Everything you need to know about withholding tax in Switzerland

What is withholding tax?

Have you ever heard of withholding tax and wondered exactly what it is and why you may be affected by it? Don't worry, you're not alone. Many people are uncertain about how withholding tax works and what effect it has on their income. Let's take a closer look at the whole thing and clarify what withholding tax in Switzerland is all about.

Withholding tax meaning

Withholding tax is a tax that is levied directly at source, i.e. when income is paid out. This means that your employer deducts the tax directly from your salary and transfers it to the tax authorities. It sounds complicated at first, but it's actually very practical because you don't have to worry about the payment yourself.

Who must pay withholding tax?

In Switzerland, foreign employees who live in Switzerland or work in Switzerland from abroad are mainly so-called cross-border workers. The following are excluded from this:

People with a C permit and those whose spouse also has a C permanent residence permit or a Swiss passport.

How is withholding tax calculated?

The amount of withholding tax depends on various factors:

Your gross income

Your marital status (single, married, children) and denomination

Your canton of residence (Each canton in Switzerland has its own tax rates, and there may therefore be differences depending on where you live and where you work)

Benefits of withholding tax

Withholding tax also has its benefits. One of the biggest advantages is simplicity: You don't have to pay taxes yourself, your employer does it for you.

Disadvantages of withholding tax

However, there are also drawbacks. A common point of criticism is that withholding tax is levied on a lump sum basis and individual circumstances, such as high medical expenses or mortgage interest, are not taken into account. This may result in you paying more taxes than necessary.

How do I find out how much withholding tax I have to pay?

Your employer will inform you of the amount of deducted withholding tax, which is shown on your payslip. The cantonal tax authorities also provide information and calculators to calculate withholding tax.

If you would like to learn more about your specific situation or need help with payroll, feel free to contact Numarics. We are here to help and advise you.

For further information and specific regulations in the individual cantons, please visit this page.