Switzerland Rules Out Changes To Family Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

22 February 2012

Switzerland’s Federal Council has announced that it does not intend to introduce tax incentives to promote the traditional family model of parents staying at home to look after their children.

It has therefore rejected a recent initiative calling for tax deductions to be accorded to stay-at-home parents, and requiring the amount to be equal to the deduction currently accorded to parents for childcare costs when provided by a third party.

According to the Swiss Federal Department of Finance (FDF), the Federal Council considers that such a move would merely serve to disadvantage two-income families for whom the cost of third party childcare significantly reduces disposable income, compared to a one-income family in the same financial situation. This situation was rectified following the reform of family taxation in 2009, which provided for the introduction of tax breaks for third party childcare, the FDF emphasises.

In its release, the FDF stresses that costs associated with raising children are already sufficiently taken into consideration in the country’s tax law, notably via the existing tax deduction accorded for children and via the parental tax scale in the direct federal income tax system.

The Federal Council insists that the Confederation’s tax law must be “as neutral as possible”, and must not favour the traditional family model, the FDF underscores, noting that the decision of whether or not to stay at home or to pursue a professional, lucrative career should not be based on fiscal reasons.

Since January 1, 2011, third party childcare costs of up to CHF10,100 (USD10,997) (EUR8,359) may be deducted from direct federal income tax for children under the age of 14. The Swiss cantons are required to adapt their legislation by January 1, 2013, to provide for the deduction, although are able to determine the specific threshold independently.

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