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EXPLAINED: What changes in Swiss tax law in 2021?

Swiss revision of taxation at source, or withholding tax, took effect on January 1st, 2021. As all matters related to taxes, it is a bit complex. The Local explains the main points.

EXPLAINED: What changes in Swiss tax law in 2021?
Nee legislation will reform Switzerland's withholding tax system. Photo by AFP

Foreigners working in Switzerland have their taxes deducted directly from their payroll each month, a system called taxation at source, or withholding tax.

Employers then forward the levied amounts to cantonal tax authorities. 

What is the objective of the new legislation?

Switzerland’s new law on taxation at source (Quellensteuer/ Impôt à la source/ Ritenuta d’acconto), is intended to ensure compliance with rules stipulated in the EU/EFTA agreement on the free movement of persons.

Most specifically, its aim is to eliminate disparities in treatment between workers subjected to withholding tax and those under the ordinary taxation regime.

Also, the cantons will be required to standardise the calculation of withholding taxes throughout Switzerland.

How does the system work currently?

Foreign nationals, including some 125,000 cross-border workers from France, Italy, and Germany who are employed in Switzerland, have income taxes automatically deducted from their salaries.

An agreement between Switzerland and the neighbouring countries, which is aimed at avoiding double taxation, authorises cantons to subtract withholding tax from cross-border workers’ wages. 

While most of this money remains in Switzerland, a portion is paid to the employees’ respective countries of residence or regional authorities there.

To determine the withholding tax rate, the total gross income from all employment, including supplementary earnings such as benefits from invalidity or accident insurance, must be calculated. 

Also, any foreign resident who is subject to withholding tax must file a tax return if their income exceeds 120,000 francs at the federal level. In Geneva, this threshold is currently set at 500,000 francs for a couple. 

On the other hand, Swiss citizens or foreigners who have a permanent residence status (Permit C) are not subject to taxation at source. 

Instead, companies give these employees a salary statement at the start of each year, listing the total gross and net income received in the previous year. Fiscal authorities send out tax return forms at the start of each year, which should be filled out and returned by the end of March.

READ MORE: How to navigate your way to a lower Swiss tax bill 

What will be different from January 1st?

Anyone who earns less than 120,000 a year will be entitled to file an ordinary tax return. 

Foreign nationals wishing to be taxed under the ordinary system must address their request to their cantonal tax authorities before March 31st of the year following the fiscal year in question. Once a person has been taxed under the ordinary regime, they remain subject to this system for the following years, in parallel with the withholding tax.

For all taxpayers who are not Swiss nationals, married to a Swiss national, or C Permit holders, tax at source will continue to be collected as a guarantee.

However, final taxation will be decided at a later date, in compliance with the ordinary rules and rates. The amount of the tax withheld will be applied without interest. 

For more details about the new tax system, see here. 

You can calculate your tax rate here.

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LEARNING FRENCH

How to talk email, websites, social media and phone numbers in Swiss French

It's a very common experience to have to give out your phone number or email address in Switzerland, or take down the address of a website, so here's how to do this if you're in the French-speaking part of the country.

How to talk email, websites, social media and phone numbers in Swiss French

The correct names for punctuation marks used to be fairly low down on any French-learner’s list, but these days they are vital whenever you need to explain an email address, website or social media account.

Likewise if you want to talk about websites, or social media posts, there are some things that you need to know. 

Punctuation

Obviously punctuation points have their own names, and making sure you get the periods, dashes and underscores correct is vital to giving out account details. 

Full stop/period . point. Pronounced pwan, this is most commonly heard for Swiss websites or email addresses which end in. ch (pronounced pwan ce ash).

If you have a site that ends in .com you say ‘com’ as a word just as you would in English – pwan com.

At symbol @ Arobase – so for example the email address [email protected] would be jean pwan dupont arobas bluewin pwan ce ash.

Ampersand/and symbol & esperluette

Dash – tiret

Underscore _ tiret bas 

Forward slash / barre oblique

Upper case/capital lettersMajuscule (or lettre majuscule)

Lower caseminiscule

The following punctuation points are less common in email or web addresses, but worth knowing anyway:

Comma , virgule. In French a decimal point is indicated with a comma so two and a half would be 2,5 (deux virgule cinq)

Exclamation mark ! point d’exclamation – when you are writing in French you always leave a space between the final letter of the word and the exclamation mark – comme ça !

Question mark ? point d’interrogation – likewise, leave a space between the final character and a question mark 

Brackets/parentheses ( ) parenthèse

Quotation marks « » guillemets 

Numbers

If you need to give your phone number out, the key thing to know is that Swiss-French people pair the numbers in a phone number when speaking.

So say your number is 079 345 6780, in French you would say zero septante-neuf, trois-cents quarante-cinq, soixante-sept, huitante (zero seventy-nine, three hundred forty-five, sixty-seven, eighty ).

Mobile numbers in Switzerland  begin with 079 or 078 (zero septante-neuf or zero septante-huit).

Social media

If you want to give out your Twitter or Instagram handle, the chances are you might need to know some punctuation terms as described above.

Otherwise the good news is that a lot of English-language social media terms are used in Switzerland too.

Twitter, Facebook and Instagram have the same names in Switzerland and have entered the language in other ways too, for example you might describe your dinner as très instagrammable – ie it’s photogenic and would look good on Instagram.

On Twitter you can suivre (follow), aimer (like) or retweet (take a wild guess). You’ll often hear the English words for these terms too, though pronounced with a French accent.

There is a French translation for hashtag – it’s dièse mot, but in reality hashtag is also very widely used.

Tech is one of those areas where new concepts come along so quickly that the English terms often get embedded into everyday use before the French-speakers can think up an alternative.

READ MORE: French-speaking Switzerland: Seven life hacks that will make you feel like a local

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