RELOCATION
TAXES & SOCIAL INSURANCES
Taxation here is a triple-layer cake: federal, cantonal, and communal. If you’re on a B or L permit, taxes might be deducted directly from your salary. Either way, get a grip on your obligations early on. Swiss tax offices are efficient and expect the same from you. Social contributions for pensions, unemployment, and accident insurance are also deducted at source. For higher earners or property owners, filing a full annual return is required. Strategic planning—such as where you live—can significantly impact your overall tax rate.
The Swiss pillar systems can be resumed in 3: the mandatory AVS, 2nd pillar and optional 3rd pillar.
What type of taxation applies to your situation?
In Switzerland, fiscal rules depend on the type of permit you hold, your salary and the canton where you work. Foreign employees living in Switzerland, who benefit from a B or L permit are in principle taxed “at source”, which means that the employer directly withholds the taxes from the employee’s salary at rates set forth by the Cantonal Tax Administration. This simplifies a lot the taxation procedure for both the fiscal authority and the employees who might not understand Swiss taxation system at first sight. In Geneva, cross-border workers who go back home every day or at least once a week are also concerned (art. 91 LFID).
Identify the taxation type that applies to your situation.
No income taxes are withheld from the salaries of Swiss nationals and employees holding a C permit; they have to submit a tax declaration following the ordinary taxation procedure. Foreign employees married/in a registered partnership and lawfully sharing the same household with a Swiss national or a C permit holder, are treated the same way as their partner and are therefore not subject to taxation “at source” even if they fulfill the conditions previously mentioned.
“AT SOURCE” TAXATION DETERMINATION
The taxation “at source” is calculated based on the entirety of the employee’s gross salary including benefits received in kind and incidental income (art. 32 §3 LHID). The taxation is progressive except for less important incomes and the scales vary a lot from one Canton to another.
For fairness reasons, general compulsory social contributions* as well as other individual contributions of the employee (ex. 3rd pillar contributions) are deducted from the taxation calculation.
In Geneva, the employee’s family situation (ex. child care expenses) is also taken into account in the overall taxation determination.
NB: an affiliation to a health insurance company (LAMal) is also compulsory for Swiss residents. They have to comply with this obligation within three months upon arrival/birth in Switzerland. Premiums are to be taken in charge exclusively by the employees, even though some employers may contribute to the costs on a voluntary basis. Cross-border workers, living in another country but working in Switzerland, can subscribe to such an insurance in one of the two countries.
* AVS (old-age pension scheme), AI (disability insurance), APG (insurance against loss of earnings), LPP (occupational pension scheme), AC (unemployment insurance), AA (accident insurance) and AM (maternity insurance).
SPECIFIC CASES
From January 1st 2019, the new law LEI includes the possibility to downgrade from a C to a B permit when the applicant has breached the law or does not fulfill the integration requirements anymore.
“At source” taxpayers might in addition be subjected to the ordinary taxation regime and, therefore, might have to submit a regular tax declaration.
This is the case when the gross salary exceeds a certain threshold currently set at CHF 500 000.-/year in Geneva and CHF 120 000.-/year at the Federal level. Such a complementary ordinary taxation is also due when a person receives another income arising out of an independent activity.
NB: in Geneva, a switch from the “at source” taxation regime to the ordinary one occurs when the concerned person possesses a real estate property.
Made in switzerland by immigration specialists
DeliverPermit is an online tool created by Swiss immigration specialists, enabling companies to efficiently outsource their permit requests at an exceptionally attractive cost.
