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Swiss Income Tax

Frequently Asked Questions

When do I need to pay Swiss income tax?

If you work in Switzerland you will need to pay tax on your Swiss income. If you fill a Swiss tax return your tax rate will be based on your global income, but this rate will then be applied only to your Swiss income to calculate the tax you pay.

You will also pay a small tax on your Swiss based assets, again at a rate based on your global assets. There is no capital gains tax in Switzerland, except for Swiss real estate gains.

What is the difference between Swiss source tax and Swiss income tax?

Swiss source tax is not unlike Pay-As-You-Earn (PAYE) in the UK, where the employer must deduct income tax at source and remit it directly to the Swiss tax office. You may also be asked to fill out a Swiss tax return at the year end for a more complete tax assessment in which case the source tax becomes a “down payment” on your actual tax bill. If you don’t have to fill a return then the sourcetax becomes definitive.

A Swiss tax return allows you to deduct allowances for certain items, for example 3rd pillar pension, and some travel, subsistence and training expenses. However you will be required to declare your global income and capital so the tax return can be complex, and can result in higher tax than was paid at source. It is usually worthwhile to pay a Swiss tax adviser a few hundred francs to ensure you fill the return to your best advantage. In most cantons tax returns can be filled online.

Swiss sourcetax must usually be deducted for all employees who are not Swiss or holders of a permanent residence (C) permit. There are some exceptions.

In most cases Swiss source tax, like other Swiss income tax, can be deducted (under the numerous bilateral tax treaties) from any income tax you pay abroad where you are normally resident. We will provide you a Swiss salary and tax certificate each year in order that you can claim this tax.

The Swiss tax year is from 1 January to 31 December

When must I fill a Swiss tax return?

Generally if you earn more than CHF 120’000 per year you will be required to fill out a tax return. However some tax offices may avoid inviting you to do so as it is considerable work for them and often results in a refund to you, so its not always seen to be in their interest.

If you have a specific reason for claiming tax back, it is often possible to fill a much lighter “sourcetax amendment” form where you can claim for such items as the 3rd pillar pension (see our pension FAQ) or the cost of travelling and working weekly away from your permanent home (Normally you are allowed economy class weekly air or rail travel and the rent of a studio flat or equivalent).  Note that this form MUST be submitted with all receipts and documentation before 31st March the year following the tax year or you lose the right to make a claim. 

If you work through us, although we are not authorized to fill private tax returns, we can point you to a reputable tax advisor or the sourcetax form for your canton.

Upon what is the Swiss sourcetax rate dependent?

Primarily, your monthly income: Swiss tax rates are highly progressive with income.
The rate is also dependent on the canton and the difference can be very significant (compare canton Zug with Geneva on our tax calculator).

The rate varies if you are single or married, if your wife has income and how many dependent children you have. (A child over 16 years of age is usually dependent if still in education).

Be careful also to declare if you are practicing religion in Switzerland or not because if you are then there may be a churchtax to pay on top of normal income tax.

If you work through Accurity we will take steps to ensure your tax rate is correct and does not result in you paying more than you have to.

How is Swiss income tax structured?

Swiss Income tax (on payroll) is split into three:
*  Federal Tax – paid to the federal government
*  Cantonal Tax – paid to the canton in which you reside
*  Local Tax – paid to the community in which you live

The cantonal and local taxes typically comprise two thirds of total taxation and vary significantly between cantons and communities.

Apart from federal tax, the tax laws are primarily under the control of the 26 individual cantons which means taxation differs not only in the tax rates, but also how taxes are applied and which deductions are allowed. In short, Swiss taxation is a complex minefield where if you know what you are doing you can save somewhat, but if you havn’t a clue it can bite you.

What if I am living outside Switzerland but commuting across the Swiss border?

If you are a cross border commuter into Switzerland then you may still have to pay source tax (sometimes at a reduced rate) depending on:

*   which canton you are commuting to
*   from how far into the neighbouring country you are commuting from

Contact us if you wish to know what the source tax liability might be in your particular case.

Note that, since you may be paying income tax in your country of residence, the Swiss source tax you pay will usually be deductable from your local tax bill.

What is deductable from income for tax purposes in Switzerland?

These days, expatriates can no longer claim special allowances when they come to work for short periods in Switzerland. However in common with Swiss citizens working away from their normal home, they can claim for the cost of weekly economy class travel (including air travel) and a small flat.

Additionally any business expenses, including travel and subsistence when working away from the normal workplace can be reimbursed directly with no payroll costs or tax payment, but they should be declared on the annual salary statement.

Depending on your canton of residence, there may be numerous other deductions for married couples, childcare, health costs, commuting charges, etc that can be claimed in a tax return. These need to be checked with the respective cantonal tax office or a professional tax advisor. Although we cannot act on your behalf in personal tax matters, we can provide you a list of cantonal tax office addresses, and a list of reputable tax advisors based on canton and your preferred language.

For those of you paying source tax and not filling a tax return, the source tax rates do reflect the major deductions for marriage and dependent children. We need to apply for a ruling on this status on your behalf when you join us. To see how tax varies in your canton with status you can try our online sourcetax calculator.

How do I register for Swiss tax?

We do this for you so unless you want/have to fill out a Swiss tax return, you need do nothing. At the year end we will provide a tax certificate for any tax declaration you may need to make in another country.

What does Accurity do to minimize legally the Swiss tax I pay?

Accurity shall ensure that legitimate business expenses are claimed where possible (for travel and subsistence away from the office in which you normally work in Switzerland).

One of the most effective mechanisms we have to optimize source tax (we believe this is unique to us) is to provide you a fixed monthly basic salary and pay additional bonus which you may decide when to take. In this way you can smooth out salary (unlike with hourly paid contracts)  and this optimises source tax. This is because in nearly all cantons source tax rates increase progressively based on monthly (not annual) income.

We also provide a choice of innovative, state recognised and proven Swiss pension schemes that can further save you income tax if desired.

If you come to Switzerland and work through us on a contract of less than 90 days you will pay tax in Canton Zürich (regardless of where you work) which has lower tax rates compared to many other Swiss cantons. You can compare cantonal rates using our sourcetax calculator.

Can I claim tax paid in Switzerland against tax in my country of permanent residence?

Switzerland has a bilateral agreement with many countries (and all EU members) that permits deduction of Swiss tax paid against that due in your country of permanent residence. Since these agreements are in constant motion, to be sure you need to check the precise rules with the tax office in your home country.

If you have any further questions please don’t hesitate to contact us. We are always interested to know what people are concerned about regarding Swiss employment.

Please note the above information is provided without guarantee or warranty. Employment, tax and pension laws are dependent on your specific situation and can change quickly. To be sure of the facts always contact us directly for a verified up to date answer.