US Expat Taxes for Americans in Switzerland – A Complete 2025 Guide

Moving to Switzerland as an American is a great opportunity, but it comes with complex tax responsibilities. As a US citizen, you still have to file US taxes, no matter where you live. That means reporting your global income, often disclosing your foreign accounts, and understanding how US rules apply to Swiss pensions, investments, and businesses. If you’re a Swiss tax resident, you’ll probably have to file and pay Swiss taxes too.

In this guide, we provide an overview of what you need to know about US expat taxes and reporting requirements as an American living in Switzerland, as well as the main features of the Swiss tax system. If you’re an American professional, entrepreneur, or high net worth expat who wants to stay compliant and optimize your finances while living abroad, read on.

• Understanding your US tax obligations in Switzerland
• Swiss tax considerations for US expats
• Tax planning strategies for Americans in Switzerland
• Taxes summary for American expats in Switzerland

Let’s get started.

Understanding your US tax obligations in Switzerland

1. Filing requirements

As a US citizen or green card holder, you have to file a federal tax return each year. This applies even if you’re living in Switzerland or paying Swiss taxes. While you still have to pay any taxes you might owe by April 15th, expats get an automatic filing extension to June 15th. You can also request an extension until October 15th.

2. Worldwide income reporting

US tax law requires US citizens and Green Card Holders to report their worldwide income – no exceptions. This includes income from employment, self-employment income, rental property, investment income, and even pension distributions. If you don’t report your foreign income, the IRS can penalize you heavily.

3. Claiming the foreign earned income exclusion (FEIE)

The Foreign Earned Income Exclusion lets you exclude up to $130,000 (for 2025) of foreign earned income from your US taxes. You can’t claim the FEIE for investment income, rental income, pensions or other passive income, just earned income such as wages and self-employment profits.

To qualify for the FEIE, you must meet one of two tests:

• The Physical Presence Test: Spend at least 330 full days abroad during a 12-month period.
• The Bona Fide Residence Test: Be a resident of Switzerland for a full calendar year with ties to the country.

Many expats use this exclusion to reduce or eliminate US tax on their foreign earned income. But it’s not automatic – you must elect it by filing Form 2555.

4. Claiming the Foreign Housing Exclusion or Deduction

If you rent your home in Switzerland and you claim the Foreign Earned Income Exclusion, you may also claim the Foreign Housing Exclusion or Deduction. This covers rent, utilities (excluding phone), and some other costs. The maximum amount you can exclude varies depending where you live, with Geneva and Zurich having higher limits than other areas.

5. Claiming the Foreign Tax Credit

Swiss taxes are usually higher than US taxes, especially in high-income cantons. If you pay Swiss income tax, you can claim a US tax credit using Form 1116. This typically  reduces or eliminates your US tax liability on the same income.

You can’t double-dip by using the FEIE and the Foreign Tax Credit on the same income, but you can use them together strategically. So for example, you might exclude earned income with the FEIE, then use the FTC on passive income or income above the FEIE limit.

6. Reporting your foreign bank accounts (FBAR and FATCA)

If your combined foreign account balances exceed $10,000 at any point during the year, you must file an FBAR (FinCEN Form 114). This includes:

• Swiss bank accounts
• Investment accounts
• Business accounts you control
• Joint accounts with a spouse or parent

Separately, you’ll have to file Form 8938 under FATCA (Foreign Account Tax Compliance Act) rules with your tax return if your foreign assets exceed:

• $200,000 on the last day of the year (or $300,000 at any time) if filing single
• $400,000 on the last day of the year (or $600,000 at any time) if married filing jointly

Penalties for non-filing are severe – up to $10,000 for FATCA and $10,000+ for FBAR violations, even though these forms are just a reporting exercise and do not imply any additional tax. Note that Swiss banks and other financial institutions are now reporting their US account holders and their balances to the US Treasury too.

7. Swiss pension plans and US taxation

Switzerland’s pension system includes:

• Pillar 1 (AHV/AVS): State pension, funded by payroll taxes
• Pillar 2: Employer-sponsored pension plans (similar to US 401(k))
• Pillar 3: Private retirement savings accounts

The IRS does not treat Pillar 2 and 3 contributions as tax-deferred. Contributions are often taxable in the US the year they’re made. Distributions may be taxed again when you receive them – unless you plan properly.

The US-Switzerland tax treaty does not provide clear protection for these plans. You may need to report them on multiple forms, including FBAR, Form 8938, and possibly Form 3520 or 8621, depending on plan structure. Seek advice from an expat tax specialist before investing and saving in these types of plans.

8. Passive foreign investment companies (PFICs)

Swiss mutual funds, ETFs, some pension plans and insurance-wrapped products often fall under punitive IRS PFIC rules. These rules punish US taxpayers with:

• Ordinary income tax treatment of assumed capital gains  (no capital gains rates)
• Interest charges going back to the year of investment
• Complex annual reporting on Form 8621

One PFIC can trigger a major compliance burden. Most US tax advisors recommend avoiding non-US pooled investments. Instead, invest through US brokerage accounts or use individually held assets like stocks or bonds.

PFIC penalties aren’t just for the ultra-wealthy. Even small investments can cause huge headaches.

9. Owning or running a foreign business

If you own part or all of a foreign business, such as a Swiss GmbH, you may face extensive US reporting:

• Form 5471: Required for US persons with significant ownership in foreign corporations
• Subpart F income: Passive or related-party income inside the company may be taxed immediately
• GILTI (Global Intangible Low-Taxed Income): Business profits may be taxed even if not distributed

Swiss companies aren’t treated like US LLCs or sole proprietorships by default. You can file a “check-the-box” election to treat your foreign entity as a disregarded entity, but this election must be timely – usually within 75 days of forming or acquiring the business.

Failure to report a foreign business properly can result in penalties of $10,000 or more per year, per form.

Swiss tax considerations for US expats

1. Tax residency

Switzerland treats you as a tax resident if you either spend at least 90 days in a year in Switzerland, or spend at least 30 days and engage in work or business.

Once resident, you’re taxed on your worldwide income. Non-residents are taxed only on Swiss-sourced income.

2. Income tax rates

Switzerland has three levels of income tax:

• Federal: Up to 11.5%
• Cantonal: Varies by canton
• Municipal: Varies by commune

Including all 3, total income tax rates can range from 20% to over 40%, depending on your income level and where you live. Zurich, Geneva, and Vaud are on the higher end; Zug and Schwyz are lower-tax cantons favored by wealthy expats.

3. Wealth tax

Unlike the US, Switzerland levies a wealth tax on your net worth. Rates vary but generally fall between 0.2% and 1%, depending on canton and assets.

4. Social Security

As an employee, you’ll contribute to the Swiss AHV/AVS system. The US-Switzerland totalization agreement helps you avoid double social security taxation.

Tax planning strategies for Americans in Switzerland

1. Combine FEIE and FTC to minimize your US tax

The FEIE helps you exclude up to $126,500 (for the 2024 tax year, or $130,000 for 2025) in earned income, but it doesn’t apply to investment income or any other type of passive income. The Foreign Tax Credit kicks in where the FEIE ends, offsetting US tax with Swiss income taxes paid. When used together, they can eliminate most of your US tax liability while keeping you compliant. Seek advice from a US expat tax specialist to apply them correctly and avoid double taxation..

2. Avoid PFICs and invest through US brokerage accounts instead

Swiss mutual funds, ETFs, and insurance-based investments usually trigger PFIC treatment – and it’s not worth it. You’ll pay US tax on gains at the highest rate, plus interest going back to when you bought them. Instead, use a US brokerage account to invest in tax-efficient vehicles. That keeps you inside the IRS system and avoids the nightmare of Form 8621 reporting.

3. Make a check-the-box election early if you own a foreign business

By default, a Swiss GmbH or SA is treated as a foreign corporation. That means complex forms like 5471, GILTI calculations, and Subpart F income rules. If you own the business outright, you may be able to “check the box” to treat it as a disregarded entity for US tax. That simplifies reporting and avoids double taxation – but only if done within 75 days of forming or acquiring the entity.

4. Take care with Swiss pensions – they can trigger US taxes and forms

Pillar 2 and Pillar 3 pensions aren’t recognized as tax-deferred by the IRS. Contributions might be taxed in the US even if they’re tax-deductible in Switzerland. Withdrawals could be taxed again later. Some pensions may also need to be reported on FBAR, Form 8938, Form 8621, or Form 3520. Work with a tax advisor who understands the interaction between the US and Swiss systems.

5. Work with an expat tax specialist – regular accountants often miss expat-specific pitfalls

Expat tax rules are a different world from domestic US tax prep. Most CPAs have never dealt with FBARs, PFICs, or Form 5471. If you own foreign assets or run a business, it’s critical to work with a tax advisor who specializes in American expats. They can help you reduce taxes legally, stay compliant, and avoid expensive mistakes that could snowball over time.

Taxes summary for American expats in Switzerland

Living in Switzerland makes for a smart move and a great experience for many Americans, but the tax obligations are complex. US expats must report everything from their income and pensions to bank accounts and businesses.

To avoid surprises, take your US tax compliance seriously. File every year, avoid PFICs, report your foreign accounts, and structure your businesses well. Always consult with a tax advisor who is experienced working with American expats in Switzerland. If you’ve been living in Switzerland for a while but haven’t been filing US taxes, you may qualify for an IRS amnesty program called the Streamlined Foreign Offshore Procedures.