Optimize financessave taxes

Tax deductions: How to save on taxes with the best deductions and flat rates

Lesedauer 14 Minuten

Taxes help the Confederation, canton and municipality to fulfill their tasks. Tax deductions ensure that you don’t contribute more money than necessary to these tasks. Because tax deductions reduce your taxable income. Here you can find out in which cases you can save money.

The basis for the tax calculation is the net wage. This is calculated by your employer deducting the social security contributions from the gross salary. You can find the net wage on your wage statement. You have to state this in the tax return and can reduce it by the tax deductions. This is your taxable income. The lower your taxable income, the lower your taxes. So, what tax deductions can you claim?

Uniform tax deductions at federal level, different tax deductions at cantonal level

You pay taxes to the federal government and to the canton in which you live on December 31st. of the year live. At the federal level, the tax deductions are the same everywhere in Switzerland and in terms of amount. What you can deduct at federal level is usually also a tax deduction at cantonal level. However, the amount and type of tax deductions differ from canton to canton. For this purpose, the cantons publish so-called “Guidelines for tax returns” every year, in which all permissible deductions are listed.

Some tax deductions are automatic, but you must claim personal tax deductions. The following tax deductions mitigate the tax burden of certain groups and are automatic. They vary from canton to canton:

  • the general tax deduction
  • the tax deduction for married couples
  • the two-earner deduction
  • the tax deduction for those on low and medium incomes

The best-of list for your personal tax deductions

In addition to the automatic tax deductions, you can claim personal tax deductions if the conditions apply to you and you have had expenses. Some deductions are limited in amount. This means that the tax authorities will automatically reduce your deductible amount to the legal maximum.

Our tip: It is better to claim more than less deduction

Claim your entire expenses as a tax deduction – a reduction will be made automatically if the worst comes to the worst.

Below you will find the best personal tax deductions, grouped according to different situations. What applies to you?

Personal tax deductions related to your employment

Do you work and have travel expenses?
Do you occasionally cycle to work?
Are you working and can’t go home in the afternoon?
Do you have high work-related expenses?
Do you work nights or in shifts?
You don’t live at home during the week?
Did you educate yourself?

Personal tax deductions around the family

Does your spouse work too?
you have children
Were your children in someone else’s care?
you pay alimony
Are your children studying abroad?

Personal tax deductions related to health and special needs

Did you pay insurance premiums?
Do you have high illness or accident costs?
Do you have additional costs because of a disability?

Personal tax deductions related to your retirement savings

Have you bought yourself into the 2nd pillar?
Have you paid into pillar 3a?

Personal tax deductions for homeowners and debtors

Did you pay debt interest?
you own a property Or did you refurbish them?
do you have debts

Personal tax deductions when you make money or give it away

did you donate
Do you have costs for securities?
Did you pay withholding tax?

Below you will find all the details on the possible personal tax deductions.

Personal tax deductions related to your employment

Do you work and have travel expenses?

You can deduct up to CHF 3,000 per year from the federal government for your commuting costs. The costs include a subscription to public transport, a flat rate for bicycles, e-bikes, mopeds or motorcycles with a yellow number plate and the kilometers driven by your car from home to work. However, you may only apply the kilometers driven of 70 centimes / kilometer if one of the following 3 cases applies:

  • Case 1: Your place of residence or work is more than 1 kilometer away from the nearest public stop
  • Case 2: you save more than 1 hour by car for the route
  • Case 3: you cannot be expected to use public transport because you are too ill or frail or the timetable is too unfavorable. In this case you can also try to claim the costs for your rented parking space at the place of work.

In the canton of Zurich, the tax deduction for travel expenses was now limited to CHF 5,000 in 2018. In the canton of Bern, the tax deduction for travel expenses is up to 6,700 francs.

Do you occasionally cycle to work?

If you cycle to work, you can deduct between CHF 300 and CHF 700 as a flat rate for the bike, depending on the canton.

Our tip: bicycle deduction in combination with deduction for public transport

According to a Federal Supreme Court ruling , you can also deduct the flat-rate bike allowance and the costs for your public transport subscription at the same time. So both the public transport subscription and the flat rate for the bike! The commute to work does not have to be covered in a “pure” manner. For example, you can cycle to the train station and from there take the train/S-Bahn to work. According to the court ruling, it doesn’t matter how much more (!) or less time you need if you ride your bike instead of running.

Are you working and can’t go home in the afternoon?

If you cannot eat at home at lunchtime, you can claim a daily flat rate for out-of-town meals, regardless of the actual costs. The flat rate is CHF 15 per day, but no more than CHF 3,200 per year. If your employer offers discounted food (e.g. through a canteen, cash contribution or meal vouchers), you can still deduct CHF 7.50 per day or a maximum of CHF 1,600 per year.

Do you have high work-related expenses?

You claim a flat-rate deduction of 3% of the net salary (at least 2,000 francs, maximum 4,000 francs per year) for work-related costs (such as special work clothing, tools including IT hardware and software, specialist literature, private study). If you have higher costs, you can also prove and estimate the actual costs.

Do you work nights or in shifts?

A full shift deduction of CHF 15 per day is granted for each declared shift day with at least 8 hours of shift work or night work, but a maximum of CHF 3,200 per year. This applies even if canteen catering would be possible during the shift. However, you cannot claim the tax deduction in addition to the deductions for external meals or for a weekly stay abroad.

You don’t live at home during the week?

If you stay at work during the week and regularly return home on non-working days and are therefore liable for tax there, you can claim various tax deductions. However, this only applies if the center of your life is not at your place of work. For married people with children, the place of residence is usually the center of life – and you are liable for tax there. In the case of single people, it is assumed that after more than 5 years of activity at the place of work and an age of more than 30 years, the center of life is at the place of work. But exceptions are possible if you can justify them well, e.g. very intensive and regular relationships with family, friends, club members, service providers (such as hairdressers, doctors). So if your place of residence under civil law and tax law do not coincide, you can usually claim the following tax deductions for the week’s stay abroad:

  • Additional costs for external meals: CHF 15 for a main meal, i.e. CHF 30 per day, maximum CHF 6,400 per year for a week-long stay all year round. If your employer makes lunch cheaper (e.g. canteen, cost contribution), you can only claim half the tax deduction (7.50 francs) for this meal, i.e. a maximum of 22.50 francs per day and 4,800 francs per year.
  • Additional costs for accommodation: you can only claim the costs for a room/studio as a tax deduction, even if you rent a larger apartment. In this case you calculate the deduction as follows: Rent (including additional costs) divided by the number of rooms times 1.5. In addition, a minimum deduction of CHF 6,000 per year applies. If your rental expenses are lower, you may only deduct the actual expenses.
  • Travel costs for home: You can claim the outward and return journey at the weekend as a tax deduction once a week, but not additional journeys during the week for family reasons. Travel costs are generally considered to be public transport costs.

Did you educate yourself?

If you have a secondary level II degree (apprenticeship, high school diploma, etc.) or are older than 20 years and it is not a question of training costs for a first degree at secondary level II, you can claim all costs for vocational training and further education as well as retraining at the Deduct federal tax and in all cantons up to an amount of 12,000 francs. Of course, only if you pay for the training yourself. Your further training must provide you with knowledge that you can and want to earn your living with – this is the second requirement in addition to a completed initial training. However, you do not have to have your own income from employment (e.g. as a spouse) to claim the education deduction.

The Canton of Zurich grants a flat rate of CHF 500 for training and further education without special proof.
Up

Personal tax deductions around the family

Does your spouse work too?

The canton and the federal government automatically make a two-earner deduction; it is between 8,100 and 13,400 francs at the federal level (2019). Here, too, the maximum amount varies from canton to canton. Bern, for example, allows a maximum of 9,300 francs, Zurich up to 5,900 francs.

you have children

Then 6,500 Swiss francs are automatically deducted from the direct federal tax for every child who is younger than 18 years old or is still in initial vocational training. The tax deduction is also available if you support people in need. Depending on the canton, there are different maximum limits for child and support deductions. For example, the Canton of Bern recognizes CHF 8,000 as a child deduction or CHF 4,700 as a tax deduction for supporting people in need, or the Canton of Zurich CHF 9,000 (for children) or CHF 2,700 (for people in need).

Your children were in someone else’s care?

You can reduce your taxable income if your child(ren) is/are cared for by a third party (e.g. childminder, crèche). Your child must be under the age of 14, live with you, be entitled to child deductions and the costs must be incurred so that you can pursue your gainful employment or training. You can deduct proven costs from the federal government up to a maximum of CHF 10,100 per year per child. The maximum amount is regulated differently in each canton. For example, Bern allows 12,000 francs or Zurich 10,110 francs per year and child as a tax deduction. If you are cohabiting and have agreed joint custody with your partner, both partners can claim half of the amount in their respective tax returns.

you pay alimony

You can deduct maintenance payments for your children (“alimony”) under the age of 18 or if they are still in initial education (with little income or assets) if the children do not live in your household. You must prove these costs. If the children live in your household, the child deduction applies. Who is allowed to deduct how much and for how long in the case of married couples who are assessed separately also depends on where the children live. The details are in the guidelines of your canton.

You can also fully claim maintenance contributions for your divorced, legally separated or actually separated spouse during the tax year as a deduction. This includes rent, health insurance premiums, taxes or other living expenses.

Are your children studying abroad?

Some cantons, but not the federal government, recognize costs for foreign education or for additional education costs in connection with the basic education of children. Bern, for example, accepts up to 6,200 francs per year per child if the education is organized by the school.
Up

Personal tax deductions related to health and special needs

Did you pay insurance premiums?

You can add up your premiums for health insurance, accident, life and pension insurance and claim them. The tax authorities will then attribute your income from bank and savings accounts to you and cap the deduction to a maximum amount. At the federal level, this amounts to CHF 1,700 (for single people) or CHF 3,500 (for married couples and registered partnerships). You can often save yourself a lot of work by putting together the bonuses down to the last detail. Because you often reach the maximum deduction with the expenses for the basic health insurance.

Do you have high illness or accident costs?

You can claim self-funded expenses for medically necessary services as a tax deduction. The chargeable costs include expenses for doctors, dentists and prescribed medication, glasses and contact lenses, medically prescribed hospital and spa stays and curative treatments as well as for nursing care costs. Many do not know that in addition to the doctor and medication costs they have paid for themselves, the deductible in health insurance and the paid deductible also belong. From these costs you must deduct reimbursements that third parties have paid. Incidentally, everything that falls under cosmetic surgery is not deductible.

In most cantons, only the amount that exceeds 5% of your net income is recognized for illness and accident costs. Some cantons (e.g. Berne) accept a celiac disease flat rate of CHF 2,500 in the case of gluten intolerance without proof of costs.

Do you have additional costs due to a disability?

If you have a permanent physical or mental disability, you can claim the actual costs you have borne yourself without a deductible. Tax deductions for disabilities can be made by recipients of IV pensions or helplessness allowances, Spitex patients with more than 60 minutes of care and support per day and residents with care level 4 and more. As an alternative to the actual costs, you can claim a flat rate for this, which, depending on the degree of disability, is between CHF 2,500 and CHF 7,500 or, for residents of the home, includes the entire actual costs of the home less a flat-rate living allowance. You can also claim the lump sums if you have received benefits from third parties (such as helplessness allowances). Disabled associations provide a lot of information on this.
Up

Personal tax deductions related to your retirement savings

Have you bought yourself into the 2nd pillar?

If you bought into your pension fund, you can deduct the full amount as a tax deduction.

Have you paid into pillar 3a?

Your actual payments into pillar 3a can be deducted. The amount of the deduction usually increases every two years, in line with the adjustments to the AHV pension . If you are employed, you can deduct a maximum amount of CHF 6,883 for payments made in 2021. If you are self-employed (without a pension fund), you can pay in up to 20 percent of your net income, up to a maximum of CHF 34,416. You can find all the tax benefits of Pillar 3a in this article.
Up

Personal tax deductions for homeowners and debtors

You paid interest on debt or into the renewal fund?

You can claim any interest you pay as a tax deduction. These include, for example, mortgage interest, prepayment penalties if the loan is continued with the same bank, costs for bank loans, personal loans, overdraft interest on the checking or credit card account or interest on arrears in the event of a tax arrears payment.

You may not deduct mortgage repayments (so-called amortization) as debt. Also, loan repayment fees or cancellation fees that banks charge when offsetting the mortgage or switching to a other lenders, you are not allowed to deduct them as debt in most cantons – after all, you can then claim them as “asset management costs”. In the case of income tax, prepayment penalties can only be claimed as deductible debt interest if the canceled mortgage is replaced by another with the same lender.

And you can’t deduct leasing payments at all. Because with the leasing fee you pay for the transfer of use because you do not own the leasing object (e.g. car) during the leasing period.

If you made contributions to the renewal fund as a condominium owner, you can list these as a tax deduction in the relevant year.

you own a property Or did you refurbish them?

When it comes to taxes, a distinction is made between value-preserving and value-enhancing expenses for real estate. You can only deduct what maintains the value of your property in the tax year as property maintenance. Exactly what this involves is recorded in great detail in the cantonal guidelines. Renovations and painting work are part of this, for example, or the equivalent replacement of technical systems such as heating. Any expenses that increase the value of the property may not be deducted from taxable income. There is one notable exception to this: spending that increases energy efficiency. These can be fully deducted immediately (except in the canton of Lucerne).
What many do not know or simply forget: you can deduct the insurance premiums for property and liability insurance from the real estate expenses. For example, supplementary building insurance or builder’s liability insurance.

In principle, it is very advantageous if you spread larger maintenance expenses (e.g. conversions) over two tax periods. So you can break the tax progression in both periods. You can achieve this by starting construction in the fall and completing it in the spring and with the appropriate invoicing by the craftsmen. Depending on the canton, the time of the work or the date the invoice is received (in individual cases also the payment date or the invoice date) decides in which tax period you can deduct the expense. Tip: In the case of extensive renovation work at the turn of the year, ask your tax authority in advance which date in your canton decides on the assignment to a tax period.

do you have debts

You can deduct debts from your assets. This is how you reduce the assessment basis for wealth tax. Debts include not only (bank) loans or other loan obligations, securities (Lombard) loans, but also open tradesmen or outstanding tax bills on December 31st. of the year. By the way, 2nd and 3a pillar assets are not subject to wealth tax, so you don’t have to state them in your tax return.

Our tip: deduct direct federal taxes as debt

Municipal and cantonal taxes are usually invoiced and due in the tax year (e.g. for the year 2021), but federal taxes are usually invoiced and due in the following year (e.g. 2022). Irrespective of this, the federal tax is due on December 31st. of the year for which you file your tax return. In practically all cantons, you can therefore deduct the federal tax expected to be due for the 2021 tax period from your assets as a debt, even if it is not yet due. How much? You simply use the last federal tax due as the expected amount.

Bonus tip: in most cantons, you can also deduct taxes owed at the end of the tax year but not yet paid as debt. The Bern tax administration says , for example, “Die on the reference date 31.12. unpaid taxes of the current year and previous years can be deducted as debt. This also applies to the direct federal tax, although the tax for the previous year is not due until the end of February.

Up

Personal tax deductions when you make money or give it away

did you donate

Great, because you can claim a very high deduction for donations to political parties or organizations with an exclusively charitable or public purpose (church, Salvation Army, etc.). At the federal level, this amounts to up to 20 percent of your net income; at cantonal level, the deduction is between 10 and 20 percent, depending on the canton. Donations are voluntary contributions of money or other assets without consideration. Therefore, membership fees and work (“donations of time”) are not donations. Contributions to political parties are limited to CHF 10,000 per year at the federal level. The canton of Lucerne regularly updates a list of non-profit organizations in other cantons as well. If your organization isn’t there, you can try deducting it, it might not be on the list yet.

Our tip: make a small donation

Many cantons accept small donations of 100-200 francs, such as those made on the doorstep, for street musicians or when going to church, without receipt.

Do you have costs for securities?

In principle, you can deduct the costs of storing the assets from your taxes. In most cantons, you can decide whether to deduct the actual costs or a flat rate.

The effective costs – and only those are accepted by the Canton of Berne – include, for example, custody account costs for your securities and expenses for your current, investment or savings accounts or costs for a tax statement with the income information from your securities. This also includes fees for a safe deposit box or a safe and collection fees for redeeming coupons. Negative interest and postage costs for the delivery of statements are also included.

On the other hand, costs that serve to increase the assets are not deductible. This includes transaction costs and any brokerage fees, stamp duties or fees, commissions or EC/credit card fees. You are also not allowed to deduct costs for financial, tax or investment advice or for completing the tax return.

Our tip: flat-rate deduction for asset management costs

For many taxpayers, the flat-rate deduction is interesting because of the bank’s effective custody account fees. Cantonal assessment practice allows a flat-rate tax deduction of 2-3 per thousand for the management of private securities assets by third parties (e.g. ZH, AG, BL, BS, LU, SO, ZH 3‰, GR 2.5‰ and SG, TG 2‰). This should save you the often difficult task of proving the deductible asset management costs that have actually been incurred. For example, a flat rate of 0.3% on securities assets of CHF 100,000 will bring you a deduction of CHF 300 – without proof. You refer the lump sum to the total of movable assets according to the list of securities; from the total you previously deduct business bank accounts, loans and self-administered securities (e.g. common shares of your own corporation).

Did you pay withholding tax?

Withholding tax (VSt) is an advance tax payment for certain distributions. This advance payment will be credited to your tax liability later on in your tax return as tax already paid. The amount of the withholding tax differs depending on the type of distribution:

  • 35% on interest or dividend payments
  • 15% on annuities and pensions
  • 8% on insurance benefits in the form of a lump sum

Winnings from lotteries, competitions and internet casinos up to CHF 1 million are not only exempt from withholding tax from 2019, but are also completely exempt from tax (but you still have to declare them). On the other hand, interest income of up to 200 francs is only exempt from withholding tax on accounts that have an annual interest payment and annual closing (e.g. savings accounts). What do you have to do? Declare these distributions and the withholding tax already paid in your tax return. In this way, the tax authorities offset the withholding tax paid against your tax liability.

Mach den ersten Schritt zur finanziellen Unabhängigkeit

In einer Minute siehst du deine Vermögensentwicklung und dein Einkommen während der Rente.

Rentenrechner starten

About author

Articles

Thomas verfügt über mehr als 30 Jahre Expertise als Privatanleger in fast allen Anlageklassen und zwei Vorsorgesystemen. Er gestaltet seit vielen Jahren einfache Kunden- und Serviceerlebnisse, bewegt Menschen und Organisationen und hat ein tiefes Verständnis für die Herausforderungen von Menschen bei Finanzthemen gewonnen. Thomas bringt mit seinem Background als Doktor in Wirtschaftswissenschaften Themen einfach und pragmatisch auf den Punkt.

Leave a Reply

Your email address will not be published.