Tax Notes: Our Business - Your Insight

Author:Mr Stefanie Gugger and Judith Lorenz
Profession:PrimeTax AG

Withholding tax rate corrections: an important deadline for the withholding tax is approaching: 31 March 2019.

By that date, persons subject to withholding tax must have submitted their applications for re-assessment of the withholding taxes taking into account individual deductions or for subsequent ordinary assessment.

Tax Subject

Foreign employees without residence permit (permit C) establishing their tax residence or abode in Switzerland are subject to unlimited tax liability in Switzerland. Nonetheless, they will be subjected to a tax deduction at source for their income from their gainful employment activity. The same applies to persons not having a tax residence or abode in Switzerland, such as cross-border commuters, weekly resident aliens and short-time resident aliens carrying out a gainful employment activity in Switzerland. They establish tax liability in Switzerland due to their economic affiliation. In both cases, the employers are obliged to directly deduct the taxes owed by their salaried employees from the wage. For international cross-border commuters and weekly resident aliens, the different regulations in the double tax agreements (DTAs) and in the cantonal instructions, depending on the country of residence and canton of work, must be observed. Contrary provisions of the DTAs remain reserved as well.


The withholding tax is designed progressively and is calculated based on the gross incomes. It covers all incomes from a gainful employment activity incl. secondary incomes and benefits in kind as well as the replacement incomes. The withholding tax deduction comprises the state, municipal, church and direct federal taxes. To ensure equal treatment of the different tax payers to the maximum extent possible, the withholding tax rates include certain correctives, such as the deduction of the mandatory contributions for OASI/DI/IC and for the occupational pension as well as the contributions for the UI and the NOAI up to the amounts stipulated by law. These general deductions are equivalent to those of the ordinary assessment. Added to this must be deductions for insurance premiums and work-related expenses. The tax laws also take account of the personal circumstances of the taxable person (civil status, number of children) by applying different rates. Individual deductions, such as column 3a or debt interest, however, are not taken into account in the rate calculation and are the subject of a subsequent application of...

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