Hello, I'm semi FIREd an this will be my first full year in Switzerland. I really tried to search for an answer to this but I really can't find it
:
- Let's say I have an income of 80k CHF, which is composed of 40k from rented real estate abroad (taxes paid abroad) and 40k from swiss income.
So we must apply the "exemption with progression" style of taxing:
- In order to calculate my average tax rate we sum all my global income (80k CHF) and then.. should we apply the deductions (let's say -10k CHF from deductions), so we reach a 70k global income that works in order to calculate my average tax rate?
But then my biggest doubt comes to hunt me at night: Lets say my average tax rate is 20%. Now, do I have to pay a 20% from all the income taxable in Switzerland, 40k CHF, without reducing it by the deductions? Or will the deductions also be counted here and then I will have to pay a 20% on 40k-10k= 30kCHF?
ChatGPT says I have to pay a 20% from the whole 40k, but that really seems unfair, since the deduction will have almost no impact on the taxes I have to pay.. it would virtually be like if the income deducted were the foreign 40k from rents.. which I already paid taxes for, ergo no deduction makes sense.
In that case, the only benefit from putting 7k CHF in a 3rd pillar would be a very small reduction of the average tax rate.. instead of a real reduction on the amount of income taxed.
I hope someone can enlighten me.. because it's probably a very specific matter, thanks in advance!!
:- Let's say I have an income of 80k CHF, which is composed of 40k from rented real estate abroad (taxes paid abroad) and 40k from swiss income.
So we must apply the "exemption with progression" style of taxing:
- In order to calculate my average tax rate we sum all my global income (80k CHF) and then.. should we apply the deductions (let's say -10k CHF from deductions), so we reach a 70k global income that works in order to calculate my average tax rate?
But then my biggest doubt comes to hunt me at night: Lets say my average tax rate is 20%. Now, do I have to pay a 20% from all the income taxable in Switzerland, 40k CHF, without reducing it by the deductions? Or will the deductions also be counted here and then I will have to pay a 20% on 40k-10k= 30kCHF?
ChatGPT says I have to pay a 20% from the whole 40k, but that really seems unfair, since the deduction will have almost no impact on the taxes I have to pay.. it would virtually be like if the income deducted were the foreign 40k from rents.. which I already paid taxes for, ergo no deduction makes sense.
In that case, the only benefit from putting 7k CHF in a 3rd pillar would be a very small reduction of the average tax rate.. instead of a real reduction on the amount of income taxed.
I hope someone can enlighten me.. because it's probably a very specific matter, thanks in advance!!
