The taxes for U.S. citizens living in Switzerland are generally the same whether you are in the U.S. or abroad. Your global income is subject to US income tax, regardless of where you live.

Switzerland is known for its remarkable beauty, good economy and favorable job opportunities and thus it attracts umpteen numbers of US expats.  Americans Taxpayers living in Switzerland, have to report their income earned in Switzerland and other countries to the IRS.

The United States is one of two countries in the world that taxes their citizens on the worldwide income, means that US citizens living in Switzerland are subject to the US taxes no matter where they live in the world and have to face severe penalties for not filing, which can be many cases be much higher than the taxes themselves. However, the tax structure of U.S. for U.S. citizens living Switzerland or abroad have certain provisions that help and protect them from double taxation:

  • The foreign earned income exclusionallows you to decrease your taxable income on US expat taxes by the first $105,900 in 2019).
  • A foreign tax creditthat could allow lowering your tax bill on your remaining income by certain amounts paid to a foreign government, and
  • A foreign housing exclusionthat allows an additional exclusion from income for certain amounts paid for household expenses that occur as a consequence of living abroad.

FBAR: Report of Foreign Bank and Financial Accounts (FinCEN 114). If you have a foreign bank account, investments, pensions, insurances, or any other foreign financial assets accounts located outside the US for which the aggregate total of the accounts is $10,000 or more, then you have to file a FinCEN 114.

Aggregate balance means the combined balances of all of your accounts located outside of the US, is $10,000 or more then you have F BAR requirement. Luckily, there is no tax associated with this form, meaning there is no tax on the balances but are subject to severe penalties if they were willful failure to file.

Due to the Bilateral agreement The US and Swiss governments, Switzerland is required to share all US citizen’s financial accounts information. So it’s not worth not file or not completely disclose your financial accounts. 

Failing to file an FBAR can carry a civil penalty of $10,000 for each non-willful violation. But if your violation is found to be willful, the penalty is the greater of $100,000 or 50 percent of the amount in the account for each violation—and each year you didn’t file is a separate violation.

A US citizen, green card holder, or US/Swiss dual citizen, living in Switzerland but were unaware of filing US tax return, there’s an amnesty program called the IRS Streamlined Procedure that allows you to come in compliance with the IRS and will not face failure to file penalty. However, they will be subject to interest on any tax owed.  

Americans will be considered residents in Switzerland if their permanent home or center of interest is there, or if they stay 30 days working (or intending to work) during the tax year, or 90 days not working or intending to work. Residents pay Swiss tax on their worldwide income, non-residents only on their Swiss sourced income (and wealth).

Preparing US tax returns should not be daunting or add stress or frustration because of special tax rules for any Americans citizens, green card holders living abroad. With many tax risks that goes into filing a return for expatriates and green card holders, there are many opportunities too and therefore it is beneficial to take the guidance of US expat tax expert, who will help and guide in tabling beneficial expat tax solutions.

Have a question or not sure how to file your US taxes

Our team of expat-expert CPAs and IRS Enrolled Agents can help you understand the intricacies of US expat taxes while living abroad, so you’ll be prepared when tax season comes around. CONTACT US TODAY to learn more!