Depending on the respective canton, different regulations apply in Switzerland for self-employed persons in terms of taxes. Each year, you will be asked by the relevant cantonal tax administration to submit a tax return. Different deadlines and tax rates apply depending on the canton. If you are self-employed, you must observe additional regulations.
Who is required to file a tax return in Switzerland?
In principle, everyone who has reached the age of 18 and has their main residence in Switzerland must file a tax return. It does not matter whether he receives an income or not. Based on the tax return, the cantonal tax administration decides whether you have to pay income tax and how much it will be. The tax return must always be prepared for the previous year. If you turn 18 in 2022, you must file a tax return for the first time in 2023. Read more about“Who must file a tax return?”
Self-employed are asked to file a tax return
At the beginning of each year, you will be requested by the responsible cantonal tax administration to submit a tax return. The request sets a deadline by which you must submit your tax return. Different deadlines apply depending on the canton. In most cantons, the tax return must be submitted by the March 31 or April 30. You always file the tax return for the previous year.
In which canton do I have to file my tax return as a self-employed person?
Those who are employed must file their tax return in the canton in which they reside. The situation is different for the self-employed.
If you do not operate your company in the canton in which you reside, you must file your tax return in the canton in which your company is located.
What is the amount of the tax?
The amount of tax you have to pay depends on your income and the canton in which you carry out your self-employed activity. In the individual cantons, the tax rates can vary considerably. However, you can reduce the tax if you deduct various expenses from the tax.
What must be included in the tax return?
You can be self-employed on a full-time basis. However, you can also be self-employed on a part-time basis if you work full-time as an employee and also carry out an activity on your own account. You are also considered self-employed if you carry out an activity as a freelancer, i.e. you work for several clients. This is also possible on a full-time or part-time basis.
If you arethemanaging director of a company, you are considered an employee under Swiss tax law. You are considered self-employed if you have a sole proprietorship, work in your own name and for your own account and bear the economic risk yourself.
If you are also employed, you must complete a form for your income as an employee in addition to the form for self-employment. For employment, enter income from employment. Thus, you must report your net wages for the entire year. If you are self-employed, enter the income from self-employment. As a rule, this is your profit.
In your tax return, you still have to declare other income such as money gambling winnings, alimony and income from capital assets.
In your tax return, you must also provide information about your assets, to which
- Account balance
- Real Estate
- Life insurance and annuities with the surrender value
- Valuable items such as art collections
What do self-employed persons have to declare additionally in the tax return?
As a self-employed person, depending on what activity you perform, you must pay attention to good accounting and archive all receipts. You must also submit these receipts with your tax return, at least if the tax administration asks you to do so. You must file a tax return as a self-employed person on the basis of business records. You report your income from business activities on your tax return.
Now it is possible that you also have capital investments for your company. You must also declare these investments and the income from them on your tax return. You must also declare gains from the sale of business assets, for example if you sell a company car, on your tax return.
What about value added tax on the tax return?
As a self-employed person in Switzerland, you may be wondering when you have to start paying VAT. From an annual income from self-employment of at least CHF 100,000, you are subject to VAT. It does not matter whether your self-employment is full-time or part-time. Within 30 days you must declare the VAT to the Federal Tax Administration (FTA). A form is available online for this purpose. You can also check online if VAT applies to you. There are also exceptions in VAT such as health sector, insurance or agriculture. Even if your annual income exceeds CHF 100,000, you will not have to pay VAT.
What can you deduct for tax purposes as a self-employed person?
If you are self-employed, it is important to save taxes. Therefore, you can deduct various expenses and financial burdens for tax purposes. Partly there are differences, depending on the canton. However, in each canton you can deduct these things for tax purposes and include them as deductions in your tax return:
- Mortgages and small loans, private and for your company
- Pension contributions and pension funds
- various contributions for insurances, including company insurances
- Allowances for own personnel
- Depreciation on business assets, for example on machinery and company cars
In most cantons there are also tax allowances. It is best to check with the relevant cantonal tax administration to find out what you can deduct for tax purposes.
What to do if you can not meet the deadline?
If you are already aware that you will not be able to submit your tax return on time, it is essential that you submit a request for extension of the deadline to the relevant cantonal tax administration. The request for extension of the deadline must be received by the tax administration by the end of the deadline applicable to the submission of the tax return. You will be given an extension of time. In some cantons, a fee may be charged if the extension goes beyond a certain deadline. If you fail to submit a request for an extension of the deadline and do not submit the tax return on time, you may face a reminder and a fine.
What happens if you do not file the tax return or forget to file it?
If you intentionally fail to file a tax return or forget to file a tax return, you will receive a reminder from the relevant tax administration setting you a new deadline. A reminder fee may be charged for the reminder. In addition, there is the threat of a fine. Especially if you have already forgotten to file your tax return several times, the fine can be up to CHF 10,000.
The cantonal tax administration estimates your income and determines a tax. If this tax is too high, you can appeal. This will be successful only if you fill in all the required forms. However, the tax can also be set too low. In this case, you can be prosecuted for tax evasion. You will have to pay the tax in the appropriate amount in addition to a fine. Therefore, it is important to always file your tax return on time.
In exceptional cases, with
- Death of a member of the taxpayer’s family
- mental illness of the taxpayer
- longer stay abroad of the taxpayer
if you have failed to file the tax return, you can apply to the tax administration for a new deadline. You must prove the reasons why you could not file a tax return.
Tax return for married couples
If you are married and self-employed, you must file a joint tax return with your spouse. This also applies if you live in a registered civil partnership. If your partner is not self-employed, he or she must provide information about his or her income from non-self-employment. The joint tax return is valid from the year of your marriage. In the following year, you must file a joint tax return for the year of the marriage.
Help with the tax return
In every canton you can submit your tax return online. Depending on the canton, different tax programs are recognized to make your tax return easier.
For the self-employed, the help of a tax advisor is recommended. He knows legal tax tricks and tells you what you can deduct from taxes in the relevant canton. He is familiar with the tax regulations for the self-employed, which are quite complicated after all. With the help of a tax advisor, you can avoid tax return mistakes that can result in hefty fines. Addresses of tax consultants can be found via industry associations such as ExpertSuisse or Treuhand Schweiz.