As an expat working in Switzerland, you are liable for Swiss income and wealth tax. This tax varies from canton to canton.
Tax provisions specific to Switzerland
In Switzerland there are three different levels of taxes:
- Federal tax
- Cantonal tax
- Municipal tax
This may seem complicated, but in practice you will only have to pay tax once, normally to the cantonal authorities.
The Swiss tax system therefore implies differences according to the place of residence.
See, for example, our map of the tax burden in 2017 for a single person without children with an annual gross income of CHF 100,000.
For example, a single person taxed at source and earning CHF 8,000 gross per month will pay CHF 418 per month in the canton of Zug (cheapest canton) and CHF 1,363 per month in Neuchâtel (most expensive canton)1.
As each canton has its own tax system, this can lead to other differences depending on criteria such as family composition.
On the website of the Swiss Confederation you will find links to cantonal tax calculators so that you can get an idea of the amount of tax you will have to pay.
Types of tax
Taxation at source
Conditions and how it operates
Expats holding a B or L permit are taxed at source, i.e. the amount of tax is deducted directly from their monthly salary.
In this case, it is not necessary to file a tax return. Your employer is responsible for indicating the criteria necessary to determine your tax rate, i.e. the rate at which you will be taxed.
Withholding tax is based on the ordinary income tax rates and includes federal, cantonal and municipal taxes. In addition, work-related expenses, insurance premiums, deductions for dependants and tax breaks granted in the event of the gainful employment of both spouses are taken into account on a fixed-rate basis.
Conditions and how it operates
Expats holding a C permit or earning more than CHF 120,000 gross per year (CHF 500,000 for Geneva) are taxed in the same way as residents.
This means that you must file an annual tax return. This will determine your taxable income, i.e. your gross income less deductions.
The ordinary tax return allows deductions such as transport costs, childcare costs, subsistence, third pillar contributions, etc. The conditions for these deductions may vary from canton to canton.
Taxation at source does not permit the actual deduction of these expenses, but takes into account an overall average. However, it is possible to request an adjustment (ask your cantonal authorities), in order to include certain significant deductions, such as those related to the third pillar.
You may be liable for other types of taxes in Switzerland.
Although it may seem strange, your religious affiliation will be requested on the administrative documents, as some Swiss cantons apply a religious tax. If your denomination is a recognised church, you will have to pay a certain amount of tax.
However, you have the option of stating that you have no religion and pay nothing.
Wealth tax must be declared (in conjunction with the income tax return in the case of ordinary taxation).
This tax applies above CHF 50,000 depending on the canton and generally amounts to less than 1%.
Tax on possessions and expenses payments
There are other taxes such as motor vehicle tax and dog tax. These vary from canton to canton and you will find them on the website of the cantonal tax authorities.
Depending on the laws of your home country, you may have to file a tax return there as well, but this does not usually mean that you will pay tax twice. Switzerland has signed agreements with around 100 countries aimed at preventing double taxation.
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