The calculation basis
The basis for income tax taxation purposes is calculated on the annual expenditures incurred by the taxpayer in Switzerland and abroad. Also the expenses of the spouse and dependent children are taken into account.
Expenditures for the following items are part of the calculation:
- Food and clothing;
- Housing (including heating, cleaning, garden maintenance, etc.);
- Further education, leisure activities, sports, etc.;
- Trips, vacations, cures, etc.;
- Expensive domestic animals (horses, etc.);
- Cars, boats, yachts, aeroplanes, etc; and
- All other expenses linked with the standard of living.
As it is often difficult to assess the annual expenditures of foreigners, Swiss law provides an individual minimum amount based on the housing costs:
- For taxpayers residing in their own household, the lump-sum is fixed to at least five times the annual rent paid (if the house/apartment is rented).
- For other taxpayers, the lump-sum will be fixed on at least twice the annual amount for lodging and food.
For wealth tax purposes the assessed lump-sum basically will be capitalized with 5 % to calculate the taxable hypothetical net wealth.