According to the Swiss Federal Statistical Office, 36,410 couples tied the knot in Switzerland in 2021, and according to the news portal “watson”, couples prefer to get married on dates with repeating digits (e.g. 22.02.2022). But these are by no means the most important figures when it comes to marriage. Far more important are the effects of tying the knot on a couple’s finances. What is the impact of getting married in Switzerland on taxes? What else changes after your wedding day in terms of finances and insurance? We will show you what advantages getting married can have, as well as how it can have a negative impact on finances.
Getting married in Switzerland: the financial advantages and disadvantages
If you’re thinking about getting married, it makes sense to give some serious thought to what the impact of saying “I do” will have on your finances and insurance. We will show you what the financial advantages and disadvantages are of getting married in Switzerland. In doing so, couples can get ready for their future together even when it comes to this admittedly dry topic.
Marriage and taxation in Switzerland: what’s the situation with taxes?
Do you also know couples who don’t get married for tax reasons? This is because of what’s known as the “marriage penalty”, a term the Federal Supreme Court uses to refer to when married couples pay at least 10 percent more in direct federal tax than cohabiting (unmarried) couples in the same economic situation. Although the cantons have for the most part eliminated this financial disadvantage by means of relief measures according to SRF, reforms are only in the pipeline when it comes to direct federal tax.
The reason for the marriage penalty is the fact that married couples are taxed jointly. In other words, couples enter both their incomes in their joint tax return, and seeing as these are added together when calculating how much tax they owe, couples end up in a higher progression level than if their salaries were taxed separately. This is because, when it comes to income tax, a higher percentage tax rate is applied to higher incomes. This means that people not only have to pay more tax on higher incomes in absolute terms, but in relative terms as well.
Tax disadvantages of getting married
When it comes to direct federal tax, it’s mainly high earners who remain at a disadvantage. The marriage penalty mainly affects married couples where each spouse earns an annual income of 75,000 to 125,000 francs.
Tax benefits of getting married
In addition to the “marriage penalty”, there is also a “marriage bonus”. In certain circumstances, spouses benefit from lower taxes essentially because they are assigned a lower tax rate than single people. This is, for instance, the case if one spouse contributes considerably more towards a joint income than their partner. In this instance, their joint tax bill will generally be lower than if each spouse were taxed separately.
Marriage and OASI: what is the situation with OASI contributions and pensions?
There are also important differences between married couples and cohabiting couples when it comes to payments towards OASI and OASI pensions, and the biggest difference is only visible upon retirement.
Advantages of getting married when it comes to OASI
Spouses who are not in employment do not have to pay any OASI/IV/EO contributions if their partners are in employment and pay at least twice the minimum amount in OASI contributions each year.
Disadvantages of getting married when it comes to OASI
- As is the case with taxes, spouses face a marriage penalty when it comes to OASI as well when they reach retirement age: whereas unmarried couples can withdraw both pensions in full (200 percent), a married couple will be paid no more than 150 percent of the maximum pension.
- Spouses on similarly high incomes in particular are at a financial disadvantage in this respect. In concrete terms, it means that dual-income married couples each with an annual income of between 75,000 and 125,000 francs lose out.
Tips on how to avoid gaps in coverage
In any case, make sure you close gaps in coverage with OASI – for instance if the couple’s main earner reaches retirement age earlier than their partner who is not in employment.
Death and marriage: how are spouses covered with OASI and pension funds?
In the event of a spouse passing away, married couples are better covered than cohabiting couples. Specifically, the bereaved spouse will receive survivor’s benefits under pillar 1 (OASI) and a survivor’s pension (or at least compensation from pillar 2 (pension fund). Cohabiting couples, on the other hand, come away empty-handed under pillar 1, and they cannot designate each other as beneficiaries in their will either. Under pillar 2, spouses can designate each other as beneficiaries in their will, but whether they can withdraw money from their pension fund depends on the pension fund.
Marriage and inheritance: do the spouses of testators have to pay inheritance tax?
Spouses in Switzerland are at an advantage when it comes to inheritance tax, as well. This is because, depending on the provisions in each canton, inheritance and gift tax are either significantly lower for spouses, or non-existent. Generally speaking, the spouses of testators are exempt from inheritance tax, whereas unmarried couples are subject to it.
Marriage and debts: what if a spouse gets into debt?
Each spouse is liable for their debts alone and only with their own assets. If a spouse signs a car lease contract or rental agreement by themselves, their partner cannot be held liable for the lease payments. By law, debts for daily essentials such as food and drink or health insurance are excluded, in which instance the spouses are jointly liable.
Financial management after marriage: what account model do you want to opt for as a couple?
What’s best: a joint account, separate accounts, or even three accounts? We will show you which account model is most suitable in which circumstance.
- Two separate accounts: you want to keep your finances separate, and give yourselves a high degree of autonomy.
- A joint account: you don’t just want to live together, you also want to manage your finances together and make joint decisions.
- Three bank accounts: you both have accounts, and you also create a third that you use to cover fixed costs, for example rent or joint expenses.
And lastly, something a bit more romantic. Are you planning to go on a honeymoon?