Moving to and living in the Switzerland
Learning to navigate crossborder finances
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 portfolio that is compliant with US and Swiss regulations.
- US accounts: We can provide guidance related to keeping or closing US bank accounts, credit cards and mortgages after ending US residency, allowing you to minimize costs and taking your FICO credit score into consideration.
- Swiss accounts: we can help you understand your Swiss banking options and open accounts at US citizen friendly Swiss banks.
- PFICs: The US tax code treats non-US registered mutual funds, ETFs and other pooled investments as Passive Foreign Investment Companies or PFICs. PFICs require complex reporting tax forms and are subject to punitive taxation. Generally speaking, US persons should avoid PFICs and continue to invest in US funds. Swiss advisors regularly recommend Swiss investments to US persons living in Switzerland that are treated as PFICs. We can help you understand what investments are problematic and how to minimize your Swiss pension PFIC exposure, particulary 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 through the use of 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, keeping 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 assets, US and Swiss, are taxed for wealth tax purposes, 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 to you, and help you decide if there is a benefit to claiming this provision. As you approach retirement, we can help understand how to can 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 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.
Are You Ready to get
the help you are looking for?
Work with a team of experienced and specialized advisors who truly understand your situation and needs.
Still Have More Questions?
No Problem. Read the FAQs.
Do you prepare US tax returns?
Swiss American Wealth Advisors provides US tax return review services as part financial planning, but it does not prepare tax returns. One of our founders, Marina Hernandez, is also a credentialed tax professional. Her tax preparation firm, MHTax, prepares US tax returns for a few of our clients. This service is independent from Swiss American and our clients are not required to use it.
Do you prepare Swiss tax returns?
Swiss American Wealth Advisors provides Swiss tax return review services as part of financial planning, but it does not prepare Swiss tax returns. For clients of both Swiss American and MHTax, MHTax offers coordination with a Swiss tax firm to prepare both the US and Swiss tax returns using a unified client portal and document exchange system. This service is independent of Swiss American and requires separate engagements with the tax preparation firms.
Can I work with you if I don’t need investment management?
Yes. Although we manage investment assets for most clients, we do not require a minimum asset level to work with us and occasionally we work with clients with no asset management needs. Our minimum annual fee contemplates that some of our clients are looking exclusively for financial planning services because they are just starting to build their wealth, their wealth is invested in their businesses, it is tied to real estate or in employer pensions that cannot be externally managed.
Can I work with you if I don’t need financial planning?
Yes. While most of our clients want us to provide services beyond financial planning, we of course also work with clients who are looking to delegate only the management of their investment accounts. Typically, these are clients who like to work with an organization that has the expertise, experience and structure to manage their investments in an international compliant manner.
Is my money safe with you?
We work hard to make sure your money is safe. We are members of a fee-only Registered Investment Advisor (RIA) with approximately $2.5 billion in assets under management serving over 3,500 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.
How are you compensated?
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 wealth advisory fees paid by our clients as detailed in their wealth advisory agreements. Our clients pay us a transparent fee for our advice.
What is your investment philosophy?
We believe that a disciplined investment approach using portfolios that are well diversified across asset classes and regions can deliver superior long-term results. We build our portfolios with highly liquid and low-cost ETFs from established providers like Blackrock or Vanguard. We pay attention to asset location and follow a tax efficient rebalancing process to maximize after tax returns. We also offer ESG portfolio solutions for clients interested in considering environmental, social and governance factors with their investments. ESG portfolios have been the fastest growing segment in our investment offering.
Do you work with expats who don’t live in Switzerland?
Yes. We work with foreign families of different origins living in the USA, and with American families who at some point had ties to Switzerland but returned home or moved to third countries and wanted to keep working with us. Although we believe that our combined decades of experience on US-Swiss crossborder issues allows us to provide the best value to clients with those ties, our multicultural and multilingual backgrounds attract multinational clients who do not feel understood or well served by domestic focused advisors.
What can I do if I need advice but can’t afford your fees?
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 retain our professional services, our public benefit initiatives support free financial education through the Crossborder Planner [free newsletter and blog], and the Crossborder Academy [free webinars], covering topics like tax reporting, tax planning, saving for retirement, benefiting charities or caring for the next generation.
