Tax rates between Germany, Austria and Switzerland:

I have now lived in all German-speaking countries. So I grew up and lived in Austria for 30 years, then in Germany for 2 years and now in Switzerland. Every time, my financial situation changes a lot. Now after 6 months in Switzerland I can make a clear comparison between those countries. The first time I made a real income calculation was in Austria at my first job in 2019 and the result was devastating, earning 1600€ while working 51 hours per week if the commuting is also considered. For Germany, I had to pay rent for the first time, but the net income was 3000€ working in home office thanks to the pandemic. Switzerland is on a whole different level, sitting at 6000€ net without any real commuting at all being below 5 minutes. Each time the taxes were total different, and they matter more than you can ever imagine.

Taxes:

Taxes in Austria and Germany are almost similar. Switzerland is completely different. Tax rates in Germany and Austria are progressive, so you pay 50% only on the sum above 90000€ so if you earn 100000€, 10000€ are taxed with 50% But let’s get an overview first:
Source Austria
Source Germany

Austria Germany Switzerland*
Income level Tax rate Income level Tax rate Income Level Tax rate
0-11000€ 0% 0-9744€ 0% 12000 CHF 0.51%
11000-18000€ 20% 9745-14753€ 14%-24% 24000 CHF 1.63%
18000-31000€ 32.5% 14754-57918€ 24-42% 48000 CHF 7.93%
31000-60000€ 42% 57919-274612€ 42-45% 96000 CHF 13.92%
60000-90000€ 48% 274612€ above 45% 192000 CHF 20.41%
90000€-1000000€ 50% 1000000 CHF 28%

*The tax rate in Switzerland highly depends on the location where you live. In this case, it is St. Gallen and I use the Quellensteuer which can be checked here.

 

In total, you can see that the tax rate in Switzerland is much lower than in Austria and Germany. However, you also have to account additional taxes.

Tax Type Austria Germany Switzerland
Capital Gains 27.5% 26.375% 0%(Income tax when professional trader)
Dividends 27.5% 26.375% Income tax above.
VAT(Mehrwertsteuer) – Essentials 10% 7% 2.5%
VAT – Non Essentials 20% 19% 7.7%

Now you have a broad overview of the most important tax rates in the DACH region. However, you also have to pay that social security, which itself is a daunting tax disguised as a social construct.

 

 

Social Security

Social security is in my opinion the biggest scam ever invented. Instead of paying a flat sum to insure yourself, you pay a percentage of your income for those things. In Austria, it is capped at 5850€ per month, so rich people do not pay into this thing more than someone earning 5850€. Germany has a social security cap is 4837€. In the table below

Source Austria
Source Germany

Austria Germany Switzerland*
Employer pays 22.6% ~ 20% 18.7%
Employee pays 18.12% ~ 20% 10.6%

* Switzerland again is more difficult to calculate as the rates are according to age and where you live. I calculated the rate using this tool.

 

Total Tax Rate

So in summary, we can calculate a total tax rate using all those values above. I will use my yearly salary of, 100000CHF per year and the results will probably shock you:

Austria Germany Switzerland
Base Salary 100000€ 100000€ 100000CHF
Scam Security Employee: -14723€ -15225€ -14268CHF
Incom Tax: -23126€ -25653€ -13596CHF
Result Net 62150€ 58126€ 72096CHF

Source Austria:
Source Germany
Source Switzerland

 

The values calculated here are what you see on your loan sheet. However, what you get is not what the company has to earn somehow. There are shady hidden taxes which are not visible on your loan sheet. Basically, it is the employer part of the social security. Important is what the company has to earn in order to be able to pay you 100000€ per year.

Austria Germany Switzerland
125503€ 115046€ 118771CHF (not sure how it is calculated)

Source Austria:
Source Germany
Source Switzerland

 

Conclusion:

You have a tax rate of 50% in Austria, 50.5% in Germany and 39.2% in Switzerland. Here we have not considered VAT which is 20% in Austria and Germany, resulting in a tax rate of 60%. Switzerland is not completely correct as 8700CHF goes to the first pillar and 7000CHF to the second pillar. So in Switzerland, 15700CHF deducted is in reality a stock market portfolio and could be recovered when you leave the country or buy real estate. So the real tax rate in Switzerland is 26% if considering what the employer really has to pay and what you really get, including the invisible things. Also, you have much less taxes on investments in Switzerland.

So what I probably will do is move to Zug in order to be a part of the rich and pay the lowest amount of taxes. I hate taxes as I consider them theft.

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