FTA publishes Circular Letter No. 44 "Taxation according to expense in direct federal tax"

On 24 July 2018, the Swiss Federal Tax Administration (FTA) published Circular Letter No. 44 "Taxation according to expense in direct federal tax".

The background of the newly published circular letter No. 44 is the following: In June 2011, the Federal Council submitted the Dispatch on taxation on the basis of expenditure to parliament. In September 2012, the federal law on taxation on the basis of expenditure was passed with the corresponding amendments to the DBG and StHG. The corresponding changes came into force on 1 January 2014 (StHG) and 1 January 2016 (DBG). In the course of the amendments to the law, the previous ordinance of 15 March 1993 was also replaced by the new ordinance on taxation according to the cost of direct federal tax of 20 February 2013, which came into force on 1 January 2016.

The highest of the following amounts is set for the cost of living incurred in Germany and abroad: (i) CHF 400,000; (ii) seven times the rent or rental value; (iii) three times the pension price for room and board; or (iv) the sum of gross income.

In the case of spouses who wish to be taxed on the basis of expenses, both partners must meet all the conditions for lump-sum taxation.

Circular No. 44 "Taxation according to the expense for direct federal tax" dated 24 July 2018 replaces the previous Circular No. 9 of the FTA dated 3 December 1993 and is generally applicable to all assessments of direct federal tax from the 2016 tax period onwards. For taxpayers already taxed according to expense on 1 January 2016, the old law and the old circular no. 9 of the FTA of 3 December 1993 will continue to apply until 31 December 2020 in accordance with Art. 205d DBG. From 1 January 2021, this category of taxable persons will also be subject without exception to the new law, which will be applicable to all other taxable persons from 1 January 2016.

All circular letters of the FTA can be downloaded here.