5 Greedy Sins Of Switzerland

To most people, Switzerland equals money and rich people. And surely, there are quite a few millionaires here. But how about the middle or lower class? Is Switzerland really the place where grass is greener on the other side? Before moving here, I extensively researched tax rates to estimate if we will be able to pay all the bills. Every blog and article promised me that Switzerland is a tax haven, with low rates and a logical system. But oh, how wrong was I! Here are the top 5 things about the Swiss tax system that I cannot help myself but vent about.

1. Switzerland penalizes married couples who do not have children

If you are married without children, your tax burden is a lot higher then for those who live together in sin AKA not married. Basically, once you tie the knot with your loved one you are required to declare your income under one household. Hence, the income amount raises and so does the tax rate. This of course puts people off getting married. On what planet does this make sense?

The crazy people who got married. Photo: Inta Photography

2. Taxes upon taxes = wealth tax

Imagine you have a goal to save money for a house deposit or for a rocket ship if you wish… So you skim down on eating out and buying unnecessary things in hopes to save that extra CHF 200 each month. And ultimately after years of saving be able to reach your goal and buy that thing you so highly desire.

But surprise, the tax man knocks on your door and asks a share from that hard-earned money you have saved (and already paid taxes on)! The good thing – wealth tax only kicks in if you have a certain amount of money and the tax is relatively low. But considering property prices in Switzerland and the deposit required to purchase a house this amount is unjust!

The house I might be able to afford in 10 years…

3. Health insurance conundrum

So one reason why Swiss tax rates are so low (arguably) is because you do not pay for access to the health system. In fact, you must pay a separate obligatory health insurance premium! Depending on the deductibles it is about CHF 200-700 a month per person. I maybe wouldn’t mind paying that sum if in return I received unlimited access to the health system. But that is not the case! If something happens, I still must cover the first CHF 2,500 medical costs from my own pocket (annually).

And then there are further restrictions – only one covered ambulance ride a year, even if you have already paid those CHF 2,500. At least Swiss health care is supposed to be one of the best in the world, right? Let’s just hope I have money to pay for it when needed.

An apple a day keeps doctor away (I hope)

4. Location, location, location – 35% tax difference between cantons

I suppose the main reason why Switzerland is considered to have low tax rates is that in some cantons it actually is very low…For example, a single person with an income of CHF 100,000 a year pays only CHF 5,729 tax in Zug, but CHF 16,441 in Jura (Source: Wikipedia). That is a HUGE difference!

Note: those are not the final income deductibles, there are AVS (social insurances) and pension pillars your money also goes to.

Unfortunately, we live in a canton with one of the highest tax rates. But the views…

5. My own personal accountant

In most European countries, if you are a salaried employee your tax gets automatically deducted from your earnings. This obviously saves a person from a lot of trouble becoming a master in all things accounts. In Switzerland (unless you are a salaried person with B or L permit) you must fill out a special electronic tax return form with loads of steps and clauses. This isn’t necessary a negative as it helps to apply proper tax rate on each individual’s case. But it sure has given me one too many headaches.

Grabbing bull by its horns reaches a whole new level when doing tax return for the first time…

Final thoughts

Overall, yes, the system is very good if:

  • you live in a canton with low tax rates;
  • are not married;
  • have children;
  • have so much money you just don’t care!

Despite all these negatives (that I have finally found in the perfect Switzerland) I still love living here. And compared to most countries Switzerland has salaries on which people can actually live on…So somehow the system does work.