We ran into some headaches with reconciling our Swiss and Canadian taxes, even though everything we did tax-wise was above-board and by the book. The problem is, the book is either always being rewritten, or not everyone is working from the same page.
The short of it is that Canada and Switzerland have a tax treaty that protects migrant workers of either nation employed in the other nation from double-taxation. The simplified version of how this works is that money earned in Switzerland is paid into Swiss tax coffers. On returning to Canada, we still filed a Canadian tax return, but are spared from double-taxation as the Swiss taxes are deductible. Obviously, not every country taxes at the same rate, so if you go from a lower-tax region to a higher-tax region, you can expect to pay the difference.
It’s advisable to figure out the financial impact of any foreign job offer before signing on, especially when moving to a country with as high a cost-of-living as Switzerland. For those going to other countries, click here to learn more about Canada’s tax treaties and to find out which countries have a treaty with Canada.
As for the book being rewritten while you are out of the country: That does happen, so paying attention to emerging treaty interpretations is of value. For example, this addendum came out in our last month in Switzerland. If anything appears alarming, contact Canada’s tax offices to obtain an interpretation.
Be patient. There will always be some structural adaptation required from one country to another – for example, Canada requires tax statements from the federal government, however, Switzerland only provides tax statements from the cantonal (provincial or state) level, and those issued directly from municipal offices. Merging those two realities was a dance, so along with our tax statements, we sent the emails from the Swiss tax offices that explained their system.
Here are a few tips on how to smooth the process.
- Revenue Canada will accept cantonal (state or provincial-level) tax statements. Contact the office in your canton to request your “notice of withholding taxes.”
- To find your cantonal tax office, go to www.ch.ch, and enter your town name or postal code in the search box.
- Send an email via their online contact form with your request and be sure to include the term“notice of withholding taxes,” as more Canadianesque references (tax return, T4, etc.) might confuse the issue.
- Expect a prompt reply. These are the Swiss, after all, a people who pride themselves on efficiency. In my search, I sent out four emails and received responses to all within 24 hours. Of the four, I took up the conversation with the one most fluent in English (for simplicity’s sake), who then provided me with the name of the individual who could provide the documentation. The appropriate electronic document was sent out within a week, and the hard copy followed soon after via post.
- We concurrently enrolled our employer in a search for the correct tax document (leaving nothing to chance). They acquired the statement and forwarded it to us. It arrived shortly after the document we had chased down, so you might find it quicker to navigate your paper-chase on your own.
- Language and culture issues:
- In all government correspondence, use English, German, French and Italian.
- On your first email, put English at the top as this signals to the Swiss that this is the language in which you are most comfortable.
- Do not be taken aback if you receive a response in German/French/Italian only. This is not considered rude in Swiss society – you are dealing with their official government and they expect communication in their official languages. It would be considered rude to insist on your language being used (although they will make every effort to accommodate you – just be polite about it).
- Important tip that no one will tell you about: If you do receive a response that includes any English, my advice is to seek help from this writer, even if he/she is not able to help you directly.
- Ask them for the names, offices, emails and phone numbers of those tax staffers who can assist you.
- Then use this person’s name in your subsequent emails, as this English-speaking staffer can provide behind-the-scenes support to your request, and bridge the culture/language gap.
- How do you use their name? When you write to the offices that they recommend, open your subsequent emails with “Mr. X from the X Cantonal Office (provide Mr. X’s email and phone number in brackets) advised that I contact you regarding my request. If the person receiving your email has some language confusion over your request, he/she will likely contact your Mr. X (or Ms. X, whichever) for clarification, thus making Mr. X your culture and language agent.
- Even after English has been established as your language of choice, it is then polite to place the language used by your correspondent in his/her response at the top of your next email. For example, if you receive a response in German first, then follow suit as that is the native language of the tax personnel.
- Use Google Translate to provide the French, German and Italians translations. It is not perfect, but it is acceptable.
- When all else fails: If you continue to have trouble acquiring the necessary Swiss documents, contact a Swiss attorney to assist you. It will very likely be worth the legal fees to pursue this, rather than suffer double-taxation. Oh, which brings me to another point that can make your life easier. When you are exiting Switzerland, you will be required to have exit documents notarized by an attorney. Use an attorney fluent in English, and make sure you meet him, not just his staff. This attorney can be your point of contact for finding a Swiss tax attorney, should matters come to that. Keep his contact information after you leave the country. This might seem like an obvious thing, but it did not seem so obvious to us until after we ran into our tax snafu.
- Be patient. You are navigating a bureaucracy and while it may seem frustrating at times, it will work out. While it took the Swiss less than a week to produce the documents, it took Revenue Canada two months to accept them (sigh). Revenue Canada, while being very helpful, was still unable to tell us precisely which documents would be required, although you would think they would know this as we were not the first Canadians filing Swiss tax documents in Canada. Just accept this as your tax reality and deal with it.