Switzerland’s upcoming referendum on individual taxation of married couples on March 8th is highlighting a trend already commonplace for many Swiss citizens living abroad: separate tax assessments for spouses. While Switzerland currently taxes married couples jointly based on a single tax return, a growing number of countries have moved towards individual taxation in recent decades.
“I live in Mexico, where we are taxed based on our individual income, regardless of whether that income comes from a salary, dividends, or rental income,” wrote Martha, a participant in a debate surrounding the proposed tax reform. Her experience reflects a broader shift in how many nations approach taxation of married individuals.
Across Europe, individual taxation has become the dominant model. Don Ron, commenting on the debate, noted that “Here in Spain, everyone can freely choose what is best for them to lower their taxes. The same applies to Ireland.” Further detailing the Spanish system, “AndrewintheAlps” explained that individual taxation is most advantageous when both spouses have similar, moderate incomes, while joint taxation benefits households where one spouse has little to no income.
Germany also offers a similar choice. Married couples and registered partners can opt for individual taxation or “Ehegattensplitting,” a system that combines the couple’s income and divides it by two for tax calculation, particularly benefiting households with significantly different earnings. But, this model faces criticism from Germany’s Social Democratic Party (SPD), which argues it exacerbates inequalities between men and women, according to a report from SWI swissinfo.ch.
The move towards individual taxation isn’t limited to Europe. A reader reported that in Canada, married couples or common-law partners file individual tax returns but must declare their marital status. “Tax rates remain individual, but marital status allows for the transfer of tax credits, the splitting of pension income, and the pooling of medical expenses, which is often advantageous,” the reader explained.
In the United States, married couples can choose between filing jointly or separately, according to Anne. “Married couples are often taxed at a lower rate than single individuals, but this doesn’t always depend on the individual situation, such as income, children, and various deductions,” she noted.
Australia operates with a fully individual system. Peter, a resident of Australia, stated that there is no joint tax return. While married couples are taxed individually, the income of a spouse is considered for certain benefits, allowances, and tax concessions.
France remains an outlier, maintaining a system of joint taxation linked to a family quotient based on the number of people in the household, resulting in significant income tax reductions, especially with more children.