General Deduction Options for Wealth Tax in the Swiss Tax Return

Wealth management expenses include all costs related to the management of private wealth, such as custody fees, management fees, wealth advisory costs, and even negative interest on bank balances. These expenses are generally tax-deductible as they are considered necessary for the preservation and growth of wealth.

An important aspect is the tax statement or tax reporting offered by banks. This document simplifies the tax return process significantly as it provides a detailed breakdown of all deductible expenses, increasing the accuracy of the submitted information.

Cantonal Differences in Wealth Tax

The deduction possibilities for wealth tax in Switzerland can vary from canton to canton. Below are some examples:

Wealth Tax Canton Zurich:

• Flat-rate deduction: 3‰ of the taxable value of securities managed by third parties.
• Maximum: CHF 6,000

Wealth Tax Canton Thurgau:

• Flat-rate deduction: 2‰ of externally managed securities.
• Maximum: CHF 6,000

Wealth Tax Canton Zug:

• Flat-rate deduction: 3‰ of the taxable value of privately owned securities managed by third parties.
• Maximum: CHF 9,000

Wealth Tax Canton Schwyz:

• Flat-rate deduction: 3‰ of the taxable value for the management and custody of securities and assets by third parties.
• Maximum: CHF 6,000

Wealth Tax Canton St. Gallen:

• Flat-rate deduction: 2‰ of externally managed securities.
• Maximum: CHF 6,000.
• Higher actual costs can be proven.

Wealth Tax Canton Basel-Stadt:

• Actual costs must be proven.
• No specific flat-rate indicated.

Wealth Tax Canton Graubünden:

• Flat-rate deduction: Up to CHF 3.6 million, 2.5‰ of the taxable value; above this amount, 1‰, up to the amount of taxable income from assets. Higher deductions must be proven.

Wealth Tax Canton Lucerne:

• Flat-rate deduction: Up to CHF 3 million, 0.3% of the taxable value; above this, 0.1%, but not more than the amount of taxable income. Higher deductions must be proven.

Wealth Tax Canton Aargau:

• Flat-rate deduction: 3‰ of the managed portfolio at year-end, independent of performance. Performance-based fees are not deductible.

Wealth Tax Canton Bern:

• Flat-rate deduction: Not specified; actual costs must be proven.

Here is a general list of deductible and non-deductible wealth management costs in the Swiss tax return. For more detailed information, consult your canton’s tax guide.

Deductible Wealth Tax Costs:

• Custody and safe deposit fees: Costs for the storage and management of securities.
• Collection fees: Fees for collecting interest and dividends.
• Management costs by third parties: Costs incurred for wealth management by third parties (e.g., banks, asset managers).
• Negative interest: Expenses for negative interest on capital assets.
• Non-refundable or non-creditable foreign withholding taxes.

Non-Deductible Wealth Tax Costs:

• Acquisition and production costs: Costs for the purchase of assets.
• Capital enhancement costs: Expenses for increasing the value of assets.
• Costs for acquiring and selling securities: Brokerage fees, issuance commissions, sales commissions, etc.
• Issuance tax: Costs related to the issuance of securities.
• Costs for financial, investment, inheritance, pension, and tax advice.
• Costs for preparing the tax return.

Conclusion

This blog post has explored the deduction possibilities for wealth management expenses in the Swiss tax return, highlighting that the rules vary between cantons in terms of flat-rate deductions, maximum limits, and specific conditions for deductible and non-deductible expenses.

Key takeaways include:

• Flat-rate deductions offer simplicity: Many cantons allow flat-rate deductions for wealth management costs, simplifying the tax return process. However, these flat rates vary between cantons.
• Consider the maximum limits: There are limits for flat-rate deductions that differ from canton to canton. These limits are essential in determining whether the flat-rate deduction or detailed listing of actual costs is more beneficial.
• Differentiate cost types: It’s important to distinguish between deductible and non-deductible costs. While expenses like custody fees or management costs by third parties are often deductible, expenses related to asset acquisition or advisory services are typically not deductible.
• Current information is crucial: Tax laws and guidelines can change. Therefore, it’s essential to always refer to the latest tax guides to complete the tax return correctly and efficiently.

In conclusion, this blog post by Smart eTax provides a comprehensive overview of the deduction possibilities for wealth management costs in Switzerland, emphasizing the importance of familiarizing yourself with the specific regulations of your canton. Various online calculators can help provide a rough estimate of when and how much wealth tax will apply in Switzerland.

Wealth Tax Resources by Canton:

You can find out when wealth tax is due in Switzerland through the links below. Generally, you will also find a table outlining how wealth tax is derived.

• Wealth Tax Zurich Guide
• Wealth Tax Thurgau Guide
• Wealth Tax Zug Guide
• Wealth Tax Schwyz Guide
• Wealth Tax Basel-Stadt Guide
• Wealth Tax St. Gallen Guide
• Wealth Tax Graubünden Guide
• Wealth Tax Lucerne Guide
• Wealth Tax Aargau Guide
• Wealth Tax Bern Guide