#70 What investors should keep in mind when filing their tax returns

Let’s start by talking about the wealth tax. While the federal government does not tax wealth, all cantons and municipalities do. When it comes to financial investments – that is, securities – the tax authorities rely, among other things, on the securities statement for assessment purposes.

The e-tax statement saves time

As a True Wealth client, you can download the e-tax statement at any time free of charge and upload it directly to your tax return using the barcode. You can also generate an interim statement online with a specific cutoff date, which is helpful, for example, in the event of a divorce or in the event of a death for the heirs.

A major advantage of the electronic tax statement is that all domestic and foreign investment income is automatically entered in the correct column. Those who do this by hand must laboriously determine which income has been reduced by withholding tax and which has not. If the declaration is correct, the tax office will refund the withholding tax. Additionally, upon request, the values for the DA-1 form are also imported. This allows you to have the withholding tax deducted abroad credited against your Swiss tax liability and largely avoid double taxation.

Deductibility of asset management costs

You can deduct the costs of having your movable assets managed by third parties from your taxable income – this includes, for example, wealth management fees. However, brokerage commissions incurred when trading on your own, or fees for pure investment advice, are not deductible.

The easiest way is to deduct the flat-rate fee on your tax return. This is possible in most cantons and saves you the trouble of collecting and submitting additional receipts. However, cantonal regulations vary greatly in this regard:

• Canton of Zurich: Automatically grants a deduction of 3 percent of your assets (up to 6'000 Swiss francs) when using the e-tax statement.
• Cantons of Aargau, Basel-Landschaft, Lucerne, and Solothurn: The 3 percent rate also applies, but not automatically – the deduction must be entered manually.
• Canton of Schwyz: Allows for a flat-rate deduction of up to 6'000 Swiss francs.
• Canton of Zug: Is somewhat more generous with an upper limit of 9'000 Swiss francs, higher costs must be documented.
• Cantons of Thurgau and St. Gallen: The flat-rate deduction here is only 2 percent of assets.
• Cantons of Bern and Basel-Stadt: There is no flat-rate deduction here. Actual costs must always be documented in order to claim a deduction.

Tax optimization through retirement savings

Retirement savings are an important tool for tax optimization, as they are not subject to wealth tax. In addition, all contributions to pillar 3a accounts, as well as any purchases made into the pension fund, can be fully deducted from taxable income.

The tax office requires the corresponding certificate of pension contributions for this purpose. You can conveniently download the 3a tax certificate as a PDF from True Wealth. Unlike the e-tax statement, this amount currently still has to be entered manually on the tax return, even though the tax offices are already working on automation.

Conclusion

Tax matters are extremely broad. Complex issues such as child deductions in blended-family situations, the deductibility of donations, or the taxation of family foundations often require an individualized assessment. In highly complex cases involving large sums, it may be worthwhile to consult an independent tax specialist.

What other tax aspects interest you? Send me an email with your thoughts.