Living in Switzerland as a US citizen –
The Challenges of Overlapping Rules
The United States is the only developed country in the world that taxes its citizens and green card holders based on citizenship, even when they live in a foreign country. Being an American in Switzerland therefore requires managing US financial and tax rules on top of the Swiss ones. To make matters more complicated, these rules are not always compatible, and yet, somehow, you need to make sure both systems co-exist with minimal conflict.
We can help you in the following areas:
- US investments: Not every brokerage firm can keep you as a client after you move to Switzerland. Additionally, US mutual funds cannot be purchased by non-US residents. We can help you transition your investments to a globally diversified, low-cost ETF (exchange-traded fund) portfolio that is compliant with US and Swiss regulations.
- US accounts: We can guide you on keeping or closing US bank accounts, credit cards and mortgages after ending US residency. We aim to minimize costs and will consider your FICO score.
- Swiss accounts: We can help you understand your Swiss banking options and open accounts at Swiss banks that are friendly to American citizens
- PFICs (Passive Foreign Investment Companies): The US tax code treats non-US registered mutual funds, ETFs and other pooled investments as PFICs. PFICs require complex reporting tax forms and are subject to punitive taxation. Generally speaking, Americans should avoid PFICs and continue to invest in US funds. However, Swiss advisors regularly recommend to Americans Swiss investments that are treated as PFICs. We can help you understand what investments are problematic while you are living in Switzerland. We can also help minimize your Swiss pension PFIC exposure, particularly in Vested Benefits Accounts (Compte de Libre Passage or Freizügigkeitskonto) and Pillar 3 pensions accounts, where PFIC risk is highest.
- Citizenship-based taxation: You will need to file US tax returns and potentially pay US income tax, in addition to Swiss taxes, while you live in Switzerland. We can help you avoid double taxation by using US and Swiss domestic tax provisions, tax treaty benefits and by taking advantage of disparities between the US and Swiss tax rules.
- Foreign account reporting: We can help you understand how to correctly report your US accounts in Switzerland and your Swiss accounts in the USA. This will help keep you in compliance and away from trouble and potential offshore reporting penalties with both the US and Swiss tax authorities.
- Swiss wealth tax: Switzerland does not tax capital gains on securities but imposes a tax on your worldwide wealth instead. This tax is levied at the cantonal and municipal level. Rates vary, and it is not creditable against US income tax. We understand how different American and Swiss assets are taxed, and can help you avoid paying more wealth tax than you need to.
- Social security: Under the terms of the Totalization Agreement for social security taxes between the USA and Switzerland, you may be able to continue to contribute into the US system during your first five years of Swiss residency. We can help you understand if this option is available, and decide if you benefit by claiming this provision. As you approach retirement, we can help you understand how to claim benefits under this treaty to maximize your combined US and Swiss social security benefits.
- Health insurance: Basic health insurance is mandatory in Switzerland. It is typically not provided by employers, but rather it is the individual’s responsibility to obtain and pay for it. We can educate you about the Swiss health insurance system and help you choose the right coverage for you and your family.
- Estate planning: Unlike the USA, Switzerland has forced heirship rules and does not have its own trust laws, although it may recognize US wills and trusts. We can help you review your US estate plan, determine if Swiss estate documents are necessary, and coordinate with US and/or Swiss attorneys licensed to draw up the relevant documents in the required jurisdictions.
- Other considerations: International moves are costly and complex. We can help you budget for them, manage your cashflow, manage foreign exchange rate risk, international money transfers, employee benefit choices, executive compensation and other financial relocation related considerations.
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Still Have More Questions?
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Yes. In addition to traditional portfolio solutions, we offer sustainable investment portfolios that account for Environmental, Social and Governance (ESG) factors. ESG data on companies has become increasingly available over the last few years. This allows us to offer portfolios built with ETFs (exchange-traded funds) that exclude certain industries such as weapons manufacturers or tobacco companies. Industries included might focus on a particular theme, or aim to have a positive impact by promoting positive and limiting negative externalities. Investing in ESG portfolios involves risks, please refer to our ADV for more details.
Yes. We offer alternative investments such as private investments, hedge funds, and cryptocurrencies if you qualify as an accredited investor and when these investments are appropriate for your situation and are aligned with your financial plan. Some of these alternative investments may also be available to non-accredited investors. Investing in alternatives and cryptocurrencies involves risks, please refer to our ADV for more details.
Yes. We offer direct/personalized indexing when this investment strategy is appropriate for your situation. With direct/personalized indexing, you own the underlying securities in the portfolio, rather than shares of an investment fund. This approach provides additional opportunities to personalize your investments and potentially gain greater tax efficiency through daily tax-loss harvesting. Direct indexing involves risks, please refer to our ADV for more details.
We believe that every person deserves access to quality financial education that can empower them to make good financial decisions. For individuals and families who are unable to engage us for our professional services, our blog and educational videos provide free educational resources. Additionally, we regularly conduct educational workshops, covering topics like tax reporting, tax planning, saving for retirement, risk management, and legacy planning. To inquire about our next educational workshop, please email us at email@example.com
To minimize conflicts of interest and seek better alignment with our clients, we do not accept sales commissions or referral fees from investment product providers or independent professionals. We only receive compensation in the form of financial advisory fees paid by our clients as detailed in their financial planning advisory agreements. Our clients pay us a transparent fee for our advice.
We work hard to make sure your money is safe. We are members of a fee-only Registered Investment Advisor (RIA) with over $3 billion in assets under management serving approximately 5,000 families. We work only with top financial institutions like Charles Schwab and Fidelity as our independent custodians, and we use leading industry technology for investment management and financial planning. We hold multiple professional credentials, and we are held to a fiduciary standard, which means that we are required to always provide advice that is in your best interest, even when it’s against our own.
We offer US insurance services through our sister firm, Swiss American Risk Advisors. We have teamed up with Ash Brokerage to offer independent insurance solutions when needed. Please refer to our disclosures at the bottom of this page.