Swiss diplomats face hefty tax bills

Some allowances for Swiss diplomats will no longer be tax deductible Keystone

Swiss government employees based abroad are set to lose their tax perks as a result of changes to the fiscal system.

The foreign ministry said about 900 of its personnel stationed abroad, including employees of the Swiss Agency for Development and Cooperation (SDC), would have to pay up to three times more tax.

Spokeswoman Carine Carey told swissinfo that the Bern cantonal authorities had introduced the new regime at the beginning of the year.

She said the extent of the tax increase depended on several factors, including the posting abroad, as well as the labour conditions and the family situation of the diplomats.

“A diplomat in Iraq for instance is entitled to a special payment and this is no longer tax deductible,” Carey said.

The Bern cantonal authorities decided to include additional allowances for postings in risk countries, extra education costs, pension fund contributions or the trip for an annual home leave in the tax bills.

It is estimated that the loss of these perks will result in a tax bill which is twice or even three times higher than at present.

“We are evaluating the situation,” she added, but did not elaborate.

Tax justice

The changes in the tax system are part of efforts to create a fair fiscal policy and do away with a preferential treatment for employees of the federal administration.

The head of the Bern cantonal tax office, Bruno Knüsel, was quoted as saying that the foreign ministry “has been rather generous towards its employees”.

He told the Berner Zeitung newspaper that some of the rules for additional expenses were “peculiar”.

However, Carey said federal employees based abroad were subject to federal taxes and had to accept salary cuts to compensate for the exemption from cantonal and local taxes which make up the bulk of fiscal charges for Swiss residents.

The regulation is in line with a 1963 Vienna agreement on consular relations.

swissinfo

In brief

As a rule Swiss citizens who live abroad are no longer subject to the Swiss tax system, neither on a federal, cantonal nor local level.

However, employees of the federal administration based abroad, including members of the foreign, economics or defence ministries, remain subject to federal taxes.

They also have to accept cuts from their basic salaries to make up for some tax breaks.

These include exemption from cantonal and local taxes and tax-free allowances.