Why parents in Switzerland will save more on tax in 2023
From January, parents in Switzerland will be able to deduct a higher amount of tax for childcare expenses. Here's what you need to know.
At the moment, parents can deduct 10,100 Swiss francs from their income for each child cared for outside of the home.
But from 2023, that maximum amount is increasing significantly - families with children will be able to deduct up to CHF 25,000 per child for in their annual tax return. This more than doubles the tax deduction for external childcare.
The new tax law is expected to lead to annual revenue losses of around CHF 10 million for the federal government.
It comes after an earlier attempt to increase tax deductibles for childcare - as well as increase the general deduction for children - were rejected in a referendum in September 2020 by around 63 percent.
READ ALSO: What changes in Switzerland in January 2023
The new law, which differs from previous plans, was passed by the government with little opposition.
What's behind the changes?
The federal government hopes it will help get more people into work. The government said it expected a positive effect on Switzerland's shortage of skilled workers through a better balance of work and family life.
According to authorities, the losses in revenue for the government will be "compensated for in the longer term with positive employment momentum".
Under the changes, only external expenses for the care of a child under the age of 14 are tax-deductible.
The childcare costs must also be directly related to the mother's or father's work or education. The aim is to further promote the compatibility of work and family and the integration of women into the labour market.
The move is beneficial to many middle-income families - especially in cantons that have higher taxes.
READ ALSO: Where in Switzerland has the lowest and highest taxes
However, there is still some controversy. For instance, parents on one income may feel they do not benefit from the new rules. Some have also questioned if the changes benefit wealthier families more.
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At the moment, parents can deduct 10,100 Swiss francs from their income for each child cared for outside of the home.
But from 2023, that maximum amount is increasing significantly - families with children will be able to deduct up to CHF 25,000 per child for in their annual tax return. This more than doubles the tax deduction for external childcare.
The new tax law is expected to lead to annual revenue losses of around CHF 10 million for the federal government.
It comes after an earlier attempt to increase tax deductibles for childcare - as well as increase the general deduction for children - were rejected in a referendum in September 2020 by around 63 percent.
READ ALSO: What changes in Switzerland in January 2023
The new law, which differs from previous plans, was passed by the government with little opposition.
What's behind the changes?
The federal government hopes it will help get more people into work. The government said it expected a positive effect on Switzerland's shortage of skilled workers through a better balance of work and family life.
According to authorities, the losses in revenue for the government will be "compensated for in the longer term with positive employment momentum".
Under the changes, only external expenses for the care of a child under the age of 14 are tax-deductible.
The childcare costs must also be directly related to the mother's or father's work or education. The aim is to further promote the compatibility of work and family and the integration of women into the labour market.
The move is beneficial to many middle-income families - especially in cantons that have higher taxes.
READ ALSO: Where in Switzerland has the lowest and highest taxes
However, there is still some controversy. For instance, parents on one income may feel they do not benefit from the new rules. Some have also questioned if the changes benefit wealthier families more.
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