Swiss Withholding Tax for Expats and Cross-Border Workers Explained

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 withholding tax (German: Quellensteuer, French: impôt à la source) covers federal taxes, cantonal taxes and municipal taxes.

How are withholding tax rates determined?

Most foreigners who are employed in Switzerland but do not have permanent residence in Switzerland pay withholding tax. This is deducted from their salary at a flat rate by their employer. The flat rate used 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 are a cross-border worker, 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 withholding tax.
3. Possible exemptions. If you have children or a spouse or legal partner, you benefit from tax exemptions and pay less withholding tax than you would otherwise.

Who does not pay withholding tax?

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 and permanent residents. No withholding tax is deducted from your salary.
2. You are married to a Swiss citizen or permanent resident. If your spouse or registered partner is a Swiss citizen or permanent resident, you must file a tax return as a couple. This holds true even if you do not hold a C permit. Your employer should not deduct withholding tax 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. Withholding tax will not be deducted from your salary. The 120,000-franc threshold also applies to cantonal and municipal taxes in the majority of cantons.

Withholding tax and tax returns

There are some situations in which you have to submit a tax return even when your employer deducts withholding tax.

1. You earn a supplementary income in excess of 2500 francs in addition to the salary from which withholding tax is deducted.
2. Your personal wealth (including real estate in other countries) exceeds 200,000 Swiss francs.
3. You own real estate in Switzerland.

How to claim tax deductions if you pay withholding tax

Having taxes deducted directly from your salary is convenient, but it also means that tax deductions are not accounted for.

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 during the tax season. 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 many more 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 and the guide to widely-applicable tax deductions.

More on this topic:
Tax deductions for expatriates working in Switzerland
Expats In Switzerland: 7 Financial Tips For Newcomers
Leaving Switzerland? 7 Important Financial Questions Answered
Guide to Switzerland for cross-border workers

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.