Withholding tax for employers.

Who does it apply to?

As a general rule, it applies to foreign nationals living in Switzerland without a settlement permit C, and to many people who work in Switzerland but live abroad, such as cross-border commuters (Grenzgänger). Special rules apply depending on the country of residence and double taxation agreements, so each case needs to be checked.

What the employer must do

• Check when hiring whether the employee is subject to withholding tax.
• Register them with the tax administration of the relevant canton.
• Apply the correct rate for their personal circumstances: marital status, children and other household income.
• Deduct the tax through payroll every month.
• Report and pay the amounts withheld to the canton by the set deadlines.
• Show the amounts on the salary certificate (Lohnausweis).

Changes to keep in mind

Any change in personal circumstances can change the rate: a marriage or divorce, the birth of a child, a move to a new address or canton, or obtaining a C permit, which ends taxation at source. Ask your team to tell you about these changes as soon as possible and record the date on which each one occurs.

The subsequent ordinary assessment

Since the 2021 reform, people subject to withholding tax who have a high income must go through a subsequent ordinary assessment (nachträgliche ordentliche Veranlagung), while everyone else can apply for one within the set deadline. It is worth letting your employees know about this option.

Common mistakes

• Applying another canton’s rate after a change of address.
• Not updating the rate after a change in family circumstances.
• Continuing to deduct tax after the employee has obtained a C permit.
• Paying late or without the breakdown the canton requires.