GLOBAL MOBILITY SERVICES: TAXATION OF INTERNATIONAL ASSIGNEES - SWITZERLAND - PWC
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Global Mobility Services:
Taxation of International
Assignees – Switzerland
People and
Organisation
Global Mobility
Country Guide (folio)
Last Updated: April 2018 This document was not intended or written to be used, and it cannot be used, for the purpose of Menu avoiding tax penalties that may be imposed on the taxpayer.
Country:
Switzerland
Introduction: International assignees working in Switzerland 4
Step 1: Understanding basic principles 5
Step 2: Understanding the Swiss tax system 8
Step 3: Switzerland and the EU 16
Step 4: What to do before you arrive in Switzerland 18
Step 5: What to do when you arrive in Switzerland 20
Step 6: What to do at the end of the year 21
Step 7: What to do when you leave Switzerland 23
Step 8: Other matters requiring consideration 25
Appendix A: Taxation of foreign employees resident in the 27
canton of Zurich
Appendix B: Taxation of foreign employees resident in the 30
canton of Geneva
Appendix C: Taxation of foreign employees resident in the 35
canton of Basel-City
Appendix D: Special concessions for expatriates 38
Appendix E: Double-taxation agreements 42
Appendix F: Countries whose citizens can obtain a C permit 44
after five years' continual residence
Appendix G: Social security reciprocal agreements 45
Appendix H: Switzerland contacts and offices 47
Additional Country Folios can be located at the following website:
Global Mobility Country Guides
Global Mobility Country Guide (Folio) 3
Introduction:
International assignees working in
Switzerland
This folio has been prepared to of Swiss tax law but should help The folio reflects tax law and
provide foreign nationals who foreign nationals to understand practice in Switzerland as at April
qualify as Swiss residents for tax their tax status before and during 2018. Information on tax rates and
purposes with a general background their period of residence in allowances has been kept to a
to Swiss individual income tax. Switzerland. Please note that this is minimum because they not only
not a guide to completing Swiss vary from year to year but also from
This folio is not intended as a income tax returns. one Swiss canton (state) to another.
comprehensive or exhaustive study
4 People and Organisation
Step 1:
Understanding basic principles
The scope of taxation in inheritance tax, gift tax, and The tax year and basis of
Switzerland church tax (See Step 8). assessment
1. A foreign national working in Federal and cantonal taxes 5. The tax year corresponds
Switzerland will in general with the calendar year and
become liable to Swiss 3. Switzerland is a tax returns have to be filed
taxation either as a resident confederation that is divided every year. All cantons and
or as a nonresident. The main into 26 cantons. Each canton the confederation now assess
taxes are personal income tax determines its own tax taxes on a current year basis.
('Einkommenssteuer', 'impôt legislation and sets its own
sur le revenu', 'imposta sul tax rates. As a result, each Methods of calculating tax
reddito', 'taglias sin la Swiss income taxpayer is
subject to at least two 6. What is considered as taxable
entradas') and wealth tax income as well as the
('Vermögenssteuer', 'impôt different tax laws: direct
federal tax ('Direkte applicable tax rates are not
sur la fortune', 'imposta sulla the same for federal tax and
sostanza', 'taglias sin las Bundessteuer', 'impôt fédéral
direct', 'imposta federale', cantonal tax purposes.
facultad') which are levied on However both federal and
worldwide net income and 'taglias federala directa') and
cantonal tax ('Kantonssteuer' cantonal tax rates are
net wealth if a person is progressive rather than
resident in Switzerland. or 'Staatssteuer', 'impôt
cantonal', 'imposta banded. In effect each income
Taxation may be limited to level has its own federal,
Swiss source income if a cantonale', 'taglias
chantunalas'). The cantonal, and community tax
person is tax nonresident in
communities also set their rates.
Switzerland, and other
worldwide income is own tax rates and raise their 7. Federal tax starts at a taxable
exempted but taken into community tax usually by income of CHF 14,500 if
consideration to calculate the adding a supplement to the
single, or CHF 28,300 if
applicable Swiss tax rate cantonal tax. married. The maximum
(exemption with effective federal income tax
4. Income for federal tax is
progression). normally reported in the rate is 11.5%. The cantons
cantonal tax return or in an and communities fix their tax
2. Other taxes with which a rates autonomously
foreign national resident in appendix, so that it is not
necessary to file two tax depending on their financial
Switzerland could be needs. As a result, the
concerned are capital gains returns. The cantonal tax
authorities assess and collect cantonal and communal
tax levied on the disposal of
federal tax. income taxes can vary
property in Switzerland, significantly. The maximum
Global Mobility Country Guide (Folio) 5
average tax rate including assets and usually also that of of income splitting between
federal, cantonal, and their dependent children. spouses.
community taxes varies Filing a separate tax return is
between approximately 22% only possible in certain Determination of residence
and 45%. circumstances if the couple
10. Foreign nationals working in
has two different places of Switzerland are normally
8. Swiss tax residents normally residence. For federal taxes,
have to file their own tax considered to be resident,
income is not split between
return from the age of and therefore subject to Swiss
spouses in determining the income and wealth tax on
eighteen, unless they earn tax rate.
employment income before worldwide income and
that age. However, special rates apply wealth:
for married couples. – If they intend to stay
Husband and wife
For cantonal taxes, about half permanently in
9. Married couples living of the cantons follow the Switzerland;
together are obliged to file a model for federal taxes, the
joint tax return reporting other half apply the concept
their worldwide income and
6 People and Organisation
– If Switzerland is the Switzerland and the other In case the individual is
centre of their personal country to determine the considered a non-resident,
and economic interests; country which is entitled to tax agreements also include
claim unlimited tax liability. provisions exempting income
They are treated similar to a If the other country does not from Swiss tax in cases where
resident individual, if have a double taxation the duration of stay is less
– they perform agreement with Switzerland than 183 days within a tax
employment for a period then some income may be year or within any 12-month
of 30 or more taxed in both countries. (See period, depending on the
consecutive days in Appendix E for the countries applicable tax agreement.
Switzerland. Short with which Switzerland has a Normally other conditions
absences are ignored. double taxation agreement). will also need to be fulfilled in
order to qualify for this
– they stay in Switzerland 12. Most tax agreements signed exemption (see paragraph 39
(without performing by Switzerland consider the below).
employment) for a following criteria to be
period of 90 or more relevant in determining the 13. For people who are resident
place of residence: in one of the neighboring
consecutive days in
Switzerland. Short countries (Germany, Austria,
– Permanent home; Italy, France, and
absences are ignored.
Liechtenstein) and who
– Personal and economic
11. If a foreign national working relations (centre of vital commute on a daily basis to
in Switzerland is deemed to interests); work in Switzerland, special
be resident in both rules are applicable and are
Switzerland and their home – Habitual abode; set out in the respective
country, reference should be double tax agreements.
made to the relevant double – Nationality.
taxation agreement between
Global Mobility Country Guide (Folio) 7
Step 2:
Understanding the Swiss tax system
The Swiss tax system Taxable income an employment contract,
whether in cash or in kind. In
14. Foreign employees resident 15. Swiss income tax is levied on addition to salary, taxable
in Switzerland are basically worldwide income including employment income includes
subject to the same taxation income from: bonuses, commissions,
rules as Swiss employees. All overseas adjustments, cost of
cantons, however, have – Employment;
living allowances, tax
introduced a tax-at- reimbursements, the private
– Self-employment;
source/tax withholding use of a company car,
system for foreign employees – Pension and retirement housing allowances, etc. The
instead of, or in addition to, income; following points concerning
an ordinary assessment based additional elements of a
on a Swiss tax return. An – Immovable property
compensation package
employer is obliged to deduct (real estate, etc.);
should be noted:
income tax directly from the
– Movable property
monthly gross salary – As well as Swiss salary,
(interests, dividends,
payments in accordance with any compensation
royalties, etc.);
tax tables issued by the received for work
cantonal tax authorities, – Capital gains insofar as carried out abroad is
covering federal, cantonal, they are realized by a also taxable. There may
and community taxes. taxpayer who is liable as be exceptions to this
Specific details of this a commercial security based on an applicable
taxation procedure differ trader; double taxation
from canton to canton. agreement;
Further information is given – Lottery gains.
about tax at source in the – Income received from a
All income from the above profit sharing scheme
cantons of Zurich, Geneva,
and any other sources is such as a bonus is fully
and Basel-City in Appendices
added together to determine taxable if it relates fully
A, B, and C respectively. The
the applicable income tax to Swiss work duties. If
tax withheld at source will be
rates. entitlement to payment
credited against the effective
tax liability based on the tax is deferred, then the
Taxation of employment
return filed and assessed. bonus will be taxed in
income
the year in which an
16. Employment income is employee is entitled to
widely defined and includes receive it;
all benefits originating from
8 People and Organisation
– Removal costs are – Income from employee transfer it to the Swiss tax
usually considered as share and stock option authorities. For federal tax
taxable income (with plans needs to be looked purposes, tax will be withheld
possible exceptions); at on a case by case basis at the maximum tax rate of
in order that the tax 11.5% in most cases. For
– School fees for children implications can be cantonal/communal tax
are considered as assessed. They are often purposes, the withholding of
taxable income (with subject to a special taxes at the maximum tax
possible exceptions); ruling agreed with the rate is not mandatory.
– Reimbursement of the cantonal tax authorities.
20. The national approach is in
costs of home leave is General rule for Swiss taxation of line with the international tax
considered taxable options law. According to the OECD
income unless the home recommendation the income
leave is in connection 17. According to federal tax law from the options is to be
with a business trip; about taxation of employee allocated to the countries of
share plans which is in force activity, whereby the period
– The free use of a as per January 1, 2013, from grant until vesting
company car for private options can be taxed at grant
purposes is considered should be considered. This
or at exercise. In Switzerland, pro rata allocation could be
as a taxable benefit. The any exercisable or done in the individual tax
value of this benefit is unrestricted options which
subject to cantonal return, where you would
are listed are taxed at grant. exempt the income relating to
variation but is, in many Any restricted or non-listed work abroad (i.e. the Swiss
cantons, fixed at a options are taxed at exercise.
monthly amount of portion would be calculated
0.8% of the purchase Swiss taxation of imported and on the basis of the days spent
price of the car exported options in Switzerland from the date
(minimum CHF 150 per of arrival in Switzerland to
month). Federal tax law 18. Based on national tax law, the end of the vesting period).
has limited the Switzerland has the right to The tax authorities may want
deduction for tax the gain pro rata at to consider the whole benefit
commuting costs to a exercise based on the work for the determination of the
duties performed in tax rate applicable for the
maximum of CHF 3,000
per year. Depending on Switzerland during the period portion allocated to
the commuting distance, from grant to vesting of the Switzerland (i.e. exemption
options. This approach with progression).
an additional taxable
income of CHF 0.70 per applies irrespective of the Nevertheless, the appropriate
km of commuting has to individual’s Swiss tax double tax treaty needs to be
residence at exercise. consulted for any further
be declared in the tax
return. Some cantons regulations which might limit
19. If the individual is non-tax the Swiss taxation right.
have adopted the same resident at exercise, the
limitation, other have (former) Swiss employer is Due to the complexity of
higher limits or even stock option plans we
bound to withhold taxes on
none; the pro rata amount and recommend that you
Global Mobility Country Guide (Folio) 9
provide a copy of your income declared in the Swiss 25. Foreign employees often own
stock option plan to your tax return. properties abroad, which they
tax advisor for an rent out during their stay in
analysis of the tax 23. Income from foreign Switzerland. Foreign rental
implications at your investments may be liable to income is exempt with
earliest opportunity. foreign tax. If a double progression in Switzerland.
taxation agreement exists, Therefore the actual or a
Taxation of self- then this will determine the deemed rental income
employment income amount of tax the source (normally based on the
country can impose. market value of the property)
21. Profits or gains from trades, Switzerland will avoid double and any maintenance and
professions or vocations taxation of this income by
carried out in Switzerland are repair costs will need to be
granting a tax credit declared in the Swiss tax
subject to tax whether an depending on the treaty and return to determine the
individual is resident or not. personal situation.
If an individual is resident in applicable tax rate. Although
Switzerland, then a liability Taxation of rental income any net gain will be exempt
from Swiss tax and any net
may also arise on profits or
gains from trades, etc., 24. Income from real estate loss cannot be offset against
carried out abroad unless a located in Switzerland is other income, such gains or
subject to Swiss taxation at losses may increase or reduce
double tax agreement
provides otherwise. the applicable tax rate. In the the tax rate applicable to
Professional advice should be case of an owner-occupied income taxable in
taken at your earliest house or flat, a theoretical Switzerland.
opportunity. rental income is assumed. In
other words, owner occupied
Deductions and personal
Taxation of investment real estate is deemed to
allowances
income generate income (deemed 26. In order to determine taxable
rental income). Expenses for income, mandatory social
22. Income from Swiss and maintenance of real estate;
foreign securities is taxable security and company
either the actual amounts pension contributions along
income (unless it is a private invoiced in the tax year, or a
capital gain) and is subject to with other income-related
standard allowance, which is deductions and personal
taxation at the applicable tax determined by the canton
rates. Investment income allowances are deducted from
where the property is located gross income.
from Swiss sources such as (e.g. 20% of gross actual or
dividends, interest on bank deemed income) can be Employment expenses
accounts and bonds as well as deducted from the actual or
income from shares in deemed rental income. 27. Employment related
investment funds is also Depreciation cannot be taken expenses are usually
subject to a 35% withholding into account, but mortgage deducted in the form of the
tax. If you file a Swiss tax interest can (See point 26). following standard
return, this withholding tax is Any losses arising from rental deductions:
credited against the Swiss tax income can be off set against
liability assessed on the a. Commuting cost
other available income. deduction. A
10 People and Organisationstandard deduction 28. Expenses exceeding the Interest paid
determined by the general employment
canton and in line with deduction can only be 31. Mortgage and other debt
local public transport deducted if they can be interest paid to Swiss and
costs, is given for the supported by invoices or foreign creditors can be
use of public transport. other evidence. In this case, deducted up to CHF 50,000
A fixed amount per the standard deduction plus the gross income derived
kilometer can be cannot be taken in addition to from movable and
claimed for using the actual expenditure. immovable wealth. Interest
private car but only if paid on a mortgage for real
proof is given that its 29. If an employee receives a estate outside Switzerland is
use is absolutely fixed monthly expense only partially deductible from
necessary. The allowance (i.e. representation Swiss income. The amount,
deduction of allowance) instead of a which can be deducted from
commuting costs is reimbursement of actual Swiss income, will be
limited to CHF 3,000 expenses incurred, then the determined by the location of
per year for federal allowance is considered movable and immovable
taxes. Some cantons taxable income unless the assets. However the full
have adopted the same employee can prove that the deduction can normally be
limitation, other have same amount of actual taken into account to
higher of even no expenditure has been determine the applicable tax
limitation for incurred. It is advisable for rate.
deduction commuting an employer to agree fixed
allowances, which have been Insurance premiums
costs;
itemized and submitted in a 32. Actual insurance premiums
b. Lump-sum formal ruling approved by the are normally tax deductible
deduction for cantonal tax authority. up to maximum amount
additional costs for determined by the canton
meals at place of Special concessions for
expatriates and based on the status of the
work. A standard taxpayer (married, single,
lunch deduction may 30. Special business deductions number of children).
be given if the may be claimed for foreign
employer does not
nationals working in Double income allowance
provide a canteen. A Switzerland who fulfil various
reduced deduction may 33. A standard deduction is
conditions. The concessions granted by some cantons to
be available if the
concern double housing married couples if both
employer offers a meal costs, moving costs, and
subsidy; spouses are in paid
school fees. The cantons employment.
c. General business grant similar concessions.
related deduction. Please refer to Appendix D Alimony/Maintenance
There is a standard for more detailed information payments
deduction for costs of the current rules and
discussions. 34. Alimony or maintenance
associated with
payments to a divorced or
employment.
legally separated spouse are
Global Mobility Country Guide (Folio) 11deductible for federal and gains tax in all cantons. There agreements. Although this
cantonal tax purposes. is no federal tax on this gain. income is exempt from Swiss
Alimony is tax deductible for The tax is based on the tax it must be declared in the
the payer and taxable for the amount of gain and period of Swiss tax return in
recipient in all cantons. For ownership. Property accordance with the cantonal
federal tax purposes and in improvement costs which tax practice as it is taken into
many cantons, maintenance have not qualified for the account to determine the
payments paid to minor maintenance and repair costs applicable tax rate. This
children are deductible for deduction from income can method of avoiding double
the payer and taxable for the be deducted from the gain taxation is referred to as
recipient. made on the sale of the exemption with progression.
property before tax. A list of countries with which
Further deductions Switzerland has concluded
38. Private gains on the disposal double taxation agreements is
35. Certain cantons accept of movable assets (shares, given in Appendix E.
further deductions, e.g.: etc.) are not subject to Swiss
– Donations to Swiss income tax. However, an 40. If an individual is resident in
individual dealing with one country and working in
charitable institutions;
securities frequently and another country, the salary is
– Medical costs borne by systematically could be in principle taxed in the
an individual. treated as a commercial country in which work duties
securities dealer and capital are performed. However
Personal allowances gains would be subject to most double taxation
federal, cantonal and agreements have a clause
36. Certain personal allowances
communal income tax. In stating that the salary is only
are given according to an
such a case, capital losses taxed in the country of
individual's personal
could be credited against residence (home country)
circumstances (i.e., marital
other income. and exempt from tax in the
status, number of children,
country of work (host
age). If a taxpayer supports Double taxation allowances country) if all of the following
individuals financially who
39. Taxable income is essentially conditions are met:
are either not able to work or
not able to work full-time the sum of worldwide income – The individual stays less
(with the exception of a less allowable deductions. than 183 days within a
spouse and their own Foreign nationals working in calendar or a tax year or,
children) an additional Switzerland may continue to depending on the
deduction may be granted if have foreign income (e.g. applicable tax
all other conditions specified income from foreign property agreement, within any
by the canton are satisfied. and business interests), 12 month-period, in the
which may remain taxable in country where work
Capital gains tax the other country and can be duties are performed;
exempted from Swiss tax in and
37. Private gains arising on the
order to avoid double
disposal of Swiss real estate
taxation of this income in – The salary is paid
are subject to a separate,
accordance with Swiss law (borne) by an employer
cantonal immovable property
and/or double taxation who is not resident in
12 People and Organisationthe country in which the contribution to the Swiss this rule. An employer may
employee works; and social security system). sometimes provide health
insurance but this would be
– The salary is not borne 42. Contributions have to be considered as a taxable
by a permanent made for Unemployment benefit.
establishment of the Insurance (ALV, AC, AD).
employer in the country 50% is contributed by the Contributions to an
in which the employee employee and 50% by the individual retirement
works. employer. account
Social security 43. The 2017 rates are: 2.2% 45. In Switzerland pensions are
contributions (1.1%+1.1%) on a capped categorized into 3 pillars:
salary of up to CHF 148,200.
41. Social security contributions In addition, a solidarity tax – Pillar 1- The state
are normally paid in the contribution of 1% (0.5% + pension is included in
country where the 0.5%) has been introduced on the social security and is
employment is exercised; employment income referred to above;
though there are exceptions exceeding CHF 148,200 as
(see Appendix D). Foreign – Pillar 2- The
part of the ALV, AC, AD
nationals working in occupational/company
contribution. pension scheme (BVG,
Switzerland are therefore
obliged to contribute to the Employers also have to LPP);
Swiss social security system contribute to compulsory
– Pillar 3 - Voluntary
(AHV/IV/EO, AVS/AI/APG, occupational accident personal pension (Pillar
AVS, AI, IPG). The benefits insurance for their 3).
include old age, survivors and employees.
disability pensions (Pillar 1). 46. Pillar 2 - The occupational
The contributions amount to In addition, employers have pension scheme (BVG, LPP)
10.25% (5.125% + 5.125%) of to provide non-occupational is mandatory for all salaried
uncapped employment accident insurance for their
persons in Switzerland who
income, borne half by the employees. The premiums are subject to AHV/IV,
employee and half by the can be deducted from the AVS/AI are older than 17, and
employer. Providing the monthly pay. have an annual income that
spouse is living in Income net after social exceeds CHF 21,150
Switzerland, a non-working security contributions is (threshold for the mandatory
spouse of an employee shares declared in the Swiss tax pension scheme). The level of
in the social security benefits return. contributions depends on age
of the working spouse. In and the level of the
general, the non-working 44. Health care is not covered by employee's insured salary.
spouse is automatically the Swiss social security The level of compulsory
insured together with the system and it is therefore a insured salary ranges in 2016
working spouse if the legal requirement to take out between CHF 24,675 and
working spouse's annual medical insurance with a maximum CHF 84,600.
contribution amounts to at Swiss insurance company Employee’s contributions are
least CHF 956 (twice the soon after your arrival. There calculated as a percentage of
legally prescribed minimum are very few exceptions to the annual salary less the
Global Mobility Country Guide (Folio) 13coordination off set (i.e. CHF prior to making a top-up no intention of
65,000 – 24,675 = CHF payment as the timing of resuming Swiss
40,325) as follows: the payment and your residency on
tax residency status can application to
Age Minimum significantly impact the the Swiss
Retirement tax benefit of making Compensation
credits
such a payment. Office in Geneva.
25-34 7%
48. Employees may also – Pillar 2 and Pillar 3a
35-44 10% contribute to an individual pensions
45-54 15% voluntary retirement account
(Pillar 3a). These accounts o The funds can be
55-65 (64)* 18% withdrawn or
can be opened with any Swiss
* For women bank or a Swiss insurance assigned to a
company. Contributions to Swiss mortgage
The employer must if the individual
Pillar 3a personal pension
contribute at least 50% of buys real estate
accounts, up to a maximum
the total obligatory to be used as a
of CHF 6,768 for 2018 are
contribution for its main residence
deductible for employees
employees. (subject to the
already contributing to the
Pillar 2. The original conditions of the
Since Pillar 2 also provides
certificate confirming this pension plan);
benefits in case of death
payment must be filed with legislation
and disability, and
your tax return. introduced on 1
additional amount to cover
January 2006
these risks will be due.
49. Pension funds cannot usually restricts the use
47. Income net after mandatory be withdrawn until the owner of Pillar 2 top-up
Pillar 2 contributions is reaches retirement age. With payments
declared in the Swiss tax the following exceptions: referred to above
return. A deduction can also for the purchase
– Pillar 1 of real estate, for
be taken for additional
contributions/top-up o If you are a a period of 36
payments to the Pillar 2 national of a months
pension and the original country which o The funds can be
certificate confirming this does not have a paid out if the
payment must be filed with social security individual is
your tax return. You will be treaty with leaving
informed whether it is Switzerland Switzerland with
possible and how much you benefits vested no intention of
can pay into the Pillar 2 in the Swiss resuming Swiss
pension by the company social security residency
pension fund administration. system can be (restriction:
It is also very important claimed back if BVG, LPP part
that you consult your you leave will not be paid
personal tax advisor Switzerland with out if
14 People and Organisationmandatorily rate normally to/if you are employed in an
insured in applicable to the EU/EFTA State and are insured
EU/EFTA payment). there against the risks of old age,
member state*) death and permanent disability on a
o A refund of the mandatory basis. In this case, a
o The payments withholding tax portion of the pension fund
would then be may be made equivalent to the mandatory BVG,
subject to a depending on LPP will be retained by Switzerland
withholding tax the country of in line with the practice in the EU
at a favorable, residence at the States until the benefits are due to
progressive tax time of be paid out e.g. on retirement,
rate, which is withdrawal. It is death or disability, etc.
capped. The important to
maximum tax check the tax
rate depends on consequences
the canton of receiving
where the this refund as
pension fund is it may be
domiciled, but considered as
should in taxable
principle not income in the
exceed 13%. The new country
maximum of residence.
federal tax rate
is approximately *Since 1 June 2007 it is no longer
2.3% (1/5th of possible to have the full Pillar 2
the federal tax pension fund paid out if you move
Global Mobility Country Guide (Folio) 15Step 3:
Switzerland and the EU
50. In brief: The sector-specific Agreement on free have sufficient financial
bilateral agreements between movement of persons means of their own, in both
Switzerland and t the between Switzerland and Switzerland and the EU. The
Member States of the EU as the European Union right to free movement is
of 1 June 2002 (EU) cover the accompanied by the mutual
following seven areas: civil 51. The bilateral agreement on recognition of professional
aviation, overland transport, free movement of persons diplomas and the
research, public procurement between Switzerland and the coordination of social
markets, agriculture, EU entered into force on 1 security regulations. With
elimination of technical June 2002 for the 15 old EU regard to the tax situation,
barriers to trade, and the free Member States (“EU-15”). As the agreement states that the
movement of persons. In this of 1 April 2006, the provisions of bilateral
summary we focus on the agreement s was extended to agreements between
agreement of free movement the 10 new EU Member Switzerland and the Member
of persons. States (EU-8 plus Cyprus and States of the European
Malta) who joined the EU on Community on double
1 May 2004 and as of 1 June taxation shall be unaffected
2009 to Romania and by the provisions of the
Bulgaria (EU-2). It applies agreement of free movement
only to Swiss citizens and EU of people.
nationals. The agreement has
not yet been extended to 53. In February 2014, Swiss
Croatia which became an EU people voted in favour of an
Member State as of 1 July initiative to restrict mass
2013. immigration to Switzerland
and in consequence a new
52. The bilateral agreement on provision was added to the
free movement of persons Swiss constitution. Currently,
governs the introduction of the implementation of this
freedom of movement provision into a respective
between Switzerland and the law is in process but heavily
EU, and the gradual opening discussed. We expect the
of their respective labour legal implementation to have
markets. It covers workers of an impact also on work and
all kinds, the self-employed, residence permits for EU-
and individuals without citizens in the near future.
gainful employment who
16 People and Organisation17 People and Organisation
Step 4:
What to do before you arrive in
Switzerland
Residence and work permit and their children who are employer that no other
younger than 21 or who suitable candidate on the
54. Basically, before you enter depend on maintenance. The local and the EU employment
Switzerland, you must obtain spouse and children who join market was found for the
a residence and work permit the employee in Switzerland specific position. These
for the canton in which you are entitled to take up paid permits are subject to quotas.
intend to stay and/or work. employment. The new Non EU/EFTA nationals who
Please note that Croatian provision in the Swiss have been granted a permit
citizens are still subject to constitution, which may be joined by their
strict immigration restricts immigration, families. As a rule the period
requirements similar to those will likely also have an of validity of residence permit
applicable to non-EU citizens impact on employees (B) is limited to one year and
(priority of local workforce, from EU countries once it must normally be renewed
minimal salary requirements the provision is every year. The period of
etc.). implemented in the validity of short-term L
55. For citizens of the EU- respective law. It is permits is usually identical to
recommended to seek the term of the employment
Member States (excl. Croatia)
with a Swiss employment advice as early as contract and can be extended
contract, it is basically only possible with regard to to an overall duration of no
the requirements, more than 24 months.
necessary to register at the
local commune (Gemeinde, process and duration to
obtain a work and/or 57. A foreign national may have
Kreisbüro) before taking up the right to settle in
work. Depending on the residence permit.
Switzerland after 10 years
duration of the employment 56. For employees with a non- and be granted a C permit.
contract, either an L- or a B- Swiss employment contract This gives the right to change
permit (cross-border: G- (“assignees”) or for the place of residence and
permit), which is valid individuals from non employer in Switzerland.
throughout Switzerland will EU/EFTA Member States Citizens from certain
be granted. EU/EFTA stricter immigration countries may obtain a C
nationals with residence requirements apply. For non- permit after a period of five
permits (B-EU/EFTA) or EU/EFTA citizens, the so- years (see Appendix F).
short-term residence permits called “priority of local
(L-EU/EFTA) may be workforce” applies: evidence
accompanied by their spouse must be provided by the
18 People and OrganisationRemuneration package household goods duty-free if Switzerland. If the use of the
they have held them for at car does not fulfil these
58. Before moving, satisfactory least six months, have used requirements, two
arrangements should be them for personal purposes, possibilities exist. The first
made to cover any extra and will continue to use them possibility is to apply for a
expenses due to living in for personal purposes. At the license for the duty-free
Switzerland. Special attention point of importation, a Swiss import and the use of the car
has to be paid to the question customs form (no. 18.44) within Switzerland during a
of continuing to participate in must be presented during the limited time. Such a license is
an existing pension plan. usual working hours, along valid for a period of
Social security with an original list (in either maximum two years from the
French or German) of the date of the transfer of the car.
59. On moving to Switzerland, it items being imported. A copy After this time, the car must
is not usually obligatory to of the residence permit or a be exported or definitely
contribute to the home copy of the first five pages of imported. The second
country social security the passport will also need to possibility is to import the car
scheme. Failure to make any be presented. In addition, a immediately and pay the duty
contributions for a period of copy of the house/apartment and VAT owed. At the import,
years, however, is likely to purchase or rental agreement a customs-duty (CHF
result in a lower pension. It of the property in Switzerland 15/100kg), a car tax (4%), a
may therefore advisable to must be presented. fee for the inspection report
consider the possibility of Household goods should be (CHF 20), and 7.7% VAT
continuing to pay voluntarily imported contemporaneous (basis for the VAT-calculation
contributions. with the move into a is the amount after the
house/apartment in mentioned fees/taxes) is
60. There are social security Switzerland. levied. The Swiss Customs
agreements in existence with Office can provide further
numerous other countries Importing cars details on importing cars into
(see Appendix G). As a result Switzerland.
of such an agreement, foreign 62. Cars, which are brought to
nationals may be exempted Switzerland together with the Transferring funds to
from contributions to Swiss household goods, can Switzerland
social security schemes (see generally be imported duty-
Appendix D). free into Switzerland 63. Funds can be transferred to
providing they have been Switzerland without any
Importing personal used for personal purposes restrictions.
possessions/household for at least six months before
goods entry into Switzerland and
that they will continue to be
61. Individuals moving to used for personal purposes
Switzerland can import their for at least one year in
Global Mobility Country Guide (Folio) 19Step 5:
What to do when you arrive in
Switzerland
Registration they should reply 'none' or financial circumstances and
'other' to the question about canton or community of
64. All residents of Switzerland religion. residence.
have to register at the local
city community offices where Tax return Social security
they are living. Foreign
nationals arriving in 65. Depending on the canton of 66. Social security matters are
Switzerland should go to residence, B or L permit dealt with by the Swiss
register as soon as possible holders will be subject to tax employer. The employee and
after their arrival and before at source and might also have the accompanying family
starting to work. The to submit a Swiss tax return members will have to take out
residence and work permit each year (see Step 6). mandatory medical insurance
will be issued which Professional tax advice in Switzerland within 3
documents the status (B/L should be sought shortly after months of their arrival. An
permit holder, etc.). If a new arriving in Switzerland in exemption from this
resident does not want to order to fully understand how obligation may be granted by
contribute to the church tax Swiss tax legislation will be the authorities in certain very
system in Switzerland, then applied in the individual specific circumstances.
Global Mobility Country Guide (Folio) 20Step 6:
What to do at the end of the year
Tax return – The taxpayer or the – Statements of mortgage
spouse is not Swiss or C and debt interest paid;
67. Foreign nationals who are permit holder.
Swiss tax residents will – Statements of alimony
normally have to file a Swiss If these conditions are or support payments
tax return each year unless fulfilled, then Swiss tax will paid or received;
they satisfy the following be withheld from the salary
conditions: and there will be no – Real estate maintenance
requirement to file a Swiss and repair invoices;
– The individual's gross tax return.
annual employment – Invoices for medical
income is less than CHF 68. The due date for submitting costs not reimbursed by
120,000 (if both spouses the tax return is usually 31 the health insurance;
are employed in March of the following year. – Original certificates of
Switzerland, they may Some of the cantons have additional voluntary
each earn up to CHF earlier deadlines (28 pension contributions;
120,000) or CHF February, 15 March). This
500,000 for the canton due date can be extended by – Receipts for
of Geneva (there may be sending an application for an contributions to Swiss
other cantonal extension to the competent charities;
variations) providing cantonal respectively
that; communal tax authorities. – Surrender value of life
The tax return has to be insurance policies with a
– Tax is withheld at source submitted with all the capital value; and
by the employer on supporting documents
worldwide – There may be other
including:
compensation; documents specific to
– The annual and monthly the individual's personal
– There is minimal or no salary statement; situation.
foreign source
investment or other – Bank and investment 69. To make the preparation of
income to declare; and statements showing the the tax return easier, a file
balances at the 31 should be kept throughout
– There is no real estate in December; the year for any of the above
Switzerland or abroad to documents (if applicable to
declare; – Bank and investment your financial
statements showing circumstances), which may
– There is no taxable interest and dividends need to be submitted with the
wealth; received;
21 People and Organisationtax return. Swiss banks Withholding taxes However it is not normally
automatically make available necessary to make any
statements showing the 70. Swiss and foreign taxes on additional payments before
balance of your accounts, dividends and interest can be receiving the final tax
interest received, and reclaimed or credited against invoices, if taxes are being
withholding tax paid at the the tax liability, if there is a withheld from your monthly
beginning of each calendar double tax agreement, certain salary payments, unless you
year. Other banks or financial conditions are fulfilled, and have substantial additional
institutions do not the income has been reported income, which has not been
automatically provide this in the Swiss annual tax subject to Swiss tax at source.
information and it may be return. Tax withheld or estimated
necessary to contact the Payment of tax payments will be off set
financial institutions against the final tax liability
concerned to request it. Even 71. The federal, cantonal and and interest for late payment
if the conditions above are community tax authority will will be charged on any taxes
satisfied and a Swiss annual issue final tax assessments not paid by the due dates.
tax return does not have to be and invoices based on the tax Interest will be paid on any
filed, it is still useful to retain return submitted. It may be taxes overpaid and the
the documents throughout several months and can be overpayments will often be
the year, as it may be possible over a year before these carried forward to the next
to claim some of the assessments and invoices are tax year unless the tax
deductions by requesting a issued. Tax payments may authorities are requested to
withholding tax tariff need to be made before the refund the overpayment to
correction. The deadline for final invoices are issued. the taxpayer. If the taxpayer
filing this correction is 31 Swiss nationals and C permit does not agree with the
March of the year following holders will normally make assessment, then an appeal
the tax year in many cantons estimated tax payments can be made, normally within
and it is often not possible to during the year, as they do 30 days. Foreign nationals
obtain an extension. Failing not have taxes withheld at are recommended to have
to meet this deadline would source by their employers. To their tax assessments checked
likely result in a rejection of facilitate making these by a Swiss tax professional to
the application. payments the tax authorities ensure that all the deductions
generally issue provisional claimed and taxes
tax invoices based on the prepayments have been
previous year’s tax return. correctly accounted for.
72.
22 People and OrganisationStep 7:
What to do when you leave Switzerland
Filing a tax return reach the retirement age of fund regulations
65 for men and 64 for permitting); or
73. When de-registering from women. You should keep
Switzerland, a tax return your Swiss Social Security 2. Transferred to a vested
must be filed declaring all the Card safe as this may need to benefits account in
income received up to the be provided to the Swiss Switzerland; or
date of departure, unless the Compensation Office in
conditions referred to above 3. Paid into your personal
Geneva in order to claim your account.
are satisfied and the foreign pension.
national is subject to tax at Options 1 and 2 are normally
source only. If you own real 76. As mentioned in Step 2 the tax neutral.
estate in Switzerland you will Pillar 1 pension funds
normally continue to have an accrued in the Swiss social If you chose option 3 above
annual tax filing obligation in security system can only be Swiss tax will be withheld
the canton where the paid out to you when you from the payment as
property is located after you leave Switzerland if you are a mentioned in Step 2. The
have left Switzerland. national of a country which payment may also be subject
does not have a reciprocal to taxation in the new
74. You are liable for tax in social security agreement country of residence.
Switzerland up to the date of with Switzerland (see
departure in respect of any Appendix G) and you are not Please note that
Swiss-sourced earnings paid moving to an EU State. If you although Swiss pension
at a later date e.g. bonus are eligible to have the social funds can normally only
payments. Tax will normally security fund paid out you be paid out to you after
be withheld from such should complete the claim you have de-registered
payments and it will not form, which can be obtained from Switzerland
normally be necessary to file from the Swiss Compensation arrangements for the
a Swiss tax return for such Office in Geneva, at the time transfer of your pension
income. of your departure. funds should be made
well in advance of your
Swiss pension payments 77. Your Pillar 2 and Pillar 3a departure and should be
75. If you have contributed to the pension funds can either be: discussed with the
Swiss social security system pension fund
1. Transferred to your
you will have accrued benefits administrators and tax
Swiss new advisors in both
in the state pension (Pillar 1) occupational/company
which you will normally be Switzerland and the
pension fund (pension
entitled to receive when you country you are moving
to in order to fully
23 People and Organisationunderstand and optimize has a double tax agreement Reporting departure
the tax implications of with Switzerland. You will
this transaction. normally be able to claim this 79. Before leaving Switzerland,
tax or part of it back by foreign nationals must
Tax on Swiss bank account completing and submitting personally give notice to the
interest the appropriate tax claim community of residence of
form in line with the the intention to leave. It is
78. Bank account interest is usually at this time that any
subject to a withholding tax respective double tax treaty.
outstanding tax liabilities
of 35%, however, once you should be paid. It is
have de-registered from recommended that assistance
Switzerland you will no from a tax professional is
longer be (fully) liable to tax sought if you are unable to
on this income if you are complete this process prior to
resident of a country which departure
24 People and OrganisationStep 8:
Other matters requiring consideration
Wealth tax Pension funds are not minor children). Foreign real
considered as assets for the estate and qualifying business
80. All cantons raise a tax on net purpose of the Swiss wealth interests are exempt from
wealth. There is no such tax tax and do not need to be wealth tax but are taken into
at the federal level. In declared in the Swiss tax account to determine the
general, the following assets return. Foreign pension applicable wealth tax rate
are considered as taxable: funds may need to be (exemption with
– Immovable assets (e.g. declared nonetheless. progression). Liabilities are
real estate); allocated according to the
81. All liabilities e.g. outstanding location of gross assets.
– Movable assets (e.g. mortgages and other loans
securities and other can be deducted, in order to
investments); determine the net wealth. In
some cantons, there is a In this example CHF
– Cash, gold and other personal allowance 80,000 will be taxed at a
precious metals; depending on the status of tax rate based on net assets
the taxpayer (married or of CHF 400,000.
– Cash value of life single, number of children).
assurance policies; 83. The rates for wealth tax are
In other cantons, this progressive in most cantons
personal allowance is
– Shares in undistributed and vary depending on the
considered in the applicable canton in which the taxpayer
inheritances;
wealth tax rates. is living. For example, the
– Business capital, shares 2017 tax on joint net assets of
82. A taxpayer must declare
in a partnership; and CHF 1,000,000 for a married
worldwide assets including
worldwide assets belonging couple resident in:
– Motor vehicles, boats,
etc. to all immediate family
members (e.g. spouse and
Example Total (CHF) USA (CHF) CH (CHF)
Property 400,000 400,000 -
Other assets 100,000 - 100,000
500,000 400,000 100,000
(100%) (80%) (20%)
Liabilities (100,000) (80,000) (20,000)
Taxable net assets 400,000 320,000 80,000
25 People and Organisation– Zurich is approximately Inheritance and gift tax however that there can be
0.2% (CHF 2,000); cantonal variations.
86. Inheritance/property and gift
– Basel-City is taxes are only levied by the 89. The tax rate is progressive
approximately 0.5% cantons, although in a few and reflects the degree of
(CHF 5,000); cases they are also levied by kinship involved as well as
the communities. The federal the value of the inheritance or
– Geneva is approximately authorities do not charge tax gift. The maximum tax rate
0.49% (CHF 4,900). on either inheritances or for unrelated persons can be
Church tax gifts. In some cantons there as high as 50%.
are no inheritances or gift tax
84. In most cantons members of at all. In all other cantons 90. In an international context,
inheritance or gifts to spouses Switzerland has concluded
the Roman Catholic Church
and the local Protestant are exempt from tax; most inheritance tax treaties with a
Church have to pay a church cantons also exempt direct small number of countries.
descendants. These treaties do not cover
tax, which is levied at a
certain percentage of income gift taxes.
tax. In some cantons other 87. An individual becomes liable
to tax if they: Purchase of property
religious communities also
levy a church tax. – Inherit property from a 91. A foreign national who has a
person whose last B permit can buy property in
85. Foreign nationals who Switzerland if the property
residence was
register at the local will serve as the individual's
community office should Switzerland;
main place of residence.
check carefully whether they – Receive a gift from a However, if you have a B
are registered as a member of donor resident in permit and your employment
such a religious community. Switzerland; in Switzerland is
If they do register as a discontinued you may no
member they automatically – Receive property in longer have a right to remain
become subject to church tax. Switzerland as either a in Switzerland. In this case,
If they do not wish to gift or as an inheritance. you would be able to rent out
contribute to the church tax the property. Purchasing
they should answer 'none' or ' 88. Liability to taxation does not,
in principle, depend on the property as a second
other' when asked their residence or vacation home is
religion. If they wish, a letter nationality of the deceased or
possible only in certain
can be sent to the church tax of the donor, and is also not
dependent on the place of communities and under
authority requesting that they certain conditions with the
be removed from the church residence of the heir or
recipient. Please note approval of the local
register. authorities.
26 People and OrganisationAppendix A:
Taxation of foreign employees resident
in the canton of Zurich
Taxation at source
As a resident of the canton of Zurich, you will usually become liable to tax from the date of your arrival. If you nor
your spouse are a C-permit holder nor Swiss citizens, tax at source is deducted monthly from your salary in
accordance with withholding tax tables issued by the canton. The tax is calculated based on the monthly gross
salary and will therefore increase in months when a bonus or additional month's salary is paid to take account of
the progressive Swiss tax rates. Swiss social security and average Swiss pension contributions, as well as standard
deductions and your marital status and family size are built into the tax tables.
Tax deducted at source covers direct federal tax, cantonal and communal taxes as well as church tax. Church tax is
only levied if the taxpayer has registered at the local community office as a member of the three main Swiss
churches: the Roman Catholic, Christian Catholic, or the Protestant church.
If conditions for filing a tax return are not fulfilled (referred to in step 6), the tax at source will be the final tax
liability. Non-standard deductions can be claimed by filing an application for a withholding tax tariff correction
with the cantonal tax authorities. Any documents proving source tax withholding (e.g. Swiss salary certificate) as
well as actual deductions (e.g. statement confirming contributions made to pillar 3a) have to be provided to the tax
authorities. This must be done before 31 March of the year following the tax year (e.g. 31 March
2019 for the 2018 tax year), as extensions for the filing of tariff corrections are normally not
granted.
Tax rate
Tax at source rates (based on 12 regular monthly salary payments), which will be offset against your final tax
liability for 2018, including federal, cantonal, and communal taxes (excluding church taxes) for the following
examples of gross income are as follows:
Gross income/year (CHF) Single Married (single earner) Married (single earner) +
2 children
100,000 9.51% 6.58% 2.97%
150,000 13.77% 10.08% 6.88%
200,000 17.62% 14.09% 11.02%
300,000 21.28% 17.86% 15.38%
27 People and OrganisationTax return In the year following your arrival in Switzerland, you have to file an annual Swiss tax return (see Step 6) if your annual gross income exceeds CHF 120,000. In the first year, regular income from the date of arrival to the year-end will be annualized. Income received after the date of arrival in Switzerland relating to work duties exercised prior to arrival in Switzerland will be exempt with progression (subject to the application of an existing double taxation agreement). If you or your spouses are a C-permit holder or Swiss citizen registered in Switzerland, you have to file a tax return each year. If you own a property, you have to file a tax return each year as well. Only net income/deemed income received from this property (less social deductions allocated to Switzerland based on income received in Switzerland and abroad) is taxable in Switzerland. Any employment income (assuming taxed at source if relating to Swiss work duties) and income from movable assets will be considered for tax rate purposes only (exemption with progression). There are differences in the value of certain standard deductions for cantonal and federal tax purposes. For example the 2018 normal cantonal standard insurance and savings deduction for a married couple is CHF 5,200 whereas the federal deduction is CHF 3,500. Cross border Cross border employees working in Zurich but living in Germany are subject to tax in their country of residence, Germany and must also pay a withholding tax of 4.5% of their gross income earned in Switzerland. The withholding tax paid in Switzerland will be credited against the German tax liability. A Swiss tax return does not have to be filed. Swiss residents working in Germany need only declare 80% of their gross income in their Swiss tax return and must also pay a withholding tax of 4.5% of the gross income to the German tax authorities. Special cross boarder agreements between Switzerland and further bordering states have to be reviewed on case by case basis to determine the taxation right of Switzerland. International Commuter International commuters (generally defined as individual who is living and working in Switzerland but having centre of vital interest abroad and commuting back on a regular basis) are treated as source tax final and have not to file a tax return. If you are an international commuter you can claim back any non-standard deductions by filing a source tax tariff correction with the cantonal tax authorities by 31 March of the following year the latest. Furthermore if you perform a part of your work outside Switzerland and the work days are taxed abroad based on the treaty, you can file a tax tariff correction to avoid double taxation of work days performed outside Switzerland. Income tax computation 2018 The following computation assumes that the individual is married, with only one spouse in paid employment and two children, resident in the city of Zurich, contributing 7% of the base salary (after deduction of the coordination off-set) to the Swiss pension plan, liable to Swiss social security contributions and no church tax. Other relief or 28 People and Organisation
allowances may be available; therefore further advice should be sought if you would like a more accurate estimate
of your annual tax liability.
Tax computation Cantonal CHF Federal CHF
Base Salary 150,000 150,000
Allowances 50,000 50,000
Total gross salary 200,000 200,000
Less —
Social security (employee's share) (12,139) (12,139)
Pension contributions (employee's share) (8,773) (14,000)
Less — Deductions:
General employment (4,000) (4,000)
Insurance deduction +2 children (7,800) (4,900)
Child allowance (18,000) (13,000)
Deduction for married couple (2,600)
Taxable income 149,288 154,588
Cantonal and community tax 19,942
Federal tax 6,145
Total Swiss tax liability 26,087
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