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Tax tips: Save taxes now and finance your next vacation!

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Save enough on taxes so that you can take a vacation – so how does that work? Very simply: Pay in the maximum amount to Pillar 3a by December 31 and secure your tax benefits. Otherwise you’ll be giving away up to CHF 2,000 in taxes.

Employed persons can make voluntary contributions into their private pension provision – Pillar 3a – and at the same time reduce their tax bill considerably.  Last year,  an employee earning CHF 80,000 achieved tax savings averaging CHF 1,462; self-employed persons without a pension fund were able to save about 10 times as much.

Calculate your savings potential online with our tax savings calculator.

Pay in once and benefit twice.

If, as an employee, you start paying in the maximum statutory amount regularly - year for year - from the age of 35, you can save around CHF 40,000 by the time you reach retirement. For the self-employed, an amount of CHF 300,000 and more can be saved – without actually spending a single franc. And every invested franc benefits the payer in old age when it is repaid but only taxed at a very moderate special tax rate. There can be no doubt that this makes sense – especially in times of uncertainty concerning our Swiss retirement provision.

The money saved is additional retirement money. For the gainfully employed, you can save enough every year to finance a vacation. Anyone who can afford the necessary sum is doing the right thing by paying in the maximum amount deductible from taxes every year into Pillar 3a.

Tax deduction limits

Tax deduction limits for payments into Pillar 3a by  31.12. at the latest:

  • Employees: CHF 6,768
  • Self-employed persons: CHF 33,840

10 tips for saving on taxes

  1. Fully utilizing the 3a limit is the simplest way to make big savings. A Pillar 3a account can be opened at a bank or insurance company. Both offer flexibility and returns. Pillar 3a can also be combined with securing living costs for yourself and your dependents.
  2. Purchases in the pension fund: Voluntary purchases in the pension fund are also tax-deductible and are possible if you have a gap in pension coverage. Check your latest pension fund certificate to see if you have a gap.
  3. Journey to work & meals: Whether public transportation, bike or car – account for your travel costs between home and work. And if you have to eat or sleep away from home, you can make deductions, generally in the form of flat-rate amounts.
  4. Continuing education & professional expenses: Training courses, specialist literature, clothing, equipment and other job-related expenditure is tax-deductible as a flat-rate amount in many cantons without the need for proof.
  5. Home office: If you regularly use a private room at home for work purposes, you can deduct some of your housing costs from your tax bill.
  6. Paying taxes in advance: Some cantons offer a better interest rate than any savings account if you pay your taxes in advance. However, pay too late and you will incur an interest penalty of up to 6 percent.
  7. Debts: Debit interest on personal loans, credit cards and mortgages is tax-deductible. Leasing costs cannot be deducted if you earn a salary.
  8. Medical expenses: Expensive healthcare costs – for dentistry, for example – are tax-deductible. The threshold is at about 5% of net income depending on the canton.
  9. Donations: Enclose the receipts with your tax return.
  10. Tax advice: Ask a tax professional and you’ll benefit. Free pension advice also offers valuable tips for optimizing your tax situation. 

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