taxes in Switzerland
Taxes and other duties are levied on three levels: the Confederation, the 26 cantons and the some 3,000 municipalities, reflecting the federalist State structure of the Swiss Confederation. Each canton has its own tax legislation and taxes as it sees fit the income and assets of individuals, the profits and capital of legal entities, inheritances and donations, property gains, etc.
When and how do I have to pay taxes?
- Swiss citizens and foreign employees holding a residence permit (C) have to file each year a tax return. The community your are resident of sends the forms.
- Foreign employees who do not hold a residence permit (C) from the Immigration Authority and who are in gainful employment as an employed person, are subject to withholding tax (taxes at source). This is deducted monthly from the salary. No refunds are made when leaving the country.
- Foreign employees who are married to a spouse who holds Swiss citizenship or residence permit (C) are exempt from withholding tax.
How many taxes do I have to pay?
- The income tax calculator of the Swiss Federal Tax Administration or the tax calculator of Credit Suisse determine approximately how many taxes natural persons living Switzerland have to pay (only employees).
- The amount of withholding taxes depends on the cantons.
Do I have to pay taxes on fellowships?
Legally, fellowships are defined as an amount of money indigent people get without an engagement of return or consideration. Such fellowships are tax-free in Switzerland. Therefore, not every amount of money commonly called "fellowship" is a fellowship in the juridical sense.
- If you get a fellowship without condition, it is tax-free.
- If you get an amount of money linked to an application or a contract of employment, it is assessable.
PhD fellowships are usually received in the form of a salary, and are therefore subject to tax. Postdoc grants that are directly given to the postdoc are in priciple not subject to tax. This may however vary from canton to canton.
taxes at source on income
- Tax at source or withholding tax is applied to two categories:
- foreigners who are permanently or temporarily resident in Switzerland
- individuals (regardless of nationality) with no tax domicile or tax residence in Switzerland.
- How it works: The tax is deducted at source means that it must be deducted by the employer. This includes all taxes: direct federal tax, cantonal and communal taxes. The tax amount is generally calculated on the basis of the individual’s gross income.
- How it is calculated: Tax at source rates are based on a cantonal average of ordinary tax rates, and are also affected by the individual’s marital status, by any children they have and by general deductions. To give some idea of the tax burden of individuals taxed at source in Switzerland, the following table shows some tax-at-source calculations for various income for a person living alone in the Canton of Geneva in 2008:
|Income per month||tax at source|
The actual rate depends on your marital situation and on the number children. There are also differences between cantons.
A subsequent ordinary assessment will only be made, based on an ordinary tax return, in the case of foreigners permanently or temporarily resident in Switzerland who have a gross annual taxable income of more than CHF 120’000. In such cases, any taxes already deducted at source will then be offset against the actual tax amount due. Exception: Married couples in a joint household are assessed using an ordinary procedure provided one spouse is a Swiss citizen or holds a residence permit.
- An example of tax calculation:
Gross Monthly Income: 6’231.- CHF (13 months)
Gross Annual Income: 81’000.- CHF
Social Security Insurance: 315.- CHF
Unemployment Insurance: 62.- CHF
NBU (Accident Insurance): 49.- CHF
Pension Fund: 319.- CHF
Tax at source (12.1%): 754.- CHF
Net Monthly salary: 4’732.- CHF
- The Swiss Federal Tax Administration provides general information regarding taxes in Switzerland.
- The Federal Department of Finance provides information about the dual taxation agreement between Germany and Switzerland.
- steuerkonferenz provides information about the tax laws of the cantons.
- steuerrevue furnishes general information about national and international tax laws.
- A useful web page made by Germans for Germans living in Switzerland (only in German): hallo-schweiz.ch
Source: FDF, SSK, ETH