As if moving to a new country with new cultures and a different climate weren't challenging enough, Switzerland being one of the leading tax countries in the world certainly doesn't make it any easier. We provide you with the most important facts if you hold a B-permit.

Please read carefully whether you are affected by any of these facts:

Do not hesitate to contact us for more information.

Summary

Navigating the Swiss tax system can be challenging, especially for new residents holding a B permit. This article provides detailed information about tax obligations, the specifics of paying taxes as a B or C permit holder, and the implications of having your main residence abroad. Additionally, we explain withholding tax, how it works, and the requirements for filing a tax declaration in Switzerland. Understanding these key points will help you avoid financial surprises and ensure compliance with Swiss tax laws.

When Does It Make Sense to File a Tax Return with a B Permit?

Withholding tax in Switzerland is based on the average tax rate of all municipalities in your canton of residence. This tax is deducted from your income after social security contributions by your employer. The average tax rate varies depending on the canton. Therefore, it is worth considering whether you should file a tax return:

If you live in a municipality with a lower tax rate than other municipalities in your canton, it may be beneficial to file a tax return. The best approach is to conduct a tax comparison. Determine your total withholding tax and calculate your tax liability if you were to file a tax return with all possible deductions. If your income remains stable over the next few years and does not decrease, this could be financially advantageous for you.

What Are the Consequences of Filing a Tax Return with a B Permit?

Once you file a tax return, you must continue to submit a tax declaration for subsequent years. While you will benefit from deductions, you may also benefit from the average tax rate of your municipality of residence.

How Do You Pay Taxes as a B Permit Holder?

Employees without a C permit generally pay withholding tax in Switzerland if they are not married to a Swiss national or do not own Swiss real estate. The withholding tax is deducted directly from their salary and varies depending on the canton. These rates usually include lump-sum deductions for professional expenses and insurance premiums, as well as deductions for married couples and children.

If your gross income exceeds CHF 10,000 per month or CHF 120,000 per year, you must file a complete tax return and pay taxes similarly to Swiss nationals. Taxes already paid at source are credited towards your final tax burden based on the tax return. If your annual gross income is less than CHF 10,000 or CHF 120,000, a tax return is generally required only if other taxable assets or income exceed a certain level, which varies between cantons.

Do You Own Property in Switzerland?

If you own property in Switzerland, you are subject to limited tax liability based on economic affiliation. You must submit a tax return, declaring your worldwide assets and income to determine the applicable tax rate. Property-related taxes may also apply depending on the canton.

Are You Gainfully Employed in Switzerland?

If you are liable to pay tax in Switzerland due to your employment, you are generally subject to Swiss withholding tax for the days you work in Switzerland. Special rules apply to cross-border commuters to neighboring countries and short-term assignments.

Employers are responsible for correctly accounting for withholding tax and social security contributions. It is crucial to keep your employer informed about your family’s place of residence, changes in family status, dual citizenship, remote working activities, and other relevant factors.

Can You Qualify for Quasi-Resident Status?

If you are employed by a Swiss company but have your main tax domicile abroad, you may qualify as a quasi-resident. If more than 90% of your worldwide income comes from Swiss sources, you can apply to complete an ordinary tax return, which may allow for additional deductions.

What Other Situations Can Trigger Limited Tax Liability?

Several other situations can trigger limited tax liability in Switzerland, including:

• Ownership or partnership in Swiss businesses
• Maintaining permanent establishments in Switzerland
• Real estate transactions
• Dividends and interests from Swiss investments
• Inheritance or gifts involving Swiss assets
• Earnings from personal activities in Switzerland by artists, athletes, and speakers
• Board membership fees from Swiss entities
• Interest on claims secured by Swiss real estate
• Pension funds received from Swiss schemes
• Income from employee participation plans acquired during employment in Switzerland

Professional advice is recommended to assess your specific situation.

How Is Taxation Handled in the Year of Moving to Switzerland?

When moving to Switzerland, tax liability begins on the date of arrival. This results in tax liability from the date of arrival to December 31st for both cantonal, communal, and direct federal taxes. The applicable tax rate is determined by pro-rating regular income for a full year.

What Are Your Tax Assets as a Foreigner in Switzerland?

Foreigners are subject to the same tax laws as residents. If taxed at source and your gross income does not exceed CHF 120,000 per year or CHF 10,000 per month, you must report your worldwide assets and income above certain thresholds, which vary by canton.

Additional Thresholds for B Permit Holders

In addition to the income of CHF 10,000 per month or an annual income of CHF 120,000, each canton has different regulations regarding when an additional tax return must be filed.

• Canton: Aargau
  Additional Income Not Subject to Withholding Tax: From CHF 10,000
  Assets single: From CHF 100,000
  Assets married: From CHF 100,000

• Canton: Appenzell Ausserrhoden
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Appenzell Innerrhoden
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: From CHF 50,000
  Assets married: From CHF 100,000

• Canton: Basel-Land
  Additional Income Not Subject to Withholding Tax: From CHF 1,700
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Basel-Stadt
  Additional Income Not Subject to Withholding Tax: From CHF 500
  Assets single: From CHF 75,000
  Assets married: From CHF 150,000

• Canton: Bern
  Additional Income Not Subject to Withholding Tax: From CHF 3,000
  Assets single: From CHF 150,000
  Assets married: From CHF 150,000

• Canton: Freiburg
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Geneva
  Additional Income Not Subject to Withholding Tax: No known threshold
  Assets single: No known threshold
  Assets married: No known threshold

• Canton: Glarus
  Additional Income Not Subject to Withholding Tax: From CHF 2,000
  Assets single: From CHF 50,000
  Assets married: From CHF 50,000

• Canton: Graubünden
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Jura
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Lucerne
  Additional Income Not Subject to Withholding Tax: Interest income: CHF 2,000, Self-employment income / alimony: CHF 5,000
  Assets single: From CHF 62,500
  Assets married: From CHF 125,000

• Canton: Neuchâtel
  Additional Income Not Subject to Withholding Tax: No known threshold
  Assets single: No known threshold
  Assets married: No known threshold

• Canton: Nidwalden
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Obwalden
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Schaffhausen
  Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  Assets single: No threshold / case-by-case basis
  Assets married: No threshold / case-by-case basis

• Canton: Schwyz
  Additional Income Not Subject to Withholding Tax: From CHF 2,000
  Assets single: From CHF 50,000
  Assets married: From CHF 50,000

• Canton: Solothurn

  • Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  • Assets single: No threshold / case-by-case basis
  • Assets married: No threshold / case-by-case basis

• Canton: St. Gallen

  • Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  • Assets single: From CHF 75,000 plus CHF 20,000 for each minor child
  • Assets married: From CHF 150,000 plus CHF 20,000 for each minor child

• Canton: Ticino

  • Additional Income Not Subject to Withholding Tax: From CHF 3,000
  • Assets single: From CHF 50,000
  • Assets married: From CHF 50,000

• Canton: Thurgau

  • Additional Income Not Subject to Withholding Tax: No threshold / case-by-case basis
  • Assets single: No threshold / case-by-case basis
  • Assets married: No threshold / case-by-case basis

• Canton: Uri

  • Additional Income Not Subject to Withholding Tax: From CHF 2,000
  • Assets single: From CHF 100,000
  • Assets married: From CHF 100,000

• Canton: Vaud

  • Additional Income Not Subject to Withholding Tax: No known threshold
  • Assets single: No known threshold
  • Assets married: No known threshold

• Canton: Valais

  • Additional Income Not Subject to Withholding Tax: No known threshold
  • Assets single: No known threshold
  • Assets married: No known threshold

• Canton: Zug

  • Additional Income Not Subject to Withholding Tax: From CHF 2,000
  • Assets single: From CHF 100,000
  • Assets married: From CHF 100,000

• Canton: Zurich

  • Additional Income Not Subject to Withholding Tax: From CHF 3,000
  • Assets single: From CHF 80,000
  • Assets married: From CHF 160,000

What Is Withholding Tax?

Withholding tax is a tax that is deducted directly from income before it is paid to the employee. In Switzerland, foreign employees without a permanent residence permit (C permit) are generally subject to withholding tax. This means that the employer deducts the tax directly from the salary and transfers it to the tax authorities.

The withholding tax covers all types of income, such as salaries, bonuses, and other compensation. It also takes into account personal circumstances such as marital status and the number of children. The tax rate varies depending on the canton and the employee's personal situation.

In addition to withholding tax, employees subject to withholding tax must, under certain circumstances, file a tax return, especially if they have additional income or assets that are not subject to withholding tax. This is necessary to ensure correct taxation and to take advantage of potential tax benefits.

Employees subject to withholding tax must, under certain circumstances, proactively and independently submit a tax return to the tax authorities. Failure to do so can result in tax-related legal consequences. Filing a tax return is especially mandatory if employees subject to withholding tax have additional income or assets that are not subject to withholding tax. Below, you will find out when this is the case and which cantonal limits must be considered.

How Does Withholding Tax Work?

Withholding taxes are deducted by the payer and forwarded to the tax authority. In Switzerland, this mainly includes withholding tax on salaries, interest, and dividends.

How Is Withholding Tax Calculated?

Employers deduct tax at source from salaries and send it to the tax authority. If an employee files a Swiss tax return, these withholdings are considered prepayments towards the final tax burden.

How Much Is Withholding Tax?

The calculation is based on factors such as family status, canton of residence, and gross salary. Withholding tax on dividends and interests is generally 35%, which can be claimed in the annual tax return.

How Do You Reclaim Withholding Tax?

Withholding tax can be reclaimed if a tax return is filed. The tax withheld from interest and dividends can be claimed and credited towards the final tax burden. Foreign taxes withheld from investments can also be claimed depending on double tax treaties.

What Are the Requirements for Tax Declaration?

You must file a Swiss tax return in Zurich if you meet any of the following criteria:

• Swiss resident with Swiss nationality, C permit, ownership of Swiss real estate, or married to a Swiss national or C permit holder
   
• Non-Swiss resident with Swiss real estate property
   
• B permit holders with gross income of CHF 10,000 per month or CHF 120,000 per year or higher

Taxable Assets of at Least CHF 80,000 at the End of the Tax Year

If you have taxable assets amounting to at least CHF 80,000 at the end of the tax year or tax period, you are required to file a tax return.

Earn Additional Income Not Subject to Withholding Tax of at Least CHF 3,000

If you earn additional income of at least CHF 3,000 in a tax year that is not subject to withholding tax, you must file a tax return. This includes income from self-employment, securities, or alimony.

B permit holders with lower income but significant worldwide wealth and income must request the forms. It may be beneficial to voluntarily file a tax return to claim additional deductions. The application must be submitted by March 31 of the following year, and once chosen, this option remains valid for subsequent years.

What Are the Filing Deadlines and Extensions?

You have 30 days to file once you receive the tax forms, and extensions are possible. Ensure you do not miss deadlines to avoid penalties.

By understanding these tax obligations and processes, you can better manage your tax situation in Switzerland and avoid unexpected financial surprises.