Understanding Swiss withholding tax
- Julia Tatje
- June 24
- 4 min. reading time
I couldn't help but wonder: What does it cost to fall in love with Switzerland...?
Enjoying chocolate with a view of snow-covered mountains in St. Moritz, tasting regional wines in Lavaux and shopping on Bahnhofsstrasse in Zurich until your credit card catches fire: falling in love with Switzerland is easy. But if you stay to earn money here, sooner or later you will have to take off your rose-coloured glasses and take a look at the withholding tax. Because even with our biggest crush, we are not spared the occasional annoying trait.
Today we take a look at who pays withholding taxes and why the love affair with Switzerland doesn't have to end there.
Withholding tax is also due on cloud 9
At first, we only see the good sides of our partners. We think we've finally found the perfect match - and forget that ‘perfect’ simply doesn't exist in life. Sooner or later, the first quality comes along that we don't quite appreciate.
Many people feel the same way about Switzerland. They are attracted by the nature, the luxury and the delicious food. The high salary level also draws many from countries all over the world to work in Switzerland. Everything is new and exciting at first, but even in on cloud 9 you have to pay taxes.
For all non-Swiss nationals who are employed in Switzerland, this is known as ‘withholding tax’. It owes its name to the fact that it is withheld at the source of the money. It is deducted directly from the salary and paid by the employer to the tax authorities.
The withholding tax rate
Even if we are all on cloud nine: There is no one-size-fits-all answer to the amount of withholding tax that is due. The tax rates vary depending on the canton and life circumstances. There are different withholding tax rates with or without church tax, for married and unmarried people, depending on the number of children you have and more.
This is precisely why the right partner in Switzerland is crucial when it comes to your taxes. At taxum AG, we specialize in those who see borders as an opportunity to move beyond them. Let's tackle your cross-border tax together.
Who pays Swiss withholding tax
Withholding tax is perhaps not the greatest symbol of love. But, unlike the Swiss flag, it is far from being a red flag. Sure, nobody likes to look at their payslip to find another deduction. But the tax is used to finance a lot of good things for all of us. That's why our hearts continue to beat for Switzerland one way or another.
Who exactly pays the Swiss withholding tax depends on several factors: from residence to permit to spouse.
Foreign employees without a C permit
If you live and work in Switzerland but do not have a C residence permit, you must pay the withholding tax. This applies, for example, to people with a B or L permit, meaning long-term and short-term residents. You are basically already in a relationship with Switzerland - it's just not quite official yet.
Cross-border commuters who live abroad
Anyone who works in Switzerland but lives abroad also pays withholding taxes. In most cases, they have a G permit. The exact regulation of withholding tax then depends on the double taxation agreement (DTA) with your country of residence. You cannot keep your connection to Switzerland a secret: An affair will be uncovered sooner or later.
For German cross-border commuters, for example, 4.5 percent withholding tax is levied and credited in Germany.
Withholding tax for artists, athletes and speakers
Anyone who receives an income from events in Switzerland is also subject to withholding tax. This applies, for example, to artists, athletes and speakers - even if they are not residents of Switzerland. After all, even casual acquaintances have their own wishes and quirks.
Others with income from Swiss sources
Similarly, the withholding tax obligation also applies to all others who do not live in Switzerland but receive certain income here. This could be, for example, directors of Swiss companies or pensioners who remain connected to Switzerland as if they were a former lover. Withholding tax is due, among other things, on:
board memberships with Swiss companies
(certain) pensions originating from Switzerland
Other payments of Swiss origin
Foreign spouses of Swiss citizens or holders of a C permit
If only one of two spouses has a C permit or Swiss citizenship, withholding tax can become the third wheel: The second partner may still be liable for withholding tax. But that is certainly no reason for jealousy.
Time to get even closer
You do not have to submit a tax return for withholding tax, since it is deducted directly from your income. However, a ‘subsequent ordinary assessment’ (NOV in German) may also be necessary. In this case, you will need to complete a regular Swiss tax return.
The NOV is mandatory if your income or assets in Switzerland exceed certain limits. Throughout Switzerland, it is obligatory if you own residential property or earn over CHF 120,000. Depending on the canton, there may also be other conditions under which you must complete a tax return.
The NOV can be submitted voluntarily if you wish to claim high deductions that are not automatically taken into account. This applies, for example, to pillar 3a.
In any case, you must proactively contact the tax office and apply for the subsequent ordinary assessment. This must be done by March 30 of the following year. Again, it's like in romance. You are telling the Swiss tax system: I see you - and I want to get to know you better. Maybe it's not just NOV, but also Love.
Subsequent ordinary assessment- or: The second first date
With the subsequent ordinary assessment, you basically show Switzerland that you are serious about your (tax) affairs. Be aware: if you complete it voluntarily once, you must do so in subsequent years. This may result in an additional tax liability or a refund, depending on your income and deductions. To make your decision easier, we will soon be taking a closer look at the NOV.
Is withholding tax a demonstration of love?
Life can't be all luxury, glamour and romance - even in Switzerland. Because the truth is: even Carrie Bradshaw fills out her annual tax return in her stylish New York flat. Withholding tax is actually not a bad thing. It's a matter of looking after each other, just like in a good partnership. And that is exactly how taxum AG supports you with your tax return whether NOV or not.
And just like that, you have discovered another side of your beloved Switzerland.
