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Banks & Taxes in Switzerland
A Comprehensive Guide About Opening a Bank Account and Managing Your Taxes
Managing finances in Switzerland probably calls to mind Hollywood film images of spies and ultra-secure underground bank vaults. In reality, Swiss banking is not this intense, although it is true that banks have a legal obligation to protect the identities of their so-called “numbered” accounts.
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As a new transplant to Switzerland, it is important to understand both how to open a bank account and the tax system in your new home. While opening a bank account as a foreigner is relatively easy, expats should be prepared to present a decent number of documents proving their identity. Switzerland is renowned for a banking system that protects the identities of account holders, specifically in their “numbered accounts.” To avoid protecting illegal activity, however, banks do a thorough identity check before opening accounts, and maintaining a numbered account can incur a couple thousand Swiss francs in yearly maintenance fees.
The tax system, too, can be both simple and complex to understand. This is because the Swiss government allows its 26 cantons and nearly 2,250 municipalities to levy their own taxes on income, wealth, inheritances, property gains, and more. When moving to Switzerland, it is important to check with the rules and regulations set by your specific canton. For a general overview, however, you can use this guide for everything you need to know regarding banking and taxes in Switzerland.
How to Open a Swiss Bank Account
If you want to know how to open a bank account in Switzerland for non-residents, you are in luck. Switzerland’s reputation for bank accounts easily opened by foreigners is not only a useful action movie plot, it is a fact. Opening a bank account in Switzerland as a non-resident is easy, and often even simpler if you do it before you arrive in the country.
How can I Open a Bank Account in Switzerland?
To open a bank account in Switzerland you primarily need to show verified documents proving your identity. In the past, these documents had to be submitted in person, but laws changed in 2016 making it possible to mail these documents in instead. However, keep in mind that it is still easier and faster to open an account in person.
Still, it is wise to open your Swiss bank account before arriving in Switzerland. This is because one of the most confounding requirements for opening a bank account is the need for a mailing address. However, in Switzerland, you also need a Swiss bank account in order to sign a lease on an apartment or house. Thus, many foreigners find themselves in the frustrating loop of needing an address in order to open a bank account, but also needing a bank account in order to sign a lease.
Save yourself the hassle and open your Swiss bank account from abroad. However, keep in mind that when you open an account remotely, it may take from one week to a month for the account to become active.
Required Documents to Open a Bank Account as Non-Resident
One of the few restrictions needed to set up a Swiss bank account is that you must be 18 years or older. Besides that, the documents required to open a bank account may vary slightly from bank to bank, but on average you will need to provide copies of the following:
- your passport
- proof of residence
- proof of where your money is coming from (previous bank statements, employee contract, and/or pay slips)
Because of Switzerland’s anti-money-laundering laws, you may also be asked to write a letter explaining your financial status or provide extra documents such as utility bills, Swiss visa status, tax returns, and housing contract. All documents will require an apostille seal.
It is possible to open a Swiss bank account online as a non-resident, but you may need to contact the bank before submitting your documents. This is a bank by bank preference.
What Is a Numbered Account?
A numbered account is an account that uses numbers to verify your identity instead of your name. It is what some call an “anonymous” account. Because of the anonymity, these accounts come with the highest maintenance fees, averaging over 1,000 CHF (1,020 USD) per year.
Note that when opening a numbered account, you need to go to the bank in person.
Other Swiss Banking Info
- While most Swiss banks do not require a minimum deposit to open an account, you can expect to be asked to keep a minimum balance and pay a monthly banking fee for maintenance. Fees are generally low, sometimes no more than 5 CHF (5 USD).
- There are no ‘no fee’ bank accounts in Switzerland. Every bank and bank account come with either monthly or annual maintenance fees. Be sure to look into these fees as they vary from bank to bank.
- When you open a bank account in person, you may first be offered a numbered account. Take note of the high maintenance fees and decide whether it is the type of account you want.
Best Banks in Switzerland
If you plan on staying in one canton while in Switzerland, it is worth looking into banks that are local to that canton. However, if you want the option to move from canton to canton, you should look into banks that are represented throughout the entire country. There are also plenty of international banks in Switzerland, and nearly every bank has an online banking option.
Some of the best banks in Switzerland are:
- Post Finance
- Credit Suisse
- Swiss Raiffeisen
Best Online Banks in Switzerland
- Zürcher Kantonalbank
- Swiss Raiffeisen
- CIM Banque
Best Savings Account in Switzerland
For banks with lower interest rates for savings account, look at cantonal banks rather that national ones.
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What is the Tax System in Switzerland?
Anyone planning to remain in the alpine country for more than 90 days will need to know what the tax system is like in Switzerland. If you are working in Switzerland, you are required to start paying taxes within 30 days of your arrival. The tax system in Switzerland can be complex as the 26 cantons and nearly 2,250 municipalities each levy their own taxes. This includes income taxes, inheritance taxes, wealth taxes, property gains, and more.
Types of Taxes in Switzerland
To understand the types of taxes in Switzerland, it is helpful to understand the four levels of taxation first:
- Federal: These taxes are governed by the Federal Constitution.
- Canton: These taxes are governed by the specific canton.
- Municipal: These taxes are governed by the city or town where you live.
- Church: Taxes levied on members of the three national churches, Christian Catholic, Roman Catholic, and Protestant.
Cantonal and municipal taxes differ from canton to canton. Expats should consult their canton authority’s website for specific information regarding their taxes.
What is the Income Tax in Switzerland?
Switzerland sometimes gets a reputation for being income-tax-free, but this is not true for foreign workers. As a foreigner in Switzerland, your tax will be deducted directly from your paycheck. The rate of taxation varies from canton to canton. However, since 2010 the average income tax rate across Switzerland has remained steady at around 40%.
To contribute to their reputation for low taxation, the Swiss government typically bases the rate of tax a foreigner owes on a combination of their salaried income as well as other additional factors such as their monthly rent, educational costs, and childcare. These can all be considered additional assets and add to an overall lower tax rate. Depending on your personal finances and salary, very wealthy expats can choose to pay a lump sum income tax.
Immigrants are also taxed based on household, rather than just on an individual level. Not only does this simplify matters for households and the government, but it also typically results in lower taxes, especially for wealthy families. However, be advised that this taxation perk is not available to all expats and it is best to consult an expert before moving to Switzerland with the hopes of making a fortune.
The average income tax rate in Switzerland varies from canton to canton. The chart below is a sample of income tax brackets and the tax on salary in Switzerland, but it is not representative of every canton.
Sample Income Tax Brackets in Switzerland
|Taxable Income Bracket CHF||Taxable Income Bracket USD||Tax Rate|
This tax rate continues to climb until it hits 895,901 CHF (914,490 USD). Anything above this amount is taxed at 11.5%.
Other taxes expats living in Switzerland may need to consider are:
- Swiss VAT
- stamp duties
- withholding tax
- custom duties
- special consumption taxes
To find out more about them, seek help from a tax professional.
Taxes for Self-Employed People in Switzerland
Self-employed people are taxed in Switzerland based on their business and whether they are considered a sole proprietorship, partnership, or limited liability company. The specific taxes they face is based on the requirements of their canton. Overall, self-employed people have to pay federal, canton, and municipal taxes, just like any other company.
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