The tax season is fast approaching, and as your advisor, we feel it is important to inform you of the latest major tax changes. These changes will apply to individuals as of this year.
We would also like to take this opportunity to give you an overview of the tax changes that are already applicable as of 1 January 2019.
This list of tax news is not exhaustive and is intended for taxpayers resident in the canton of Geneva and Vaud, for cross-border commuters from Geneva and Vaud and for French residents working in France.
What's new for Geneva residents
For property owners, the changes are significant. Indeed, from 2019, their properties (built before 2009 only) located in Geneva have been revalued by 7% for a period of 10 years (i.e. until 2028).
For taxpayers taxed at the marginal wealth tax rate of 1%, this tax increase will have a moderate financial impact (for example, a taxpayer owning a main residence valued at CHF 2,000,000 in 2018 without mortgage debt will see his wealth tax increase by about CHF 1,400 in 2019). For those whose wealth does not exceed the social allowance, there won't have any impact.
In addition to the increase in the tax value of their property, landlords will also see their rental value increase as it is revalued by 0.95% in 2019. The rental value will now be revalued every year. The rental value is a fictitious property income that is supposed to represent the value of the use of the property and is added to the taxpayer's income.
Our opinion: These two changes reinforce the idea that it is not good to be wealthy in Geneva.
What's new for Geneva residents and cross-border workers in Geneva
You have a child under 25 years of age who is a student
Before 2019, if your adult child under 25 years of age who was dependent on you on 31 December stopped his or her studies during the calendar year (e.g. for a language trip) and was no longer a student on 31 December of that same year, then he or she was no longer considered dependent on you and you could no longer benefit from the social deduction for family expenses, even though you had paid his or her schooling and maintenance expenses during your child's education. Translated with www.DeepL.com/Translator (free version)
From now on, this is a thing of the past! All you need is for your child to be enrolled in school during the calendar year for you to benefit from the family allowance (CHF 9,980 in 2019). This measure is cantonal and does not apply to direct federal tax.
Our opinion: it was absurd to know that a student of legal age who stops his or her studies on 15 December 2018 was not considered to be dependent on his or her parents for 15 days, whereas a child born on 15 December 2018 was considered to be fully dependent for the whole year for only 15 days.
You have childcare costs
The increase in the deduction for childcare costs sought by the FDP has been raised from CHF 3,992 to CHF 25,000 in 2019 at cantonal level to allow parents to keep their jobs and/or return to work after childbirth. This increase aims above all to combat the shortage of qualified personnel and to consider childcare costs as income-earning costs deductible from taxable income, noting that the deduction at federal level remains at CHF 10,100 in 2019.
Notre avis : Le principe fiscal de la capacité contributive reprend ses droits, faire garder ses enfants pour maintenir son poste doit être considéré comme des frais d’acquisition de revenu, c’est une très bonne initiative du PLR et plus particulièrement de notre ami Yvan Zweifel.
What's new for Vaud residents
- The deduction for health insurance contributions has been increased in 2019 to CHF 2,200 for a single person and CHF 4,400 for a married couple and to CHF 3,200 and CHF 6,400 respectively in 2020.
- The maximum deduction for childcare costs will also increase to CHF 9,100 per child from the 2020 tax year compared to CHF 7,100 in 2019.
- From 2020 onwards, the costs of demolition for reconstruction will be treated as building maintenance costs, and if the costs of maintaining private, environmentally friendly buildings exceed the income, the tax deduction can be spread over three years.
What's new for residents of the canton of Vaud?
As of 2019, employers must take into account the family expenses of employees benefiting from the "C" collection scale (when both spouses work) as long as at least one of the two spouses receives full family allowances or a differential from a Swiss fund (e.g. a taxpayer residing in the canton of Vaud during the week (a "semainier") and returning to his or her family every weekend in neighbouring France will henceforth be able to attach his or her children to the Swiss family allowance even if he or she only receives international differential family allowances from his or her Swiss AVS fund)
Our opinion: Another tax absurdity resolved, congratulations to the cantonal administration for having rectified the situation!
What's new for French resident border workers
The law implements a significant income tax reduction in 2020. The first bracket of the income tax scale will be reduced from 14% to 11% and the rest of the scale will be adjusted so that this measure benefits taxpayers in the middle and lower classes. Households with the highest tax rates (41% and 45%) are not affected by this reduction.
The tax credit for energy transition (CITE) will be replaced by a premium from 1 January 2020 for low-income households, and in 2021 for others, who will continue to benefit from the CITE in 2020 subject to means testing.
The amount of the public broadcasting contribution (redevance) is reduced by €1 in 2020. It will be €138 in mainland France and €88 in the overseas departments.
What's new about the French exit tax
The abolition of the exit tax had been announced by Emmanuel Macron for 2019. The idea of a pure and simple abolition of this tax has been abandoned in favour of a reduction. The tax on unrealised capital gains is now subject to an automatic rebate, or a refund if it was immediately paid at the time of the transfer of tax residence, at the end of a two-year period, as opposed to fifteen years previously. In other words, you will have to wait two years before selling your shares or bonds in order not to be liable for income tax and social security contributions in France.
As Switzerland is not a member of the EU, and the agreement it has signed with France does not cover collection assistance, exit tax payers who move to Switzerland are still required to provide guarantees to ensure the recovery of the Treasury's claim.