Foreign employees can request a withholding tax refund under certain circumstances. Comparis shows which deductions can be claimed by foreigners subject to withholding tax and how the process works.
We answer the most important questions on the topic of withholding tax:
- Who is liable for withholding tax?
- How much withholding tax do I have to pay?
- When do I have to pay withholding tax?
- Can I request a withholding tax refund?
- Which deductions can I claim with respect to withholding tax?
- How do withholding tax refunds work?
- Where do I get the forms for refunds?
- By when do applications for reassessments have to be submitted?
- When will the tax authority issue the refund?
- What do I do if the tax office does not accept the deductions?
- When do I stop paying withholding tax?
Who is liable for withholding tax?
The income of the following people is subject to withholding tax:
- Foreign employees resident in Switzerland for tax-law purposes who do not have a C permanent residence permit
- Employees working in Switzerland who are resident outside Switzerland for tax-law purposes. A prerequisite for this is that there is a double taxation agreement between Switzerland and the person’s country of domicile.
How much withholding tax do I have to pay?
Withholding tax is calculated on the basis of your gross income, marital status and canton of residence/employment. It can also change from year to year. With Comparis, you can calculate how much tax you have to pay in just a few seconds.
When do I have to pay withholding tax?
You do not have to submit a tax return. Your employer deducts your tax contribution from your gross income every month and pays it directly to the responsible tax authority in Switzerland.
Can I request a withholding tax refund?
Americans and Britons are familiar with the process. They file an income tax return for the preceding year and then hope for an income tax refund.
In Switzerland, you can also request a refund on the withholding tax you have paid by applying to the responsible tax authority for a withholding tax reassessment.
Which deductions can I claim with respect to withholding tax?
The type and amount of the deductions vary from canton to canton, in some cases considerably. Contact your responsible tax authority for more details.
If you live in the cantons of Zurich, Aargau, Basel-Stadt or Thurgau, the following rules apply to withholding tax deductions:
Deducting continuing education costs
Continuing education costs can be deducted if they are necessary for practising a profession. This does not include costs of initial vocational training or education (e.g. for apprenticeships, school or university courses).
The distinctions are sometimes unclear and subtle, so to be on the safe side, you should ask the tax authority whether you can deduct the costs of your continuing education course.
Deducting an allowance for your commute to work
In general, employees can only deduct travel costs for the use of public transport. In the canton of Zurich, for example, this must amount to at least 2,100 francs per year.
Car users can only deduct travel costs up to the amount of a public transport pass. Car-travel kilometres are only accepted under certain circumstances. Example: the canton of Aargau recognizes car-travel costs if the work commute adds up to more than 20,000 kilometres per year and travelling by car saves at least an hour compared to travelling by bus or train.
Deducting retirement savings contributions
Pillar 3a deposits are tax-deductible, as are purchases of additional occupational pension benefits (pillar 2) to fill gaps in your retirement provision.
Note on pillar 3a: employees with an occupational pension can deduct a maximum of 6,883 francs.
Deducting alimony and child support
Alimony and child support for an ex-spouse and children are deductible – but divorce costs are not.
Deducting childcare costs
Parents can include the cost of childcare in daycare centres or with childminders in their refund application.
Deducting expenses for illness and medical expenses
Expenses for illness and medical expenses are only recognized by tax authorities if they exceed a certain amount. The costs must amount to more than four per cent of gross income. Health insurance premiums are not deductible.
Deducting interest payments
People paying off loans may deduct the interest costs on their withholding tax return.
Donations and membership fees for non-profit organizations are deductible. However, the cantons set a minimum amount, which is often a total of 100 francs.
How do withholding tax refunds work?
The forms are sent along with all required receipts to the tax office of the canton of residence. The authorities review the application, issue an assessment statement to the taxpayer and reimburse the amount in question.
Where do I get the forms for refunds?
You can download the forms from the websites of the cantons. These sites also provide important information on the procedure, the deadlines and the documents required.
- Canton of Aargau (in German only)
- Canton of Basel-Stadt (in German only)
- Canton of Bern (in German and French only)
- Canton of Lucerne (in German only)
- Canton of Thurgau (in German only)
- Canton of Zurich
By when do applications for reassessments have to be submitted?
The deadlines vary by canton: in the canton of Zurich, for instance, taxpayers must submit the documentation for 2018 by 31 March 2019 at the latest. If you miss this deadline, the tax office will deny a refund.
Other cantons have later deadlines. Foreign nationals in the canton of Aargau, for instance, have five years to request a withholding tax refund.
When will the tax authority issue the refund?
You will need to be patient. The cantons can take their time to refund withholding tax – for example, up to 18 months in Zurich.
What do I do if the tax office does not accept the deductions?
Ask the tax authority for an explanation. You can take legal action to appeal against the decision. Detailed information on this is provided on the tax assessment statement. In case of doubt, a tax adviser or lawyer can help.
When do I stop paying withholding tax?
The following foreign employees are taxed normally, i.e. like Swiss citizens:
- People with a C permanent residence permit
- Employees whose gross income is more than 120,000 francs
- Foreigners whose spouses have a Swiss passport or a C permanent residence permit
- Property owners