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New Swiss Rules On Tax Deductions For Expats Confirmed

by Ulrika Lomas,, Brussels

19 January 2015

Switzerland's Federal Department of Finance (FDF) has announced that revised rules on tax deductions for expatriates will apply from January 1, 2016.

Under the amendments to the Expatriates Ordinance, the definition of "expatriate" will be made narrower. To be classified as an expatriate for the purposes of the Ordinance, the person must be a senior employee or a specialist, with special professional qualifications, who is sent to Switzerland temporarily by their foreign employer.

In future, expatriates' housing costs will be tax-deductible only if a dwelling abroad is permanently maintained for their use. Moving costs will remain deductible if they are directly related to the move.

School fees will be tax-deductible for minors, providing that the costs relate to education received in a foreign-language private school. Costs relating to food, transport, and supervision before and after classes will not be deductible.

The changes are the result of a lengthy debate on the viability of the Expatriates Ordinance. In 2009, a parliamentary initiative (09.3528) called for an investigation into its legality. In a legal opinion, the Federal Office of Justice (FOJ) confirmed the Ordinance's constitutionality and legality, but it recommended that the provisions on deductions relating to private school and removal costs be made more precise.

Two further parliamentary initiatives (12.3510 and 12.3560) urged the abolition of the deductions, but the Council of States rejected the proposals. The Federal Council instructed the FDF to examine the prerequisites and procedures for the individual deductions. The FDF recommended a number of clarifications to the Ordinance, and these were widely accepted in a three-month hearing conducted in spring 2014.

TAGS: expatriates | compliance | Finance | tax | tax compliance | tax incentives | revenue guidance | employees | fees | food | education | tax planning | Switzerland | tax reform | Expats

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