Tax at Source
Foreign employees who are not in possession of a C permit and are not self employed are subject to taxation at source. Tax is deducted from their salary every month. Foreign employees who are married to a C permit holder or a Swiss citizen are exempt from taxation at source.
The tariffs apply to
- Single taxable persons without children living in the same household (unmarried, legally or effectively separated, divorced or widowed). If you are liable for children or any other person you have to report that when you register.
- Married, single income, living in a non-separated marriage as well as widowed or legally separated, divorced and single taxable persons, who live with children (minus the number of dependant children. If the children and the spouse do not live in the same household, this must be proven in writing when registering with the authorities).
- Married, non separated taxable persons who are both employed.
- Border commuters, with residence in Germany, who regularly return to their home. These persons are taxed a maximum of 4.5% of their gross income as long as a German registration document is presented. Should the taxable person not return home for a period of more than 60 days per year for professional reasons it is possible to request complete taxation in Switzerland using the form Gre-3, this will mean lower taxes for the employee.
People who belong to the following confessions are subject to church tax:
Roman Catholic, Protestant and Evangelic.
Entry or exit from any of these churches can be applied for at the church authorities of the place of residence. The church authorities will issue a confirmation which must be submitted to your place of residence in order for the tax rate to be adjusted. Basel church tax are not included into the Tax at source rate, that bill will always come separately.
Employees with an annual salary of above CHF 120’000 must fill out tax return. In this case the monthly deduction for tax at source will be cleared with the ordinary tax bill at the end of the tax year. The definitive Tax calculation is based on the submitted tax return and the resulting assessment.
- Deductions can be made for actual expenses = Travel cost for the first arrival the last departure, moving cost, Rent costs, School fees, additional training cost incl. related travel expenses, Medical expenses (varies on the canton). Please make sure you always keep your receipts.
- Child support/alimony related expenses can be deducted (proof of alimony payments must be submitted)
- Withholding tax on bank interest can be reclaimed (Verrechnungssteuer)
- Municipalities with lower tax rates lead to lower taxes
- Mortgage and percentage for repairs can be deducted
The principal place of residence is abroad if the family remains there and the employee regularly returns home (for week-ends). In these cases there is no cause for subsequent ordinary taxation (tax return procedure). Should the employee receive a tax form, we recommend the empty form be sent back to the tax authorities along with a letter stating that the principal place of residence is abroad and therefore, no ordinary taxation can be carried out. In this case, tax at source will remain the definitive taxation.
The definition of a foreign Expatriate is a person living in Switzerland temporarily who still retains a household abroad.
There is an option of Tariff correction for taxation at source (this must be exercised before the 31st March of the following year) especially for persons whose principal place of residence is not in Switzerland, who leave the country over the week-end, or in the case of alimony payments.
- Effective costs of stay in Switzerland during the week = net rent and travel cost, additional training cost incl. related travel expenses, medical expenses from CHF 5’000.00 upwards per year (expatriates who maintain two households, including family) or alimony payments can be deducted. All receipts and proof of payment must be kept.
How to reduce tax?
- Pay money into a third pillar pension. The maximum you can pay in various ever year. The options available are via a bank or if you want some risk insured as well with an insurance company. If you choose a bank solution also get quotes from smaller banks and invest it in a secure fund (you get more interest).
- Expand your stay in Switzerland as long as you can either before you commence employment or at the end of the employment period. Register with the authorities as early as you can and delay deregistration as long as possible. By doing this, the month(s) without earnings before or after your employment period will be included in the annual tax assessment and effectively reduce your overall taxable income for that year.
- Since 2008 tax implications for married couples have been lowered to marry. You pay less tax now being married than previous years.
Get in touch for more information!
4143 Dornach (Basel)
+41 61 560 10 90