Unless you are a permanent resident, are married to a Swiss citizen, or earn a high income, your Swiss taxes are normally deducted directly from your salary by your employer. This specific withholding tax is usually referred to as tax as source (German: Quellensteuer, French: impôt à la source) and covers federal taxes, cantonal taxes and municipal taxes.
Who pays tax at source?
Most foreigners who are employed in Switzerland but do not have permanent residence in Switzerland pay tax at source. This is deducted from their salary at a flat rate by their employer. The size of the flat rate depends on a number of factors including:
1. Your place of residence. Taxes vary between cantons and municipalities, so the amount of tax which is deducted from your salary corresponds to the municipality which you live in. If you live outside of Switzerland (as a cross-border worker or expatriate), the tax you pay corresponds to the municipality in which your employer is domiciled.
2. Your income. The higher your salary, the higher the tax bracket which applies to your tax at source.
3. Possible deductions. If you children, have a working spouse or legal partner, spend money on insurance premiums, contribute to a 3a retirement account or another 3a savings plan, commute to work or have any one of many other tax-deductible expenses, you may pay a lower flat-rate than you would otherwise.
Who does not pay tax at source?
1. You hold a C permit. If you have permanent residence in Switzerland, you can file your own tax returns in the same way as Swiss citizens. No tax at source is deducted from your salary.
2. You are married to a Swiss citizen. If you are married to a Swiss citizen (or in a legal partnership), you will file a tax return as a married couple. This holds true even if you do not hold a C permit. You should not have a tax at source deducted from your salary.
3. You earn at least 120,000 Swiss francs per year. If your annual income is 120,000 francs or greater, you will have to file tax returns for federal tax. Tax at source will not be deducted from your salary. The 120,000-franc threshold also applies to cantonal and municipal taxes in the majority of cantons.
How to claim tax deductions if you pay tax at source
Having taxes deducted directly from your salary is convenient, but it is also a point of confusion for many expats working in Switzerland. Many newly-arrived residents are unfamiliar with the Swiss tax system and with possible tax deductions, and this may reflect in the original tax declaration filed by their employer.
The good news is that if your employer is deducting more tax from your salary than necessary, you can claim tax deductions just like the locals by submitting a special tax form to your local tax office by during tax season each year. This form is known as the “application for re-assessment of the withholding tax”. In German it is known as the “Antrag auf Neuveranlagung der Quellensteuer” and in French it is called the “Demand de réévaluation de l’impôt à la source”. You can request the form from your tax office or download it from their website.
The form contains most of the fields found on standard Swiss tax return forms, including fields in which you can list tax-deductible expenses, dependent children, sources of income and other items which may change over time. It must be verified by your employer and submitted by your employer on your behalf.
Around 100 deductions apply to Swiss federal taxes alone, and other deductions apply on cantonal and municipal levels. Some of the most widely-applicable tax deductions can be found in the moneyland.ch guide to tax savings in Switzerland.
Disclaimer: moneyland.ch is not a tax advisory service. Taxes in Switzerland are legislated on federal, municipal and cantonal levels, and tax laws vary between cantons and municipalities. moneyland.ch provides general information as is for educational purposes. While moneyland.ch strives to provide accurate content, moneyland.ch accepts no liability with regards to information provided.