Withholding tax: who is affected and how it works
Who is subject to withholding tax
Withholding tax (art. 83 ff. DFTA) mainly applies to foreign employees domiciled or residing in Switzerland who do not hold a settlement permit (permit C), as well as certain persons resident abroad who receive income from a Swiss source, such as a salary, pension, or certain benefits.
How the deduction works
Withholding tax is deducted directly by the employer from the salary, according to rates set based on income, family situation and the canton concerned, and then paid to the cantonal tax authority. This mechanism replaces, for the persons concerned, the ordinary assessment procedure by tax return.
Subsequent ordinary assessment
Certain persons taxed at source can request, or in certain cases are automatically subject to, a subsequent ordinary assessment, in particular when income exceeds certain thresholds or to claim additional deductions (actual professional expenses, pension buy-ins) that the flat-rate tariff does not take into account.
Obtaining permit C and the end of withholding tax
Obtaining a settlement permit (permit C) or marrying a Swiss national or a permit C holder in principle ends withholding taxation, and the person then moves to the ordinary assessment procedure by tax return.
Frequently asked questions
Who is subject to withholding tax in Switzerland?
Mainly foreign employees without a permit C domiciled or residing in Switzerland, as well as certain persons resident abroad who receive income from a Swiss source.
Can I deduct my actual professional expenses if I am taxed at source?
The flat-rate tariff already includes certain standard deductions; to claim higher actual expenses or other specific deductions, a subsequent ordinary assessment generally needs to be requested under the conditions set by law.
What happens when I obtain permit C?
Withholding taxation in principle ends, and you move to the ordinary assessment procedure by tax return like Swiss taxpayers.