How Does Withholding Tax Work for Expats in Switzerland?

Withholding tax is a central topic for expats living and working in Switzerland. It ensures that taxes are deducted directly from income before payment. For many expats, this is the first encounter with the Swiss tax system. At the same time, withholding tax raises many questions: Who is affected? How is it calculated? What are the differences between cantons? And in which cases is an ordinary assessment additionally required?

The following article provides a comprehensive overview of how withholding tax works for expats, which rules apply, and what to pay attention to.

Basics of Withholding Tax

What is Withholding Tax?

Withholding tax is a tax deducted directly by the employer from the gross salary and remitted to the responsible tax authority. For expats, this means that tax obligations are fulfilled immediately, without the need to file a full tax return in most cases.

Who is Subject to Withholding Tax?

Those mainly subject to withholding tax include:

• Foreign nationals without a settlement permit (C permit)
• Short-term residents with an L permit
• Residents with a B permit, if they are not married to a person subject to Swiss taxation or if certain income or asset thresholds are exceeded

Thus, withholding tax affects the majority of expats newly arriving in Switzerland.

Calculation and Rates

Factors Affecting Tax Amount

The amount of withholding tax depends on several factors:

• Gross income
• Marital status (single, married, single parent)
• Number of children or maintenance obligations
• Canton of residence or work

Each canton sets its own rates, so the tax burden can vary significantly depending on where the expat lives.

Example Calculation

A single expat without children earning CHF 100,000 per year will pay about 8–12% withholding tax, depending on the canton. The same individual living in Zug pays considerably less than in Geneva or Vaud.

Difference from Ordinary Assessment

When Withholding Tax is Not Sufficient

In many cases, withholding tax is the final tax, but there are exceptions requiring an ordinary tax return:

• Income above a certain threshold (often CHF 120,000 per year)
• Additional income from assets, shares, or self-employment
• Ownership of real estate abroad
• Marriage to a person taxable in Switzerland

Subsequent Ordinary Assessment

In an ordinary assessment, all income and assets are considered. Any previously deducted withholding tax is credited. Depending on the situation, this can result in additional tax payments or refunds.

Special Cases for Expats

Spouse and Children

Married expats with children have special tariffs. Maintenance obligations, child allowances, and marital status affect the withholding tax rate. It is important that this information is reported promptly to the employer, as it directly impacts the calculation.

Multiple Employers in Different Cantons

If an expat works for multiple employers in different cantons, withholding tax is applied by each employer according to cantonal law. In such cases, an ordinary assessment is often necessary to coordinate taxation correctly.

Secondary Income and Capital Gains

Secondary income such as consulting fees, capital gains, or rental income is not included in withholding tax. These must be reported separately in a tax return.

Rights and Obligations of Expats

Duty to Check

Expats should carefully check their monthly pay slips. Employers are responsible for deducting the correct withholding tax, but errors can occur.

Reporting Obligations

Changes in marital status (marriage, divorce, birth of children) must be reported immediately, as they affect the withholding tax rate.

Refund Opportunities

In some cases, expats can claim deductions not considered in the withholding tax tariff. This is done through a subsequent ordinary assessment or a special application process with the tax office.

Differences Between Cantons

Variety of Tariffs

Switzerland has a federal structure, and each canton has its own rates and deductions. While an expat in Zurich experiences a medium tax burden, tariffs in Geneva and Vaud tend to be higher. Zug and Schwyz are known to be particularly tax-friendly.

Residence vs. Work Canton

In many cases, the residence canton determines the rate. However, for expats without a permanent residence in Switzerland (e.g., weekly commuters), the work canton applies.

Practical Examples

Example 1: Expat with L Permit

An IT specialist from India works under a one-year contract in Zurich. He has no family in Switzerland. All of his income is subject to withholding tax, and no tax return is required.

Example 2: Expat with B Permit and High Income

A French manager lives in Basel and earns CHF 180,000 per year. Although withholding tax is deducted, she must also file an ordinary tax return, as her income exceeds the threshold.

Common Mistakes and Tips

Common Mistakes

• Failing to report child allowances or marital status, resulting in incorrect rates
• Assuming withholding tax covers all obligations, leading to undeclared assets
• Ignoring cantonal differences when changing residence

Practical Tips for Expats

• Regularly review pay slips
• Contact the cantonal tax office if uncertain
• Observe deadlines and reporting obligations
• Seek professional tax advice for complex cases (multiple employers, foreign assets)

Conclusion

Withholding tax in Switzerland is a transparent and efficient system for expats, fulfilling tax obligations directly through the employer. Nevertheless, there are special rules, cantonal differences, and exceptions that may require an additional tax return.

Expats who know their obligations, avoid mistakes, and report changes promptly benefit from a smooth and straightforward tax process.