What Switzerland's proposed income tax change could mean for employees?
Swiss employees could soon have part of their income tax deducted directly from their wages each month. Here's what you need to know about the change.
Currently, Swiss citizens and permanent residents pay income taxes by monthly instalments, the amounts of which are based on the previous years’ income. Final payments are then due once the tax return is assessed by the authorities.
But this week MPs voted in favour of introducing a taxation system for all employees that is already applied to certain foreign nationals working in the country: taxing income at source.
Deputies approved the idea of taxing everyone in Switzerland at source, arguing that that having small amounts automatically deducted from wages is more manageable for most workers than being faced with a lump-sum payment.
According to MP Emmanuel Amoos, who launched the motion, this system would prevent tax debt, which impacts nearly 10 percent of Switzerland’s population. This has a significant impact on municipalities, cantons, and the federal government.
Every year, public administrations have to write off hundreds of millions of francs in tax debts as bad debt losses.
What does this mean for Swiss taxpayers?
In future, income taxes should automatically be deducted by the employer from the employee’s salary and transferred to the responsible tax office directly unless employees themselves decide on different arrangements.
Should an employee then claim deductions on their tax return, they would get their money back upon doing so – just like foreign employees.
Voluntary tax payments already possible
Further to this, employees can already make voluntary tax payments if they wish to do so, but many choose not to.
Parties which opposed the motion have indeed argued that the main problem of indebted people is in fact not the lack of a voluntary tax deduction option, rather than people’s handling of their own money. They argue even this reform may not solve the nation’s tax debt problem.
In addition, the new deduction would only affect the income tax on people’s wages, but not their remaining income from other sources such as rent, or the wealth tax.
What happens next?
The proposal will now go to the Economic Commission of the Council of States for consideration. If agreed, the National Council must draw up a legislative proposal. If the request is not heard by the Council of States commission cannot agree then the Council of States has to decide.
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Currently, Swiss citizens and permanent residents pay income taxes by monthly instalments, the amounts of which are based on the previous years’ income. Final payments are then due once the tax return is assessed by the authorities.
But this week MPs voted in favour of introducing a taxation system for all employees that is already applied to certain foreign nationals working in the country: taxing income at source.
Deputies approved the idea of taxing everyone in Switzerland at source, arguing that that having small amounts automatically deducted from wages is more manageable for most workers than being faced with a lump-sum payment.
According to MP Emmanuel Amoos, who launched the motion, this system would prevent tax debt, which impacts nearly 10 percent of Switzerland’s population. This has a significant impact on municipalities, cantons, and the federal government.
Every year, public administrations have to write off hundreds of millions of francs in tax debts as bad debt losses.
What does this mean for Swiss taxpayers?
In future, income taxes should automatically be deducted by the employer from the employee’s salary and transferred to the responsible tax office directly unless employees themselves decide on different arrangements.
Should an employee then claim deductions on their tax return, they would get their money back upon doing so – just like foreign employees.
Voluntary tax payments already possible
Further to this, employees can already make voluntary tax payments if they wish to do so, but many choose not to.
Parties which opposed the motion have indeed argued that the main problem of indebted people is in fact not the lack of a voluntary tax deduction option, rather than people’s handling of their own money. They argue even this reform may not solve the nation’s tax debt problem.
In addition, the new deduction would only affect the income tax on people’s wages, but not their remaining income from other sources such as rent, or the wealth tax.
What happens next?
The proposal will now go to the Economic Commission of the Council of States for consideration. If agreed, the National Council must draw up a legislative proposal. If the request is not heard by the Council of States commission cannot agree then the Council of States has to decide.
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