Working in Geneva?
Working in Geneva
At a Glance:
- The social security system in Switzerland is divided into three pillars. The first two pillars, Old Age and Survivors Insurance and Disability Insurance, and an occupational pension plan are compulsory. The third pillar is a private pension plan.
- The Agreement on the Free Movement of Persons ensures that the social security systems of all EU/EFTA states, including Switzerland, are coordinated. There are also several countries outside the EU that have agreements with Switzerland.
- Patients with basic health insurance cover are expected to pay 10 percent of the price for prescription drugs and contribute 15 CHF per day towards the cost of hospital stays.
- Every person residing in Switzerland for longer than three months must make sure they have health insurance. No public health insurer can refuse you if you want to take out basic cover.
- Anyone who plans on working in Switzerland for more than three months, must obtain a work permit. It is significantly easier for EU citizens to get a work permit than non-EU nationals, as there is a quota system in place for third-country citizens.
Key Sectors in Geneva
Geneva has a strong, service-oriented economy. The overwhelming majority of people are employed in the tertiary sector. The city is among the top financial centers in the world, with many local employees working in Geneva’s private banking industry, in commodity trade and international trade financing.
Another major part of the tertiary sector is, of course, the tourism and hotel industry. It generates a significant share of the region’s wealth, providing plenty of employment opportunities.
Geneva’s manufacturing industry constitutes a small part of the metropolitan economy. Nevertheless, the city’s secondary sector boasts some brand names: Rolex, Omega, and other traditional watch makers still work in Geneva these days.
International Organizations in Geneva
Geneva owes its nickname of “Peace Capital” to the many international organizations which have their headquarters or offices in the city. As early as 1919, Geneva was the seat of the League of Nations, an organization born out of the Paris Peace Conference and a precursor to the United Nations.
Today, the UN has its European headquarters in the city. Among the many sub-organizations of the United Nations, the following are based in Geneva:
- the High Commission for Refugees
- the High Commission for Human Rights
- the World Health Organization
- the International Labor Organization
- the World Intellectual Property Organization
Other international organizations that employ many foreigners working in Geneva include the World Trade Organization, the World Economic Forum, the International Federation of Red Cross and Red Crescent Societies, the International Organization for Migration, and the European Broadcasting Union.
Paying Taxes as a Foreigner
Everyone working in Geneva must pay taxes on at least two levels: to the Swiss Federation and the Canton of Geneva. Some taxes levied in Geneva are also owed on the local community level.
Despite all these regulations, Switzerland is a low-tax economy compared to other European countries. Swiss citizens working in Geneva must submit an annual declaration detailing all their income and assets.
Foreign employees working in Geneva, on the other hand, are usually taxed at source. They pay a withholding tax on their income, which is directly deducted from their salary. It accounts for their federal and cantonal income tax. Foreign residents who have been living and working in Geneva long enough to acquire the right to settlement will be taxed in the same way as other Swiss citizens.
Expats are eligible for certain tax benefits in the form of an expat flat rate deducted from their taxable income. These benefits are supposed to account for the higher costs of the expat life-style. The rate is calculated on the basis of average expenses associated with relocation, travel, and maintaining a second domicile. Of course, only expats working in Geneva whose employer does not cover these costs are eligible.
Double Taxation Agreements
Switzerland maintains double taxation agreements with several countries across the world. Following standard OECD guidelines, they differentiate between two policies to avoid double taxation: tax exemption and tax credits.
According to these agreements, foreigners who spend less than 183 days per year in Switzerland can be exempt from paying tax on any income which does not arise from Swiss sources. If this rule cannot be applied, you might receive tax credits in your usual country of residence against taxes already paid in Switzerland.
If you are not sure whether your country has signed a double taxation agreement with Switzerland, you should contact your fiscal authorities. The Swiss Federal Tax Administration provides some information on bilateral taxation agreements, available in German, French, and Italian.
Our in-depth article on Income Tax in Switzerland offers more information on the topic.
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