nepal has benefitted from business skills training to establish a steady income for herself and her children.
In Central Freetown, Sierra Leone, Aminata been supported through the Girls Speak Out programme. She can now attend School regularly and has aspirations to one day become a teacher
*Note: The names of individuals have been changed to protect their privacy and identity
New QROPS tax charge for 2017 – Will this change after BREXIT?
By Spectrum IFA - Topics: Belgium, BREXIT, France, Italy, Luxembourg, Netherlands, pension transfer, Pensions, Portugal, QROPS, Retirement, Spain, Switzerland, United Kingdom
This article is published on: 20th April 2018
In the Spring 2017 Budget, the UK government announced its intention to introduce a new 25% Overseas Transfer Charge (OTC) on QROPS transfers taking place on or after 9th March 2017. The HMRC Guidance indicates that the OTC will not be applied in the following situations:
- the QROPS is in the European Union (EU) or EEA and the member is also resident in an EU or EEA country (not necessarily the same EU or EEA country);
- the QROPS and the member is in the same country; or
- the QROPS is an employer sponsored occupational pension scheme, overseas public service pension scheme or a pension scheme established by an International Organisation (for example, the United Nations, the EU, i.e. not just a multinational company), and the member is an employee of the entity to which the benefits are transferred to its pension scheme.
It is also intended that the above provisions will apply to transfers from one QROPS (or former QROPS) to another, if this is within five full tax years from the date of the original transfer of benefits from the UK pension scheme to the first QROPS arrangement.
Nevertheless, it is clear that taking professional regulated advice is essential. This includes if you have already transferred benefits to a QROPS and you are planning to move to another country of residence.
It is important to explore your options now while you still have the chance as who knows what changes will come with BREXIT. Contact you’re local adviser for a FREE consultation and to discuss your personal options
EU Pension Transfer from the EU Institutions – It is EUr money
By Emeka Ajogbe - Topics: Belgium, EU Pension Transfer, France, Luxembourg, pension transfer, Retirement, Switzerland
This article is published on: 15th August 2017
Have you ever worked for any of the below institutions for less than 10 years? Go ahead, and have a look:
• European Commission
• European Council
• European Parliament
• European Court of Justice
If yes, then carrying on reading this article, as an EU Pension Transfer will definitely be of interest to you. If not, then you’ll probably want to stop reading, unless you know someone in the aforementioned position.
To Whom It May Concern, if you have worked for less than 10 years at the EU Institutions (and have left), you will not have qualified for the gold plated, much coveted, EU Pension. I say much coveted, as no one is really making pensions like them anymore; as they are very, very expensive for the employer to maintain. Yet, they can be very, very good for you, the employee. Anyway, I digress. That is for another article.
As you will know by now, you have to work at the EU Institutions for at least 10 years (this can be interrupted, as long as the total is 10 years) before you qualify for the pension. If you leave before that time, then you are eligible for a severance grant which you can transfer into a scheme that has been approved by the EU. As it states in the EU Staff Regulations handbook:
“An official aged less than the pensionable age whose service terminates otherwise than by reason of death or invalidity and who is not entitled to an immediate or deferred retirement pension shall be entitled on leaving the service:
a. where he has completed less than one year’s service and has not made use of the arrangement laid down in Article 11(2), to payment of a severance grant equal to three times the amounts withheld from his basic salary in respect of his pension contributions, after deduction of any amounts paid under Articles 42 and 112 of the Conditions of Employment of Other Servants;
b. in other cases, to the benefits provided under Article 11(1) or to the payment of the actuarial equivalent of such benefits to a private insurance company or pension fund of his choice, on condition that such company or fund guarantees that:
I. the capital will not be repaid;
II. a monthly income will be paid from age 60 at the earliest and age 66 at the latest;
III. provisions are included for reversion or survivors’ pensions;
IV. transfer to another insurance company or other fund will be authorised only if such fund fulfils the conditions laid down in points I, II and III.”
The last 4 points are the most important to note as your money will not be transferred unless the approved receiving organisation adheres to those criteria.
WHY WOULD I TRANSFER?
Essentially, you have to, unless you like losing large sums of money. If you have not transferred by the time you have reached pensionable age, then your money disappears and is absorbed by the EU. If you die before you claim your money, then it is also lost. It will not be transferred to any beneficiaries as it is not a pension. When you leave, the amount that you leave behind is frozen and only increases at a very low interest rate; no further contributions are made on your behalf. So moving it when you leave allows you the opportunity to invest it into funds that could grow your money substantially over the years (depending on how close you are to retirement). For example, if you left the institutions at 40 years old, you would have at least 25 more years to grow your money. If you leave earlier, then you would have longer.
Moving it would also allow you better protect your financial future, make provisions for your partner or dependents/beneficiaries. It can be of benefit even if you decide to return to the EU Institutions.
There may be circumstances where it is not appropriate for you to transfer the money at that time, your particular situation will be evaluated by our pension specialist who will compile a report detailing the appropriateness of the potential transfer.
SOUNDS GREAT! WHAT NEXT?
We will conduct an evaluation of your situation and also the accumulation of your money at the EU. Once we have confirmed and agreed with you that transferring out is the right option for you, we will work with an approved provider to who complies with the requirements as stated above who will help set up your new pension. Then, as part of our ongoing service, we will review your pension and personal circumstances every quarter to ensure that you are always updated with the latest information. Even if you move countries, our service will continue.
We have established contacts with case handlers in the Office for the Administration and Payment of Individual Entitlements (the department responsible for calculating and transferring your money), and have developed the knowledge and expertise to ensure a smooth transfer, putting you in control of your money and helping you make the right decisions, as and when they are needed.
So, if you have no longer work for the EU Institutions and have less than 10 years’ service, you don’t like losing large sums of money, wish to protect your financial future, and potentially provide for your dependents/beneficiaries, then contact me either by email: firstname.lastname@example.org or phone: +32 494 90 71 72 to see whether an EU Pension Transfer is suitable for you.
Le Tour de Finance heads to Switzerland
By Spectrum-IFA - Topics: Le Tour de Finance, Pillar 3a, Switzerland, Uncategorised
This article is published on: 21st September 2016
Le Tour de Finance, 29th September Nyon, Switzerland.
“Three ways to save tax”
What is Le Tour de Finance?
Are you interested in finding out how to make the most of your money in France, Spain or Italy? Do you have pressing questions about making international payments, pensions, tax, wealth or the healthcare system? Why not take the time and come to a local event, bring some friends and make it a great day out?
Le Tour de Finance is the financial forum for expats which will help you with a range of different financial products and services. Just as Le Tour de France takes a route throughout the regions of France, so too does Le Tour de Finance, but we also visit Italy, Spain, Switzerland and Belgium. We want to reach expats where you live so that you can seek advice particular to your local area. Tax advice, pensions, mortgages, healthcare, schools, business advice and making the most of your assets are just some of the subjects that expats need to know more about. Le Tour de Finance is the ideal opportunity to find answers to the most pressing questions facing people living in France, Spain or Italy.
The forum will bring together key players who assist expats settling or already living in these countries. It will also be an ideal opportunity to socialise by enjoying a free Buffet lunch and meeting people in similar circumstances in your neighbourhood.
As an expat, do you make the most out of your finances?
Come and join us for expert advice and to meet other like-minded expats in your local area. The event starts at 18.45 with a welcome drink, followed by some brief presentations from experts on a range of topics that could affect you now, or in the future. This engaging events ends at 20:30 with drinks and canapes and a chance to meet the experts and hopefully make some new friends.
Register for this FREE event or for further information, by sending an email with your full contact details to: email@example.com, register online or call +33(0)4 22 32 62 40
Le Caveau de Nyon
Château de Nyon, Place du Château,
29th September, 2016
The event starts at 18.45 and ends at 20.30 with drinks and canapes.
Brief presentations on a range of topics including: Tax efficient planning: for Frontaliers and Swiss residents; Why you need a Swiss Will!, Transfers between currencies: beat the bank margins!, Wealth management: seeking positive returns post-Brexit, QROPS- the latest rules on transferring UK pensions overseas, and what the advantages may be, How do the Swiss Pillars work, and how do I save taxes?, Swiss Mortgages- how they work, how to optimise to save taxes.
Spectrum IFA sponsors Freddie for a Day
By Chris Eaborn - Topics: Spectrum-IFA Group, Sponsoring, Switzerland, Uncategorised
This article is published on: 4th May 2016
This September would have been the 70th birthday of Freddie Mercury, legendary lead singer of the rock band Queen.
His final recordings were made at Queen’s Mountain Studios in Montreux, where Freddie also lived.
As part of a number of fundraising events, students of SEG, the Swiss Education Group, a leading hospitality education network, is hosting a fundraising weekend on 14th and 15th May in Montreux, entitled Freddie for a Day, to celebrate his life and raise money for the Mercury Phoenix Trust.
The Trust was established after his death and focuses on HIV awareness and prevention with a focus on young people in developing countries.
Spectrum is a sponsor and one of our Swiss-based advisers Chris Eaborn, will be attending on our behalf.
Spectrum sponsors 23rd Swiss Classic British Car Show
By Spectrum-IFA - Topics: SCBCS, Switzerland, Uncategorised
This article is published on: 10th October 2014
Sunday 4th October was the 23rd Swiss Classic British Car Show in Morges, on the shores of Lake Geneva, Switzerland.
The Spectrum IFA Group has been a proud Main-Sponsor for several years and once again this years’ event was a real success with “shorts and tee-shirts” weather, which invariably seems to be the luck of this event!
Spectrum’s tie-in is partly because its two local advisers, Chris Eaborn and Robbin Davies, live nearby, are of British origin and both love classic cars. Also this is an event that has a huge economic impact on the town which is in the heart of the region where we have many clients.
The show itself was founded and has been run all of its 23 years by Keith Wynn, a British expatriate, and is a non-profit event with sponsorship paying solely for infrastructural costs such as posters and printing.
There is no entry fee whatsoever for exhibitors or visitors and the approximate 1,500 car-entrants come from all over Europe to display British cars and motorbikes over 20 years old (or more recent “special interest vehicles”). There is everything from eccentric enthusiast’s cars to “priceless” classics, all of which are parked unattended along the closed off quays of Morges for the pleasure of the mingling crowds with no problems whatsoever and only the lightest of security needed.
The show attracts around 20,000 visitors and the economic impact on the town through fully booked hotels, restaurants etc. is conservatively estimated at over CHF 1’000’000 of additional revenue.
So, for The Spectrum IFA Group, it is a fantastic opportunity to support one of the best car events in Europe (and arguably the very best featuring British cars!) whilst contributing to an event that has a highly positive economic impact to the area and brings pleasure to thousands.
Chris and Robbin had an excellent day and met many clients and friends who also seemed to have a great time.
[Gallery not found]
Making a Will in Switzerland
By Chris Eaborn - Topics: Switzerland, Tax, Uncategorised, wealth management
This article is published on: 12th September 2014
Wills in Switzerland
As a general rule, the Estate of anyone residing in Switzerland is governed by Swiss material law, especially by the relevant provisions of the Swiss Civil Code, which definitely apply in the absence of a Will, notwithstanding the deceased’s citizenship, personal status or religion.
Swiss law, which was influenced by the Napoleonic Code, provides for various solutions, either mandatory or optional, and includes the so-called rules of “forced heirship” – according to which some heirs (the spouse, the children and, in some cases, the parents of the deceased) are in any event entitled to a minimum portion of the Estate (similar rules apply in most countries on the continent and in Scotland).
Choice of Law
According to the Swiss Federal Law on Private International Law, foreign residents in Switzerland may, by making a Will, direct that their Estate be governed by the law of their country of origin and, thus, avoid all or some of the rules set by Swiss law.
This choice of law (that is not permitted in the event of double citizenship including Swiss citizenship) does not affect the jurisdiction of the Swiss authorities and, depending on the deceased’s Canton of residence, inheritance tax must still be paid in Switzerland (taking into consideration the deceased’s Estate on a worldwide basis).
As regards American citizens, it may be wise to specify the law of the relevant US State (with which they have some connections, e.g. California), while Brits should refer to “English law” (or “Scottish law” for the Scots) rather than UK or British law since it does not exist as such.
Making a Will
If made in Switzerland, the Will must have the form prescribed by Swiss law. As a rule, it must either be entirely handwritten, dated and signed by the “Testator”, or made before a Swiss Notary Public (where the Will is actually drafted by the Notary and signed by the Testator in the presence of two witnesses who are often the Notary’s assistants).
Typed Wills or so-called “joint” Wills (one single Will made by two people) are prohibited and void.
Handwritten Wills may be drafted in any language, while Wills made before a Notary Public are usually in the local official language (i.e. in French in the French-speaking area of Switzerland, such as Geneva or Vaud).
Although it is not legally required in Switzerland, when a handwritten Will may predictably need, at some point, to be proven in the US, it is worth asking two witnesses to certify the Will at the time it is signed by the Testator, as this would be expected by a US probate Court.
Making a Will before a Notary Public is especially advisable when the mental capacity of the person making the Will could later be questioned (due to illness, age, potential influence of other people, etc.).
Usually, Wills made with the assistance of a Notary Public are kept by the latter who must send them to the competent local Court or authority upon the testators’ death. When Wills are made privately, it is wise to leave them in some place where they will be found easily, but they can be lost or destroyed. It goes without saying that any Will may, at the Testator’s discretion, be changed, amended, replaced or cancelled at any time by their authors and mere photocopies are not effective.
Appointment of an Executor
Under Swiss law, when there is no Will, the Estate is usually handled by the heirs (who must act jointly).
An Executor (or more than one) may however be appointed by Will and, upon the Testator’s death, will be required by the competent local Court (the Judge of the Peace in Geneva and Vaud) to accept this mission. The Will may include some specific instructions to the Executor who is generally entitled to deal with the Estate without any restriction.
The appointment of an Executor in a Will (and a possible Successor Executor – contingent in the event of the death or incapacity of the first one) is recommended when some assets are held abroad (especially in the US, in the UK or in other common law jurisdictions), when some of the heirs are under 18 years of age or when the situation may prove complex for some other reasons.
Where no Executor was appointed, the local Court may, under some circumstances, appoint an Administrator to take care of the Estate and to protect the heirs’ interests, especially if they are not all known.
Anyone finding a deceased’s Will in Switzerland must send it to the local authorities. Probate proceedings include the notification of a copy of the Will to all the heirs and beneficiaries and, depending on the circumstances, to any relatives possibly entitled to a portion of the Estate.
If the heirs suspect that the deceased was insolvent, they may reject the inheritance within 90 days. Alternatively, they may, within 30 days, apply with the local Court for a formal inventory to be drawn up (at their own expenses) and only accept the inheritance accordingly.
When the heirs accept (even tacitly) the inheritance, they immediately become the successors of the deceased for all the Estate assets and liabilities. They must act jointly and they are severally responsible for the deceased’s debts and obligations (including outstanding contributions or taxes owed in connection with undeclared assets).
Usually, when the deceased was a foreign national, Swiss Courts require that the heirs submit a formal statement to be issued by a Notary Public, in accordance with information that must be given by two witnesses who have no interest in the Estate and who must confirm the deceased’s family status, along with a list of all relatives who may be entitled to the Estate. In the event of any doubt or if no one is able to provide the requested information, the Court may order that a formal notice be published in the official gazette, allowing any potential heir to challenge the Will within 1 year.
In some cases, the heirs also have to submit a legal opinion confirming the solution resulting from the application of some foreign rules (if selected in the Will) that are sometimes regarded as rather “exotic”.
Once the situation is clarified (and, where applicable, after a fiscal inventory is filed and inheritance tax paid), the Court issues a Certificate of Inheritance naming the heirs and allowing them to fully access the Estate assets and arrange for these to be distributed amongst them.
- Non-Swiss can (should) ask for their Estate to be governed by the law of their home country and state the country (i.e. will therefore avoid Napoleonic Code).
- They must clearly state in the Will that this is what they want to do, g. “I direct that my Estate shall be governed by *** law”.
- If it is not made before a Notary Public, the Will must be handwritten and married couple must write a Will each (so-called “joint-wills” are invalid in Switzerland).
- A handwritten Will does not have to be witnessed and it should be kept in a safe place.
- The appointment of an Executor (or more than one) should be considered.
- It is helpful to attach a list of worldwide assets such as the name of the bank, branch and account number in which accounts are held, details of life policies or any other assets, as well as the contact details of people who could inform the heirs (such as Attorney, Financial Advisor or Accountant).
Creating or Updating your Will / Estate Planning – The Right Questions
If you died today, how would your Estate be handled?
- Is there a Will and where is it?
- Which debts should be eliminated?
- Which assets should be sold (such as business or real estate)…
- … and which ones should be kept (such as heirlooms)?
- Who is to receive which assets (financial and sentimental)?
- Are there any distribution clauses (e.g. to give your watch to your son/daughter when they reach age 18)?
- Who is to take legal responsibility for any children under age 18?
- Who is to assist the heirs and to ensure that your instructions will be implemented?
- Did you know that, if you are a US citizen, Swiss banks can be required to freeze your accounts until all US taxes are declared and paid, thus a joint account could be frozen?
- If a joint account holder passes away, the account can be frozen until Swiss taxes are cleared up, with the surviving spouse only able to present bills for living expenses to be paid.
- If a married couple has children and one of the parents dies without leaving a Will, the child/children are deemed to inherit 50% of the Estate and depending on the Canton, may have to pay Inheritance Tax. In the Canton of Vaud, children may however be “gifted” up to CHF 50’000 per year each – tax free.
Careful individual planning allows to identify and solve a number of issues like these.
We offer a free initial consultation should you wish to discuss these or other financial planning matters and should legal advice be required, we will work in conjunction with excellent English-speaking Attorneys and likewise have access to excellent English-speaking Accountants if pertinent.
This notice is for information purpose only and does not constitute legal or other professional advice. Any specific queries should be looked at individually with a professional advisor. This document may not be disseminated or published without written authority.
Quick tips when relocating to Switzerland
By Chris Eaborn - Topics: Switzerland, Uncategorised
This article is published on: 3rd September 2014
House Contents Insurance and Civil Liability Insurance
It is cost-effective to insure your own possessions, as well as the act of damaging someone else’s property or person through a combined “RC Ménage” policy. The liability cover also covers you for accidental damage (not wear and tear, which you are not responsible for) to a rented property which can be helpful as landlords here are VERY strict about any damages when you eventually vacate your property. An average family household costs approximately CHF 300-500frs per year in total for the combined policy of Contents and Liability insurance, although this will differ depending on circumstances. Jewellery should be separately listed.
Fire/Natural Disaster Insurance
This applies only if you live in Canton of Vaud: you have to buy a “fire/natural damages” insurance policy through an agency called the ECA. This cover is not expensive but it is compulsory. Normally, you will be sent a questionnaire in French to complete a few weeks after you move in to your new home. In the interim you are NOT insured, therefore we strongly recommend that you take the initiative to enrol as soon as you move in. We can provide the simple enrolment forms in English for you and a full summary of cover in English. This policy costs approximately CHF 50-100frs a year.
Legal Insurance (“Protection Juridique”)
Attorneys are very expensive and local law is complicated. You can buy a very good insurance policy that pays your legal expenses if you are sued or wish to pursue another person/company (for example, a dispute with a neighbour, or with a service provider, or with your employer). Such a policy costs around CHF 350 per year for a whole family and covers you worldwide, including litigation concerning a driving incident and costs approximately CHF 200 for an individual per year. In addition, and if you prefer, you can exclude driving which makes it even less-expensive still. This insurance is highly recommended as Swiss law is complex, attorneys are expensive and even minor legal disputes, such as defending yourself against a driving offense, can be stressful and distracting if you are trying to handle them by yourself. In the event of major disputes, which could incur a huge cost along with expensive attorney fees, it allows you to choose a lawyer who speaks a language of your choice such as English.
Arriving to/Departing from your Rental Property
When you arrive, make sure you inform the landlord promptly of anything that is not working or that you did not see during the initial inspection or the landlord will expect you to pay for it. When you vacate a property there is a very strict inspection. You will have to have cleaned it to such a degree that they will check for dust in the extractor fans!! It is recommended to get a professional cleaning company to do this or you may have a long wrangle over your deposit and unwanted hassle at the close-out.
Rental Guarantee Insurance: If you do not wish to tie up, typically three months’ rent, you can have this released by taking out a rental deposit insurance. It costs around 5% of the rental deposit amount, per year, so for a CHF 10’000 deposit, you instead pay about 500frs per year.
In Case You Ever Have a Fire or Burglary – Video/Photo your possessions!
We strongly recommend you take a video of your house contents to act as an aide-memoire in case of a fire/burglary. If you were unfortunate enough to have a fire and a total loss of everything, imagine how difficult it would be to sit down and list “everything” right down to the smallest items. This video would also be hugely helpful to an insurance company as it would show that you did own all of the items you listed, even though you would not be expected to have receipts for absolutely everything you own (you could also include a scan of any receipts that you have for larger items such as jewellery/furniture). It will probably only take 15 minutes of your time to do this and you could upload the video to a Cloud storage service or place the disk drive in a bank safety deposit box or give it to a family member to store for you off premises from your home.
A home safe is also a great idea for storing financial papers and family photos on disk (it costs a few hundred francs for a good safe- go for as heavy a model as possible, preferably 100kg-200kg).
Car insurance: Please be aware that Swiss insurers are strict about reducing/dismissing claims for break-ins where something is left visibly in the car. We suggest that you never leave anything in plain view – lock it in the boot/trunk or in the glove-box (preferably with it locked).
Speed limits are VERY strictly policed here, and if you are caught at 30kph over the limit you face not a civil action but a criminal one – with a 3 months ban PLUS a fine of up to 20% of your salary – PLUS your car insurance premiums will go up. Better to know now as there is no lenience because you “did not know”!
Drink driving– Switzerland has a very low limit, and it is strictly enforced, so it is advisable to avoid alcohol or grab the train.
It is also the law that you drive with your headlights on all of the time.
For motorway driving you have to purchase a “Vignette” from any petrol station or Post Office and display it prominently in your car windscreen. The police enjoy random checks especially in February/March to try and catch people out who don’t have one!
If you use the train more than a few times a year, buy a 50% discount card. The Half-Fare travel-card is available for 1, 2 or 3 years and allows you to buy 1st or 2nd class tickets for half the price.
Order your Half-Fare travel-card at your local station or on the Internet at SBB Ticket Shop.
The Half-Fare travel-card is valid for the entire Swiss public transport network, which covers a total of 26,800 kilometres. The map on their website gives details of the routes and public transport services included.
It costs CHF175 for one year, CHF 330 for 2 years and CHF 450 for 3 years. It also gives discounts on the Metro, buses and ferry-boats.
There is a special offer (as of January 2014) for 16 year olds, for a half-fare card for CHF 98frs.
Local-Amenities Guide In English
There is a great book called “Know It All Passport” which includes everything you need to know, in English, about local services and leisure amenities. This is a great resource to help settle you in, especially if your French is still a “work in progress”! www.knowitall.ch lists the outlets where you can buy it.
Groceries and Wine/Beer- ordered online- delivered to your door
www.leshop.ch is an online grocery order service (English available) for Migros, one of the largest and best supermarkets here. They provide excellent service, deliveries are normally very accurate and arrive in good shape. No more heavy shopping bags and check-out queues! Other grocery stores also offer this service.
Everybody with income over CHF 120k is required to make an annual tax return. If your company does not provide access to an accounting firm to do this for you, we can introduce you to excellent local accountants who are English-speaking, not too expensive and will take the hassle of this from you.
If you earn less than CHF 120K, you should make a “Simplified Tax Return” as there are personalised deductions you can apply for that can’t have been taken into consideration at payroll level. For example, you can deduct credit/mortgage interest and you can deduct for contributing to the 3rd Pillar (mentioned later)….
You may be able to make additional back-payments into your company pension. Currently, this is up to 20% of your salary per year for 5 years, which will be fully tax-deductible. Additionally, in the event that you decide to stay in Switzerland and buy a house, this can be pledged as collateral to the bank, thus reducing the size of deposit that you need. We can help you understand the pros/cons of making back-payments.
“3rd Pillar”- this is a private pension which you control. It is totally separate from the company pension and is portable. You can invest CHF 560 per month (maximum CHF 6’739 per year and the amount increases slightly periodically). If you think you will be here for a while, this is a good idea, as both as a disciplined savings vehicle and to help reduce your taxes – and even possibly assist in buying an apartment/house. There are some very attractive products that offer excellent investment returns potential, with a guaranteed capital along with a minimum return every year, even if the investment markets go down! Plus, you benefit from the markets when they go up. Again, we can help you evaluate the various different options available and “what happens if?” scenarios. Products vary hugely in terms of cost/benefits so a comparison is highly advisable.
Buying a House
This typically requires a 20% deposit but it is now possible for Swiss and certain European nationals to obtain a 90% mortgage. Interest rates are extremely low (roughly 2% if you have a mix of variable and fixed rates) and mortgage interest is tax deductible. We recommend you consider buying only if you plan to be here at least 5 years or would be prepared to leave your capital locked-up and rent out the property if you leave Switzerland. This is simply because there are around 5% fees in buying (“Frais Notaires”) plus, if you sell, there are capital gains taxes and realtor sales commissions to pay. Therefore, it may not be a good investment in the very short term.
You can borrow to finance not only a main residence but also a secondary residence such as a ski chalet.
There are various types of mortgage on the market- if you would like information, again, we can assist you in choosing the right type of mortgage and setting it up with leading partner banks and insurance companies who offer home-loans and help you to set it up in the most tax-optimised way. We can also assist with mortgages in France and in other countries. Please contact me on the phone numbers or email address listed below.
Banking / Private Banking
We can refer you to a local personal banker who speaks English and will take care of “everything” for your everyday banking needs as well as to international banks who specialise in dealing with expatriates.
We have also negotiated exclusive conditions for top-end Private Banking. Again, you can contact me on the numbers and email address listed below.
Making or Updating Your Will (Testament)
If you are not Swiss, you should have a local Will or your Estate is very complicated because local Estate law is similar to France in that it is under the Napoleonic Code (forced-heirship rules), meaning that your money would not necessarily go where you want it to! Non-Swiss nationals have the right to nominate the law of their home country in the administration of their Estate. We can provide you with guidance to write your own Swiss Will, which is relatively simple and does not cost you anything.
We can help you review any existing investments and pensions and advise you on the impact of your move to Switzerland, as well as about any savings/investment you may wish to make now that you will be Swiss resident. We are Independent and can choose from across the wide choice of institutions on the market. We also have access to structures where you can deal assets yourself, if you wish to.
In particular, we are specialists in finding savings/investment solutions for internationally-orientated clients who may have careers that move them around and who do not simply wish to accumulate small “pots” in each country in which they work.
Foreign Currency Transfers
If you have regular payments, perhaps for funding an overseas mortgage, or you move money to/from Swiss francs, than using your regular bank for this service can be extremely expensive. Margins are undisclosed and, typically, include a spread of 4-5% with even commission on top! This is even if you move money from, for example, a CHF account to a Euro account with the same bank! We can arrange a free account with a leading currency-transfer specialist company through which you can convert currency at institutional rates, saving significantly versus foreign currency transfers through your bank.
Helicopter Rescue Service (Rega)
Helicopter rescue may be covered by your health insurance. However, the service itself is privately funded, receiving no State aid and, if you become a patron (currently CHF 70 a year for a family or CHF 30 a year for an individual), all fees for their services are waived.
Below is a link explaining the benefits in English.
Health Information and Service Providers
The below link is an excellent resource for finding a doctor nearby, as well as general information in English.
Although some of the information may seem a little overwhelming, once initial formalities have been taken care of, living in Switzerland is extremely straightforward. We hope that some of the information contained here is helpful and that you will agree it is a fantastic place to live!
We will be delighted to assist you both now and in the years to come, whether you remain here indefinitely or move around the world!
Please note that this document is intended for general information purposes only for private use. E&OE.