US expats in Switzerland 2026: FATCA, PFIC and dual tax filing guide

US filing obligations while Swiss resident

The United States taxes its citizens and green-card holders on worldwide income, regardless of where they live. This means that as a US expat in Switzerland, you must file a US federal tax return (Form 1040) every year, reporting your Swiss salary, investment income, and any other global income.

Switzerland also taxes you on your worldwide income once you are resident here. This creates a dual-filing requirement: a US return and a Swiss return every year.

To avoid double taxation, you can use either the Foreign Earned Income Exclusion (FEIE), which excludes up to USD 132'900 of foreign earned income (2026 figure), or the Foreign Tax Credit (FTC), which gives you a dollar-for-dollar credit for Swiss taxes paid. Many expats use both strategies in combination.

FATCA reporting requirements

FATCA (Foreign Account Tax Compliance Act) requires US persons to report their foreign financial accounts on Form 8938 if they exceed certain thresholds. For a US person living in Switzerland, the threshold is USD 200'000 in specified foreign financial assets at year-end (or USD 300'000 at any time during the year) for married filing jointly, or USD 50'000 (USD 75'000 at any time) for singles.

Separately, the FBAR (FinCEN Form 114) must be filed if the aggregate value of foreign financial accounts exceeds USD 10'000 at any time during the calendar year. FBAR is not filed with your tax return; it is submitted through the BSA E-Filing System.

Most Swiss banks and financial institutions are FATCA-compliant and will report your accounts to the IRS via the Swiss tax authorities. Make sure your Swiss bank knows your US status and has your correct documentation, including Form W-9 or the appropriate FATCA self-certification.

PFIC rules and Swiss funds

A Passive Foreign Investment Company (PFIC) is any non-US entity that earns at least 75% passive income or holds at least 50% passive assets. Many Swiss investment funds, including pillar 3a securities funds, ETFs, and mutual funds, qualify as PFICs.

PFIC treatment under US tax law is punitive. Gains from PFIC shares are taxed at the highest marginal rate plus interest, rather than at capital gains rates. The reporting requirement (Form 8621) is also notoriously complex and time-consuming.

If you hold Swiss funds, check whether they have a QEF (Qualified Electing Fund) election available, which can mitigate the punitive treatment. In practice, many US expats avoid Swiss-domiciled funds entirely and invest in US-domiciled ETFs and individual stocks instead. Always consult a cross-border tax professional before investing as a US person in Switzerland.

The US-Switzerland tax treaty and double taxation

The US-Switzerland Double Taxation Agreement (DTA) provides mechanisms to avoid double taxation on income, capital gains, pensions, and other payments. Under the treaty, Swiss-source income may be taxed in Switzerland, but the US allows a foreign tax credit for Swiss taxes paid.

The treaty also provides reduced withholding rates on dividends, interest, and royalties. For example, Swiss anticipatory tax on Swiss-source dividends may be partially or fully reclaimed by Swiss residents through the tax return. US persons should have the correct documentation (such as Form W-9 or a FATCA self-certification) on file with their Swiss bank.

Swiss anticipatory tax (Verrechnungssteuer) of 35% on dividends and interest from Swiss sources can be partially or fully reclaimed by Swiss residents through the tax return. The DA-1 guide for foreign withholding tax explains the reclaim workflow. For more on the treaty landscape, see the double taxation agreements guide.

Swiss Pillar 3a for US citizens: the triple tax trap

Swiss Pillar 3a accounts present a specific challenge for US citizens. While the accounts offer Swiss tax deductions and retirement savings, they often invest in Swiss-domiciled funds that are treated as PFICs by the IRS.

This creates a triple problem: first, the PFIC rules apply punitive US tax treatment to any gains inside the 3a account. Second, the contributions are not deductible on the US return (instead, the Swiss tax deduction reduces your Swiss taxable income, while FEIE or FTC is used on the US return to avoid double taxation). Third, when you eventually withdraw the money, it may be taxed by both Switzerland (at withdrawal) and the US (as income or PFIC distribution).

Some US expats choose to avoid Pillar 3a entirely because of this complexity. Others contribute only to bank-based 3a accounts that hold no Swiss funds, or they limit contributions to the amount where the Swiss tax deduction outweighs the US filing burden. There is no one-size-fits-all answer.

Before opening a Pillar 3a account as a US person, verify the provider's investment options. Ask whether the account can hold US-domiciled ETFs or individual stocks instead of Swiss funds. Also review the declaring foreign assets guide for how your 3a account fits into your overall Swiss asset disclosure. Professional advice from a US-Swiss cross-border tax specialist is strongly recommended.