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Old 25.06.2015, 12:48
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Source tax / Quellensteuer for EU citizen after 5 years?

Everybody (including the HR manager) told me that source tax would stop after 5 years in Switzerland

However, there seems to be some ambiguity. The steueramt did not send any letter to the HR department telling them to stop deducting taxes.

The canton wrote to me and told me that to apply for a C permit I must do a language test, I could not do the test at that time and they just issued another 5 year B permit

The letter from the canton also says that permanent employment is required to qualify for a C permit. There are a lot of EU citizens who work here as contractors on fixed duration employment. If none of those people are able to escape source tax then it really doesn't seem consistent with the principle of freedom of movement, which requires EU citizens to automatically be treated as permanent residents after 5 years.

What is the truth? Is it the same for all cantons or does it differ from one to the next? Should source tax stop for EU citizens after 5 years, even if they don't qualify for a C permit?
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Old 25.06.2015, 13:01
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

Where does it say that EU residents should be treated as permanent residents after 5 years? In order to get a C permit, there are certain requirements you need to fulfill. Imho nothing to do with free movement as it doesn´t stop you from being or working here.

Your tax, i.e. Quellensteuer or not, is linked to your permit only. With a C you will no longer have the tax deducted. With a B the employer needs to deduct the tax at source.
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Old 25.06.2015, 14:23
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

As above your tax depends on your permit.. once you get a C permit your tax at source stops, it's nothing to do with how long you have been here.
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Old 25.06.2015, 14:35
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

Do some research!

Sometimes "Quellensteuer" (Being taxed at source, which is the average Canton taxation) is cheaper than making the annual tax declaration.

http://www.estv.admin.ch/dienstleist...x.html?lang=de
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Old 25.06.2015, 14:40
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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Do some research!

Sometimes "Quellensteuer" (Being taxed at source, which is the average Canton taxation) is cheaper than making the annual tax declaration.

http://www.estv.admin.ch/dienstleist...x.html?lang=de
I confirm!
Instead of receiving approx 190chf chf from a "simplified declaration" in addition to the source tax, I ended up having to pay 170chf to the "normal tax"*.


*It happens that HR forgot to remove me from a la source after C permis, hence the situation where I did 2 types of taxation for the same tax year.


PS:yes, I verified the numbers many time, it's no mistake. It's all about that a la source are taking various averages, which it's not possible in the normal declaration.
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Old 25.06.2015, 15:12
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https://en.wikipedia.org/wiki/Free_M...rective#Status

"Permanent residence is acquired automatically after exercising treaty rights for 5 years"

For those suggesting source tax may be less than normal taxation, it is not completely true. For those earning over 120k CHF, it is always necessary to do a tax return anyway and pay any shortfall. For those who are married, with one spouse earning substantially more than the other, the high earning spouse is taxed based on the assumption that his/her spouse earns just as much. E.g. if one spouse earns 10k CHF/month and the other earns 1k CHF/month, the tax rate used is based on the assumption the combined income is 20k CHF/month which is much higher than the rate for a combined income of 11k CHF/month. People in this situation are often paying so much more tax, especially if the spouse works part time, the spouse stops working completely.

Last edited by 3Wishes; 25.06.2015 at 15:26. Reason: merging consecutive replies
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Old 25.06.2015, 15:21
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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People in this situation are often paying so much more tax, especially if the spouse works part time, the spouse stops working completely.
Why wouldn't they just do a tax return and get the overpaid tax back?
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Old 25.06.2015, 15:24
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

OP: Which country are you from?

Between the EU and Switzerland it is anyway somewhat complicated. Switzerland only has bilateral treaties with the EU and member states that are not 100% consistent.
Original 15 EU states still have different rules for C permit than the newer joiners. So, in short - it is not that there is an automatic guarantee of a C-permit after 5 years.
Some more details are provided by the Swiss government website - https://www.bfm.admin.ch/bfm/en/home...c_eu_efta.html
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Old 25.06.2015, 15:32
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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For those suggesting source tax may be less than normal taxation, it is not completely true...
Well in fact it's almost surely 100% true.

Since there are 3 situations:

source tax may be less than normal taxation (possible, depends on variables)
source tax may be more than normal taxation(possible, depends on variables)
source tax may be equal as normal taxation (very unlikely).

So we said it depends, and it's not systematic, you are just saying what we said using different words.
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Old 25.06.2015, 15:38
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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https://en.wikipedia.org/wiki/Free_M...rective#Status

"Permanent residence is acquired automatically after exercising treaty rights for 5 years"
This is about the EEA of which Switzerland is not a member. This is actually stated in the second line of the linked article.
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Old 25.06.2015, 17:11
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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Why wouldn't they just do a tax return and get the overpaid tax back?
Because some tax authorities resist letting you have a tax return form if you earn under 120K and have a B-permit.
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Old 25.06.2015, 17:24
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Re: Source tax / Quellensteuer for EU citizen after 5 years?

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E.g. if one spouse earns 10k CHF/month and the other earns 1k CHF/month, the tax rate used is based on the assumption the combined income is 20k CHF/month which is much higher than the rate for a combined income of 11k CHF/month. People in this situation are often paying so much more tax, especially if the spouse works part time, the spouse stops working completely.
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Because some tax authorities resist letting you have a tax return form if you earn under 120K and have a B-permit.
But they aren't earning under 120K, in fact the original poster is claiming a (incorrectly) taxed salary of 240K !

But on that point - can tax authorities actually say no, or just make it difficult?
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