If you have been considering moving overseas, financial factors and overall living conditions are likely foremost on your mind. You’ll want to look for a location that matches the standard and cost of living you have back home. But, with additional positives that make the move worthwhile.
Switzerland is high on the list of possible countries for relocating Americans. The country welcomes US expats and close to 25% of its population is comprised of foreigners. Zurich, Geneva, and Basel are the top three cities where you might like to move. Not only does the country have a robust gross domestic product (GDP), but the service sector makes up 71% of the GDP. Switzerland is considered one of the world’s wealthiest nations, so finding a job in your field and getting settled should not be difficult.
Excellent Quality of Life
Aside from finances, there’s a lot to love about Switzerland. Swiss cities like Zurich and Geneva are considered some of the safest globally, with crime rates standing at just seven per 100,000 people. That’s 28 points lower than in cities like New York in the US.
If you’re moving because of pollution issues, know that the Swiss air and water supply are extremely clean. Hiking and skiing in the fresh mountain air is a local favorite. In recent times, Switzerland has adopted initiatives such as PERECUSO, AGFORWARD, and Green Resilience for sustainable agriculture. These programs show the country’s commitment to a cleaner, greener environment.
More Expensive Costs of Living
These positives do come at a price. The cost of living in the country is relatively higher than the US. You can expect to pay at least 25% more for consumer goods than you would in New York, one of the most expensive cities in the US. You’ll also put up to 10% of your wages toward compulsory healthcare.
School starts at 4 years for all kids and lasts for the next 11 years. Since the state funds education, parents won’t have to worry about the costs, though it is part of taxes.
When it comes to housing, you can expect to pay up to 20% of your wages on rent, which is lower than many Americans pay in their home country. The startup fees are higher, though. It’s not unusual to put down three months’ rent as a security deposit.
Filing Taxes in Switzerland as a US Expat
As long as you’re an American citizen or Green Card holder, you’ll continue filing taxes as a US expat living in Switzerland. The IRS expects you to declare all worldwide income and assets in bank accounts on your returns by way of the FBAR. However, several exclusions are available to expats so they can lower the taxes they’re liable to pay. The Foreign Earned Income Exclusion allows you to deduct a sum of $107,600 from your total income in 2020 and pay taxes only on the remaining balance. In short, most individuals making less than six figures will need to file with the IRS, but are unlikely to owe anything.
The Swiss authorities levy a Federal tax at 11.5, Canton tax, and municipal tax that work out to a maximum of 19.7% for the year 2021. You need not be concerned about paying double taxes on the same income since you can avail of the previously mentioned Foreign Tax Credit benefit. With your consultant’s advice, you can offset the taxes paid to the Swiss government in your dues payable to the US IRS. Additional pros include the Foreign Housing Exclusion that lets you deduct necessary living expenses from the total taxable income.
A better quality of life, cleaner air and water, political stability, or retirement – whatever are your reasons for moving to Switzerland, know that the move could be one of the best decisions you make. Find out all you can about the possible living expenses and plan your relocation accordingly.