Novelties in the Swiss Tax at Source

By Cédric-Olivier Jenoure and Sascha Wohlgemuth, Bratschi Ltd.

Multiple novelties and changes in the Swiss tax at source hold risks for companies and groups concerning the correct declaration of the income of employees who are foreign residents without settlement permits. Companies, as employers who are liable for the payment of the tax, must take the following into account:

The Swiss Federal Legislator has partially revised the source tax law, by which there can be changes for companies concerning the correct declaration and payment of tax at source. As of 01 January 2021, a subsequent statutory assessment (SSA) can be requested for all in-Switzerland residing, source-taxable persons. This is obligatory for taxable persons with a yearly income above CHF 120,000.00.

Below that, an SSA can be requested. Furthermore, foreign residents who earn 90% or more of their income in Switzerland shall henceforth be treated equally in comparison with Swiss residents. Persons living in foreign countries and meeting the requirements of this virtual residency, can request an SSA on a yearly basis as well. The new Circular no. 45 of the Swiss Federal Tax Administration (FTA) specifies how an employer must calculate the taxable days of foreign residents. In addition to that, there are a few changes in the territorial jurisdiction: The canton in which the tax at source must be declared and paid can differ from the previous one (!). Thus, the applicable tax rates can vary.

For part-time employees, weekly residents and staff leasing employees there are extra rules. According to the new Circular, employers who do not meet the deadline for the declaration in the correct jurisdiction can lose their claim to the entitlement provision. It is advisable for every employer to check the monthly and yearly source tax declaration in accordance with the new regulations. Companies that employ persons who are taxable at source are encouraged to check whether the assessment falls under a new jurisdiction to avoid back payments, arrears and fines.

Cédric-Olivier Jenoure

GGI member firm
Bratschi Ltd.
Law Firm Services, Tax
Basel, Bern, Lausanne, St. Gallen, Zurich, Switzerland
T: +41 58 258 14 00
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: bratschi.ch

Bratschi Ltd. is one of Switzerland’s leading and rapidly growing law firms with offices in Basel, Bern, Geneva, Lausanne, St. Gallen, Zug and Zurich. As a full-service law firm, Bratschi Ltd. offers clients a broad range of first-class legal and counselling services in all fields of commercial law and with a strong presence in the public sector as well.

As an attorney and licensed tax expert, Cédric-Olivier Jenoure is deeply familiar with commercial and legal contexts. He provides consulting services for domestic and foreign corporate groups and business owners as well as private individuals, and offers his clients efficient solutions.

Sascha Wohlgemuth

Bratschi Ltd.
Law Firm Services, Tax
Basel, Bern, Lausanne, St. Gallen, Zurich, Switzerland
T: +41 58 258 14 00
E: This email address is being protected from spambots. You need JavaScript enabled to view it.
W: bratschi.ch

Sascha Wohlgemuth is an attorney and licensed tax expert, who provides consulting services for domestic and foreign corporate groups, business owners and private persons in national and international tax related questions, namely in the areas of restructuring, succession planning and establishing firms.

Published: International Taxation Newsletter, No. 15, Autumn 2021 l Photo: rudi1976 - stock.adobe.com