7 toxic tax mistakes that really hurt!

I couldn't help but wonder … how can you do everything right if you don't even know what's wrong?

Anyone who’s ever been in a toxic relationship knows the feeling: your partner expects you to do everything right and to guess their every wish. And heaven forbid you say the wrong thing or make a mistake. Filing your tax return can feel pretty similar. The Swiss tax office also expects you to get everything right and not forget a thing. However, tax mistakes in Switzerland happen more often than you might think!

But while even the best couples therapist might throw in the towel when it comes to toxic relationships, there’s good news for (unintentional) tax offenders: Our professional tax consulting really does help you correct mistakes and avoid them in the future.

Most tax mistakes happen without malicious intent

The biggest misstep in a relationship certainly is betraying the other person. Likewise, when it comes to tax evasion, many people first think of the malicious intent to deprive the Swiss government of tax revenue. But much more often, tax violations are unintentional and go unnoticed.

Here are seven common tax mistakes: From ‘I don't know what the problem is’ to ‘Oops, I evaded taxes’ ‒ it just gets worse and worse! But don't worry: We'll explain how to avoid these mistakes in the future.

Tax mistake No. 1: Forgetting expenses when filing your tax return

In every relationship, the same rule applies: If you don't speak up, you'll end up empty-handed. It's the same with the Swiss tax office. After all, you can only claim tax deductions if you include them on your tax return.

However, many people overlook important expenses when they file their own taxes: Contributions to pillar 3a of the pension system, childcare costs, health insurance premiums, commuting costs, and other work-related expenses can reduce your tax burden. But only if you report them correctly and fully!

Tax tip No. 1: Seek professional tax advice

No one can take over open communication in your relationship for you—but when it comes to tax matters, we certainly can. We’re happy to help you with your tax return and we guarantee we won’t miss any deductions. Our tax return checklist also provides a complete overview for you.

Tax mistake No. 2: Not buying into the pension fund, or doing so at the wrong time

Whether it’s worth investing in a relationship is often something you only know in hindsight. If you contribute to pillar 2 of the Swiss pension system without a plan, your investments are just as much of a gamble. That’s because occupational pension plans can be tax-advantageous—or they might not be! Here’s what you should know:

• Contributions to a pension fund are tax-deductible, unless you forget to make the payment or declare it.

• When you’re young, these contributions can actually result in a net loss over the long term: If you make them too early, the assets in your pension fund will grow so much through interest and compound interest that the taxes you’ll owe when you withdraw the money will wipe out the initial tax savings.

• If you want to withdraw money from your pension fund to buy a home, you’ll need to plan particularly carefully. In most cases, you can’t make any withdrawals for at least three years after making a contribution to pillar 2!

Tax tip No. 2: Look for advice early on

It’s not called tax ‘consulting’ for no reason—we don’t just blindly fill out your tax return. As a tax boutique, we ensure that you make the best decisions throughout the year. This includes planning your contributions to pillar 2 so they truly pay off for you.

Tax mistake No. 3: Overlooking employee shares when filing your taxes

Employees are often rewarded with employee shares as an additional benefit for their work. This is a nice perk, but it can become a problem if you’re not familiar with the tax implications: Employee shares are considered assets that are subject to taxation in Switzerland. If you forget this, it falls under tax mistake No. 4 ‒ a particularly serious one.

Restricted Stock Units (RSUs) are a special case. They are subject to income tax upon vesting and are listed by the employer on your pay slip. For many employees, this comes as an unpleasant surprise when they file their taxes. Especially if they have already spent the money needed to cover the higher tax bill or if the stock price has fallen in the meantime.

Tax tip No. 3: Initiate and attend tax workshops

It’s not always easy to understand when taxes are due on employee stock, and especially on RSUs. Of course, we can advise you personally on this matter. But you can also ask your employer to host one of our tax workshops at your company. After all, your colleagues are probably dealing with similar questions!

Tax mistake No. 4: Withholding income and assets

Sooner or later, secrets become a problem in any relationship. When it comes to tax returns, it’s never a good idea to leave out income or assets. Employee shares are, of course, just the beginning! This is where we’ve reached the realm of serious tax errors, because the Swiss tax authorities really don’t like being deceived.

Don't forget that you must declare absolutely all assets and your entire income: all bank accounts, crypto assets, stocks, and dividends, as well as any additional income from freelance work or rentals. If you conceal anything, it could result in additional taxes and penalties.

Tax tip No. 4: If needed, file a voluntary disclosure without penalty

As always, our most important advice is to have someone help you complete your tax return. With new clients, we often quickly identify what has been overlooked in recent years. In cases of serious tax violations, the only option left is a voluntary disclosure without penalty.

Tax mistake No. 5: Not declaring foreign assets in Switzerland

If it happens abroad, it's not fraud? That doesn't apply to love and certainly not to tax matters. After all, Switzerland taxes your entire income and assets ‒ and that means worldwide!

You must also report the holiday home you own in Ibiza, employee stock options from the U.S., or freelance income from Germany. There are no exceptions to this rule, since even real estate that has already been taxed abroad is taken into account when determining your tax rate in Switzerland. This tax mistake is therefore just as serious as number 4 mentioned above.

Tax tip No. 5: Seek advice on international matters

Understanding the Swiss tax system is difficult for any layperson. When it comes to complex international issues, it becomes nearly impossible. That’s exactly why we’ve specialized in cross-border tax matters. Just contact us ‒ and we’ll help you make sure you never forget to report any income or assets again.

Tax mistake No. 6: Failing to complete the subsequent ordinary assessment

When you immigrate to Switzerland, withholding tax is initially deducted automatically from your income. However, if your income exceeds CHF 120,000 per year, this honeymoon phase is over: You must then complete the mandatory ‘subsequent ordinary assessment’ (NOV in German).

This is a standard tax return which is due by March of the following year. Filing a NOV is also mandatory if you exceed the thresholds for additional income and assets (e.g., CHF 3,000 and CHF 80,000, respectively, in Zurich). Many expats are unaware of this, which is why they fail to meet their obligations.

Tax tip No. 6: Keeping an eye out for the NOV thresholds

If you’ve been paying withholding tax so far, check your income and assets regularly compared to the thresholds in your canton. If you have significant expenses, you can also file the NOV voluntarily to save on taxes. But then you’ll have to do so every year going forward. We’d be happy to advise you so that the NOV doesn’t become your first tax mistake in Switzerland!

Tax mistake No. 7: Neglecting your taxes throughout the year

No one likes to be ignored ‒ and that goes for your tax documents, too! Many people don’t start sorting through receipts, statements, and other documents until just before the tax return deadline. By then, all your documents are scattered everywhere, and you have to start digging to find them.

Why is that the biggest tax mistake of all? Because most other mistakes stem from the fact that you don’t have a system or a clear overview. You can’t claim deductions because you can’t find the receipts. You have to add up your income first. And that stock account statement from December 31? You’ll never find it anyway. Of course, filing your taxes isn’t any fun under those circumstances!

Tax tip No. 7: Get excited for taxes

Many of our clients were all too familiar with this very pain—before they walked into our tax boutique for the first time. With Tax and the City, we’ve managed to make taxes a hot topic. And that’s exactly how filing your taxes and preparing for it throughout the year becomes a joy. The fun starts with the initial consultation, by the way. We promise!

Professional tax advice instead of toxic tax mistakes

In taxes, just as in love, most mistakes happen because people simply don’t know any better. Hardly anyone cheats, withholds information, or deceives others on purpose. And that’s exactly what makes typical tax mistakes so dangerous. Whether you’re paying too much in taxes, risking a penalty, or simply feeling overwhelmed by your tax return: We can help you avoid your next tax mistake, fix past ones, and reduce your future tax burden. Just reach out to us for a friendly chat ‒ no strings attached.

And just like that… your tax mistakes are almost a thing of the past!