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Old 15.10.2015, 14:53
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Tax rate applied during year end tax return if taxed at source

Dear all,
I have a permit B (taxed at source) and I live in Zurich (city) with my wife. My annual salary will be above 120k chf next year (140k), therefore I would like to understand from you what will happen.

1- Will I have to pay municipal, cantonal and federal taxes on 140k like a permit C holder or will I still pay a withholding tax rate (just an higher one)?

2- From that moment will I be required to fill in an annual tax return until I get a permit C? If yes, will I be taxed with a withholding tax rate or with an ordinary one (federal, cantonal and municipal)?

Thank you very much for your help!!
Best!
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Old 15.10.2015, 15:17
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Re: Tax rate applied during year end tax return if taxed at source

You'll be taxed throughout the year through withholding tax (quellensteuer) at the higher rate that corresponds to your salary. At the end of the year, you'll need to file a tax return and you'll be assessed exactly as if you were on a C-permit. This assessment can result in an overpayment / underpayment, based on the amount of quellensteuer that was withheld during the year.

On a C-permit, the process is exactly the same except that no tax is withheld through quellensteuer. You file a tax return at the end of the year and write a big check.
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Old 15.10.2015, 15:34
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Re: Tax rate applied during year end tax return if taxed at source

Thank you very much for your reply.

So conversely from this year, the place where we live (Zurich City) will impact the final taxation (so far just the canton impacted it), right?

Given that this excess above 120k will only be a one off occasion (bonus), will I be taxed in this way even the next year anyway?

Best!
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Old 15.10.2015, 16:08
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Re: Tax rate applied during year end tax return if taxed at source

Quote:
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Thank you very much for your reply.

So conversely from this year, the place where we live (Zurich City) will impact the final taxation (so far just the canton impacted it), right?

Given that this excess above 120k will only be a one off occasion (bonus), will I be taxed in this way even the next year anyway?

Best!
Yes, according to this Ct. Zurich tax office FAQ, you will be taxed ordinarily (not source-taxed) in the future even if your gross income falls below CHF 120'000:

"12. What does the retrospective assessment of withholding tax mean? If the gross earnings of a person who is liable for withholding tax, in annualised terms, exceed the sum of CHF 120,000.00, a retrospective ordinary assessment of the entire income and assets of the spouses shall be conducted. In subsequent years, a retrospective ordinary assessment shall be conducted until the liability to pay withholding tax ends, even if the relevant income limit of CHF 120,000.00 is temporarily or lastingly undercut. Only persons liable for withholding tax who are resident in Switzerland or in the Canton of Zurich respectively are entitled to a retrospective ordinary assessment. Tax that has been deducted at source shall be taken into account interest-free; excessively deducted tax shall be reimbursed. "

http://www.steueramt.zh.ch/dam/finan...t_qst15_en.pdf
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