Tag Archives: taxes

Why is Switzerland so expensive?

Lauren posed this question on my previous entry and it got me thinking: Why is Switzerland so expensive? Especially compared to all the European countries surrounding it?

After living here for a few years, I do have several suspicions why.

(Photo via socialjusticefirst)

First is that Switzerland IS an island of sorts… we are located in the middle of the EU, but not part of it. This makes a huge difference with import and export and VAT going between the different countries, especially if goods are made in one country, filled and assembled in another and then delivered and sold in another country.

The EU-island position also affects supply and demand on a local level as well. Many places online will ship everywhere in the EU but not to Switzerland. Try buying something on Ebay.de and asking them to ship it to Switzerland. No bueno. It’s why we had to ship our Tempur mattress to a town just over the border in Germany and then pick it up ourselves and pay customs tax going back into Switzerland.

The second reason this place is expensive is that minimum wage is much higher in Switzerland. Labor and services all cost more, so the actual prices of the products need to be able to sustain the salaries of the employees. Grocery store clerks earn around $25/hr for example. I’m pretty sure if all the cashiers at Krogers earned $25 an hour, the milk in Columbus would have to cost a little more. 😉

(Image via Blick.ch and an article about the plight of cashiers only earning 3700CHF – $3963 a month)

Restaurant prices seem exceedingly expensive here when a quick lunch can easily run you 20-30CHF and a proper dinner is minimum 50-100CHF. But if you think about how much it costs to import high quality food (Swiss are a bit picky about where food comes from and they have regulations), how much the rent of the restaurant costs ($$$) and that the waitress and cooks are all earning at least 30-35/CHF an hour, it’s not really a surprise. Still, that doesn’t stop Kay complaining in wonder how they can charge 50CHF for a steak entree.

Naturally with such a small country, even if the population is not very dense in some areas, the real estate is still ridiculous. Think San Fransisco. Rent is expensive and with many regulations on how and where you can build, there won’t be tons of sky scrapers popping up in Switzerland to alleviate the housing issue any time soon. That’s why areas like Zürich only have 0.06% free apartments and landlords can charge 4000CHF a month for a run down old flat.

(Personal photo)

Now in addition to the supply and demand restraints from the EU and the higher salaries people enjoy here, there is something even bigger that affects the cost of goods and services: Low taxes.

Let’s be honest, compared to many EU countries (Germany, Netherlands… I’m looking at you!) we do have pretty low taxes in Switzerland. The fact that they are so low is one of the reasons why taxes are such a big problem for Americans here. We are supposed to pay the difference to Uncle Sam what we’d pay in the States. The problem with that is that Uncle Sam doesn’t know that part of why the taxes are so low here are so that Swiss can use their own money to pay for health care, ridiculous rent, unbelievable grocery bills, more expensive restaurants, crazy priced clothing and everything else.

Basically, you could say that goods in Germany are much cheaper because overall German salaries are much lower and their taxes are much higher. They cannot afford to pay more. In Switzerland with low taxes and higher salaries, we make up the difference by paying out of pocket. In essence, they charge more because they can. But if you travel here, out of context everything looks absurdly expensive!

It’s interesting that IWC is able to price their watches much higher in Switzerland because the demand for them here is much higher than in the USA. They know that the Swiss population has money so they price accordingly.

After five years here, I still seem to have sticker shock when I think how much things cost in the US. I actually believe now that goods in the US have to be subsidized for the Americans or many families wouldn’t be able to afford everything they need. That’s why sometimes we see Swiss-produced fondue selling for less in America after export and Ikea products sometimes 1/2 what you would pay in Switzerland. It drives me nuts, but that’s the way it is.

This is why most German towns over the border are filled with Swiss cars doing their weekly shopping, but for many it is simply too much hassle to go to Germany every time you want to re-stock your pantry. And with the limits on how much meat, eggs, milk and so forth that you are allowed to bring in, it’s not worth it for us to go so we shop locally and I just ignore most of the prices on the receipt. 😉

What do you guys think about the pricing in America? Have you ever wondered why some things are so affordable? We Americans complain a lot about gas prices for instance, but they are so much lower than everywhere in Europe. What’s your take on that?

Sexism in Switzerland

Everyone likes to think that Switzerland is the land of neutrality and therefore also equality, and for the most part, we do live in a country with great jobs, wonderful healthcare and top quality of life standards. But Switzerland still struggles with the concept of equality between men and women (among other things).

In general, the entire society is set up for men to work and for women to stay at home with children. After awhile expats will notice this traditional sentiment in both community policies and in the actions of residents.

One small example is how banks and post offices are open from around 8am-12pm and 2pm-6pm, which coincidentally happen to be the same hours people are expected to be working in an office. For many, the bank and post are closed when they go to work, closed at lunch time and closed by the time they get home. But for the Swiss, this is no problem if your wife would just stay at home and sign for your packages for you!

Maybe you think that’s a stretch, because single men still have the problem with the post and bank hours like anybody else. I agree, so let’s talk about money. (Oooh, the Swiss hate doing that!)

Although I graduated from university before my husband, I am both female and younger, which puts my salary well below his. Of course we have  different work experiences and we are in completely different fields, but if you look on the salary calculator on the federal administration website, or any of the salary records books available here for job research, you will find that in most jobs, men earn around 1000CHF more per month for the exact same work experience as their female counterparts.

Not only are men are generally earning an average of 10,000-15,000CHF ($10,728-16,092) more for the same work, but they are usually the ones receiving promotions and earning management level positions, which pushes their salaries even further above female workers.

Lots of people cite the so-called “pregnancy excuse” that women deserve less money because they take off time for pregnancy leave. Let’s be clear here: pregnancy leave in Switzerland is 14 weeks. The military requires* all Swiss men to complete 18-21 weeks of boot camp and the general rule is 3 weeks of military a year until around the age of 35, depending on the officer’s rank and how fast he completes his hours.

Roughly calculating how many weeks Kay had to spend in the army training and how many weeks he is serving the military each year, it comes to around 100 weeks in his case. This means that if I want to “get my fill” of women’s cushy maternity leave benefits, I would have to have one baby per year for 8 years. But considering that daycare starts around 2500CHF ($2682) per month, I probably would not be able to afford to keeping working after child number two.

OK, I’m getting a bit carried away. Most Americans already know about the bull shit surrounding maternity leave in the US and how it is a poor excuse for paying men more, but here in Switzerland the whole “let’s pay men more money and send them to the military for a month each year” just pushes the issue even further.

I’ve already talked about how marriage increases your taxes if both partners work and how I lost 11% of my income to taxes when we married. We could “fix” this tax problem if I quit my job and had some children, but obviously that is not on the agenda at the moment. I’m totally fine being a DINK couple, but when we do something like buy a flat together, we do it TOGETHER. As in, I will own 50% of the flat and my husband will own 50% of the flat. He is not buying it on his own, as our contractor seems to believe.

I haven’t mentioned who our contractor is until now, but I am so tired of the sexist, traditional ways they work that I’m not keeping it a secret any longer.

Allreal is a typical Swiss company. We were assigned a general contractor when we bought our flat who we’ve been “dealing with” for the past year and a half.

Usually Kay deals with emailing and calling the guy because he is obviously the native speaker and it does make more sense for him to do it. But Kay travels a lot and it’s not like I am incapable of communicating in German. Allreal ignores Kays emails most of the time and they ignore mine too, but they do something particularly annoying when they DO email Kay back.

They “forget” to copy me.

And it’s not like Kay forgot to cc me. Oh no. He includes me on all of our emails to Allreal because he needs my input for all of our joint decisions. We are a team after all. But instead of hitting “reply all”, our contractor always replies only to Kay, without fail.

At first I thought he was just stupid or daft, but after Kay asked the guy several times not to forget to include me on the email because Kay would be abroad for work, I now suspect this is some Swiss sexism at work.

I mean, why should he include a wife on the emails? It’s pretty obvious that in Switzerland only men have any money or any balls to make decisions about buying property. This is man business! And an American woman? Good lord, she must not know anything about this.

What really sealed the deal for me was when I wrote an email to the contractor while Kay was abroad and I deliberately excluded Kay because I wanted to force the contractor to reply only to me. I honestly thought he would ignore my email, but you know what he did? He took the time to cc not one, but TWO of Kay’s email addresses so that he was on copy for the reply.

I am furious. FURIOUS.

If Allreal’s employees can take the time to include my husband on emails about our business, they could take the time to hit “reply all” and stop excluding me from all communications. It is poor judgement on how to handle clients and frankly, it disgusts me.

Maybe all contractors in Switzerland hold similar views, but with business practices like this, I am certainly not going to recommend Allreal to anyone I know. And maybe it is a small thing, but it echoes a big sentiment that is felt all around the country in all aspects of life here: Women should stay at home with the children where they belong.

*Military requirements are changing in Switzerland and people are no longer jailed for refusing to participate. In some cases, men can fulfill civil service roles, do their service all in one go, and pay to stay out of the military.

The largest tax savings you’ll ever see!

As a new year starts, I always find myself worrying already about how to do my US taxes properly. However, I find myself a little irked when I read things like the following quote from the Expats Guide to US Taxes:

Wow, that makes a ton of sense.

I’m so excited by these “large tax savings”. I do not live in the US, maintain a residence there or benefit from anything my US taxes pay for, but I can be excited that I am “saving” on what I have to pay in addition to my Swiss taxes. My US taxes don’t take into consideration the cost of living in Switzerland, but hey… I’m saving!

I can also console myself in the fact that I am “doing my American duty.” Because labeling it a “duty to my birth country” makes me feel better about being taxed twice, sometimes on the same money because the US doesn’t recognize certain tax laws here.

The reality is more that I am terrified what kind of charges the IRS could impose if I accidentally make a mistake on my taxes or on my FBAR or FATCA filing requirements. So I try my hardest to fill out everything correctly on time, but I do it because I am fearful of the wrath of the IRS. Not because it makes me feel “more American” over here in Switzerland.

Expats Guide to US Taxes may be a little outdated and it is not from the IRS, but it does have some good information. It’s just hard to gloss over little gems like the one above that try to make me feel better about being taxed abroad.