The tax authorities are looking to reduce private sector salaries.

The taxpayer works as an employee for an insurance company, as a broker. To carry out his activity, the insurance company grants him representation expenses to cover the costs incurred by the taxpayer in the exercise of his lucrative activity. The taxpayer qualifies the representation expenses as professional expenses.

The tax authorities are not communicating on a practice they would have
No details in the annual instructions for the tax return submission.
No directive or circular published on its website.

In the annual tax assessment, the tax authorities inform the taxpayer that they have a practice:
1️⃣ Reclassification of representation fees as salary
2️⃣ On the first income bracket of CHF 60,000, 25% is treated as a business expense (i.e. a maximum of CHF 15,000 for this bracket)
3️⃣ For income above CHF 60,000, 10% is treated as a business expense
4. The total capped at CHF 20,000
which is CHF 15,000 for the CHF 0-60,000 bracket
and CHF 5,000 for the CHF 60,000-110,000 bracket
and CHF 0 for all net taxable salaries exceeding CHF 110,000
5️⃣ This package excludes any effective deduction.

Let's rephrase the tax authority's HR skills:
£60,000 net taxable salary (including flat-rate representation expenses)
£45,000 taxed and £15,000 in professional expenses
£110,000 net taxable salary (including flat-rate representation expenses)
£77,400 taxed and £17,200 in professional expenses
£200,000 taxable salary (including flat-rate representation expenses)
£180,000 taxed and £20,000 in business expenses.

When an employer seeks to value their employees and encourage them to develop business,
▶️ The tax authority is doing a U-turn, rewriting history and putting pressure on the motivation of these same employees.

👉 Flat-rate fees exist to simplify the administrative process. To refuse the principle of the existence of such fees is to
To generate extensive administrative work that reduces a taxpayer's profitability and income (and thus tax revenue)
▶️ artificially increase taxpayer revenue
to tax the taxpayer at a significantly higher rate than they should be taxed, or even at a rate beyond the legal scale
recover an overpaid tax

ACI-VD practice