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MONEY

Switzerland’s strangest taxes – and what happens if you don’t pay them

From one return per house to tax-deductible bribes, we've listed some of the oddest tax rules in Switzerland.

Switzerland's strangest taxes - and what happens if you don't pay them
Photo: Depositphotos

When the words ‘tax’ and ‘Switzerland’ are mentioned in the same sentence, the word ‘haven’ is usually not far away. 

But the diverse nature of the country – and its federal structure – means there are a number of tax laws which can seem incredibly odd, even to the Swiss. 

You just like haven 

Switzerland has some of the most relaxed taxation laws in the world, which has made it one of, if not the, preeminent tax haven.

See also: Why Switzerland is no longer on the EU’s black list of tax havens

These laws – as well as restrictions on overseas entities finding out information about account holders in Switzerland – enabled it to accrue roughly one quarter of the world’s offshore wealth as estimated by the Boston Consulting Group

Back in 1934, Switzerland criminalised banks revealing the names of account holders to anyone – including overseas tax authorities. Tax evasion is also not criminalised in Switzerland – but is instead punishable by a fine. 

Image: Depositphotos

These laws – which remains in force but are albeit watered down due to pressure from the EU and the US – has established Switzerland as a great place to store one’s money, and a terrible place to try and find it. 

Read: Here’s why the huge Swiss budget surplus is causing headaches

We are family

Unlike in most parts of the world where income taxes are levied on the earnings made by individuals, Swiss income taxes are calculated per household. 

This means that only one tax return is submitted per dwelling, which takes into account the earnings of both parents as well as any children under 18. Where a wealth tax applies, it will also be included. 

Bribes

While it was repealed in 2016, bribes paid by companies and individuals were previously tax deductible under Swiss law. 

The loophole caused an uproar, however pressure on tax authorities – both from within Switzerland and elsewhere – saw the law changed

Church tax

A country where religious freedom is paramount, it may surprise some Swiss residents to find out that paying church tax is compulsory – or at least for all church members (and companies in 20 Swiss cantons). 

Six countries in Europe have a compulsory church tax, with Austria, Finland, Germany, Denmark and Sweden alongside Switzerland. 

The church tax isn’t uniform however, with the cantons of Geneva and Neuchâtel both having no compulsory church tax, but making all contributions tax deductible. 

Church taxes are only paid by members of the three official Swiss churches – Roman Catholic, Old Catholic and Evangelical – meaning that Muslims, Jews and members of other protestant faiths are not required to pay. 

Dog tax

Anyone in Switzerland with a dog needs to pay the dog tax – a regular levy on their best friend. Fortunately for owners of successful show dogs or industrious pooches, the rate to be paid isn’t dependent on the dog’s personal income. 

Instead, there will either be a tax per dog, or in some cantons the size and weight will determine the quantum to be paid. 

Dog taxes are calculated on the basis of weight, but usually calculated by a person. Image: Depositphotos

The consequences for non payment? While in neighbouring Germany authorities have a right to confiscate the dog and sell it on eBay – yes, that really happened – to recoup unpaid dog taxes, some Swiss authorities had up until recently a relatively morbid way of punishing tax evaders. 

Reconvilier, in Bern, had a bylaw which allowed authorities to kill pet dogs if the taxes weren’t paid. This law – originally passed in 1904 – was used in 2011 to try and punish a family who had failed to pay their outstanding dog tax, which amounted to roughly CHF50. 

While officials said that the idea of the law was to put pressure on owners to comply, it wasn’t for widespread use. 

“This isn’t about a mass execution of dogs. It’s meant to put pressure on people who don’t cooperate.”

As reported by The Local in August 2011, the puppy execution law was repealed after an international outcry. 

Military service exemption tax?

Military service is compulsory for all Swiss men when they become adults. Men can apply for an exemption if they satisfy a certain criteria, however doing so will require them to contribute in other ways – namely a three percent tax until they turn 30. 

The test for an exemption is that the man is unable to reach the standard of “satisfying physically, intellectually and psychological requirements for military service or civil protection service and being capable of accomplishing these services without harming oneself or others”.

If this test is satisfied, he will be forced to pay three percent per year until the age of 30. 

A version of this article first appeared on The Local in December 2019. 

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COST OF LIVING

Six no-gimmick websites that help you save money in Switzerland

Sure, there are many adverts on the internet that claim to offer cheaper this and that, but more often than not, clicking on the link could cost you even more money (and time). However, there are also credible sites in Switzerland that will actually help you spend less.

Six no-gimmick websites that help you save money in Switzerland

When you live in an expensive country like Switzerland, getting more bang for your buck (or franc) may seem like an impossible feat.

Some residents of border areas save money by shopping for groceries in France, Italy, or Germany, where most products are much cheaper.

But not everyone in Switzerland has access to these stores and some people may actually prefer to support their own economy, even if it costs more.

READ MORE: Everything you need to know about the cost of living in Switzerland

These six sites will not help you save money on everything, but they will help you in that direction.

Comparis.ch is an independent comparison platform that provides well-researched and impartial information on best deals in a variety of areas.

They include lowest prices for insurance (health, life, travel, car, and others); properties (including loans and mortgages); vehicles; and mobile phone and internet plans.

You can also find price comparison for various electronics; toys; beauty and wellness services; car and motorcycle accessories, and other products and services.

Moneyland.ch is another, though similar, cost comparison website, where lowest prices for banking, insurance and telecom services can be found.

Like Comparis, Moneyland will often produce reports ranking certain products and services, such as healthcare and insurance plans, which can give you a valuable insight on how to save in Switzerland. 

We can’t tell you which of the two resources is better; visit both and see which one fits your needs. Both have a English-language pages, as well as producing reports in Switzerland’s national languages. 

Cost of living: How to save on groceries in Switzerland

Toppreise.ch

This comprehensive portal also lists prices for hundreds of products in a wide range of categories, including electronics; household items, and appliances; clothing and jewellery; and even wine.

You can get good deals on wine if you look around. Image by Holger Detje from Pixabay

Bonus.ch

This site compares prices of items ranging from foods to body care products at Coop, Migros, and Lidl.

The prices may not always be up to date (and may change as the war in Ukraine and inflation progress), but the site will nevertheless give you a good idea of which products are cheapest where.

READ MORE: 13 things that are actually ‘cheaper’ in Switzerland

Consumer sites

While these websites aim primarily at protecting and defending consumer rights, they also have some useful information on how to save money on various purchases.

For instance, the Swiss-German chapter, Stiftung für Konsumentenschutz has advice on how to save on customs taxes when purchasing goods online in foreign countries.

In the French speaking cantons, Féderation  Romande des Consommateurs has information on where in the region you can pick your own strawberries and save money while doing so, and in Ticino, Associazione consumatrici e consumatori della Svizzera italiana has similar information.

If you visit these consumer sites regularly, you will find helpful advice on how and where to spend less on certain products and services at that particular time.

Find out where picking your own strawberries will save you money. Photo: Anna Tarazevich / Pexels

And then there is this…
 
If you want to know how much the price of communal services such as water and waste management is in your commune and how it compares with other Swiss municipalities, you can check it out on this official government website.
 
It doesn’t tell you per se how to save money on these services but it is a useful resource nevertheless.

READ MORE: EXPLAINED: Why is Switzerland so expensive?

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