I have lived in Switzerland as a software engineer for more than three years now and have mostly been a freelancer in that time. During that time I learned quite a few things which I want to share.

While I got many things right after thoroughly researching them beforehand and experience many great highlights, there were also things I did not expect.

One of them is that the effective total deductions from your income are much higher than most people would think.

You'll need to read this article to the end to fully understand this.

I am first going to lead you onto the false path of thinking that taxes are low so you can understand how this thinking is flawed.

Salary deductions are actually still high in Switzerland

People so often say: "Switzerland has very low taxes."

But the real truth is: There are no tax havens in Europe anymore, except maybe for large corporations.

The perception that Switzerland had low taxes is actually wrong in two ways:

First of all, taxation is Switzerland is based on what city you live in.

While taxation of income and profits tend to be lower in a few towns like Zug, they are higher in places like Zürich and on a comparable level in some big cities like Basel or Geneva.

But those few towns in Switzerland tend to be a bit outside of the big centers and have high rents, so most people will have to live in places with higher income tax.

Let's take Zürich as an example. The average salary is about 8'000 CHF per month. As an expat, you are taxed at the source and pay about 9.4% of that directly in income tax as a single. I am assuming here that you are not part of a church and have no kids and are not married. If you are part of a church, the tax bill will go up while being married or having kids tends to lower the tax bill again.

But then on top of that come other taxes, like value added tax. With the two most relevant VAT rates being 7.7% and 2.5% at the moment in Switzerland, we can estimate that on average you tend to pay about 5% in VAT. So that part of the income which you do not save but consume for food, transportation, clothing etc. is basically taxed at another 5%.

And then of course, there are more indirect taxes on alcohol, fuel and so on, which are a bit hard to estimate here since they are very much dependent on your individual consumption. Let's assume they can make up to another 5% of your salary.

So all in all that leads to a tax rate somewhere between 15-20% on your income when living in Zürich, with all sorts of taxes included.

Not bad you might say, if you come from high tax countries like Germany, France or Italy.

But we are not done yet, there is more to be taken from your salary. Which leads us to the second argument: Not only taxes go away from your salary, but there are social security contributions as well.

In reality, you often hand over more money to the Swiss social security system than taxes.

Social security fees in Switzerland are high

The two pensions systems AHV and Pensionskasse/BVG as well as the various insurances against unemployment, child contributions and so on add many additional percents to the deductions from your salary.

In fact, if you live in tax-optimized locations like Zug or Freienbach, your social security contributions will be a multiple of your income tax.

Let's take the first pillar of the Swiss pension system: The AHV, which is packaged with EO and IV. It costs you about 10.6% total of your salary. It looks at first as if you only had to pay half of it while the employer pays the other half. But really it just goes away from your money, which becomes much clearer if you calculate the same case for being a freelancer instead of a regular employee.

Then there is the unemployment protection which costs 2.2%.

And there are a few more smaller deductions like Familienkasse, let's just summarize them as about one percent.

And then there is the second pillar of the Swiss pension system. This one is a bit harder to classify since you have sort of your own savings account in that system and can take it out under certain circumstances like buying a house. But on the other hand the interest rate of the Pensionskasse tends to be below the inflation rate and in case is a terrible investment in the long run, compared to properly executed stock market investments. But because the Pensionskasse is not clearly a tax-like contribution, unlike the AHV, I am going to leave it out here.

So far, we have about 15-20% + 10.6% + 2.2% + 1% = 28.8-33.8%, not counting the Pensionskasse in.

So in total, that is a tax burden of around a third of your salary in Zürich for the more or less average middle class worker - and that is not yet counting in the mandatory Pensionskasse (as I said - it's a non-voluntary deduction, but not quite like a tax).

If you do count the Pensionskasse in, you will end up with an age group dependent additional burden of between 7 and 18 percent.

So a total of about 36% to 52% in deductions from your salary.

And if you live in parts of Switzerland with higher taxes like Basel or Geneva, that deduction rate will again increase up to another 7%, so in total about 42% to 59% in deductions from your salary.

And then again, I made the calculations on a middle class salary for someone in their 30ies.

8'000 CHF gross salary per month might seem luxurious if you come from other parts of the world, but in Switzerland that will not allow you a luxurious life style.

Higher income classes do pay progressively higher taxes in most parts of Switzerland.

Summing it up: You will quickly land in the region of 40%, 50% or 60% of deductions from your income in Switzerland!