Most Swiss Abroad are already familiar with individual taxation  

In many countries where Swiss citizens live abroad, individual taxation of married couples has become the norm. Copyright 2024 The Associated Press. All Rights Reserved

Across much of Europe, individual taxation has become the norm. On March 8, Swiss voters will decide whether to replace the current system of joint taxation of married couples with individual taxation, an approach already familiar to most Swiss living abroad. 

In Mexico, “we are taxed based on our individual personal income. It doesn’t matter if your income comes from salary, dividends, rents, etc.,” wrote Martha, who took part in our online debate on the reform of taxation for married couples. 

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In Switzerland, married couples are currently taxed jointly on the basis of a single tax return. On March 8, the people will vote on a reform which, if adopted, would require each spouse to file their own tax return. The bill, which has been approved by parliament, aims to end the so-called “tax penalty” on marriage. 

Ahead of the vote, we wanted to find out what systems are in place in the different countries where Swiss citizens abroad live. The responses we received show that many are already familiar with individual taxation or live in countries that offer a choice between individual and joint taxation. 

Individual taxation prevails in Europe  

“Here in Spain, everyone is free to choose what works out best for them in order to save on taxes. This is also the case in Ireland,” wrote Don Ron. Meanwhile, AndrewintheAlps gave more detail about the Spanish system. Individual taxation, he explained, is the most advantageous option if both spouses have similar, medium to high salaries. Joint taxation is worthwhile, however, if one of the spouses has no income or a very low income.  

Germany has a similar system, as one contributor to the debate explains. Married couples and registered partners can choose whether they want to be taxed individually or jointly. In the latter case, a mechanism known as “marital splitting” applies, whereby the couple’s income is added together and then divided by two to calculate the tax rate. The greater the disparity in earnings, the greater the tax benefits. This joint model, which is based on a law from the 1950s, has come under criticismExternal link, as in Switzerland. The Social Democratic Party (centre-left) blames it for entrenching inequality between men and women.  

Many European countries have moved from joint to individual taxation in recent decades, as the Swiss government set forth in its explanatory reportExternal link on the Federal Act on Individual Taxation. France, meanwhile, still has a system of joint taxation. There, the tax rate is calculated according to a “family quotient”, determined according to the number of people in the household. This leads to a significant reduction in income tax, in particular as the number of children increases. 

Separate tax returns in Canada, US and Australia as well 

The trend is similar outside Europe. In Canada, one contributor explains, married couples or common-law partners file separate tax returns, but they must declare their status as a couple. “Tax rates remain individual, but marital status lets you transfer credits, split pension income and add together medical expenses, which is often advantageous.”  

In the United States, married couples can also choose to file a joint or separate tax return, according to Anne. “Married couples are often taxed at a lower rate than single people but not always, depending on individual circumstances such as income, children and various deductions,” she points out. 

Meanwhile, Peter in Australia writes that there are no joint tax returns in that country. Married couples are taxed individually, but the spouse’s income is taken into account for certain benefits, surcharges and tax advantages. 

>> Watch our explainer video on the proposed change:

Edited by Samuel Jaberg. Adapted from French by Julia Bassam/gw.