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Old 09.12.2015, 22:46
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No warning for change in Tax Conditions - legal?

Hi,

Need some perspective here please.

If there is a change in the corporate tax arrangements between my Employer & the tax authorities, are they legally obliged to tell me about this change & give me fair warning if the change will result in a net loss in my personal income?

My employer pays my kids school fees. Normal tax rule is that this is tax free for 5 years. However my employer had a special arrangment with Tax authoriites that it would be tax free "forever". However Tax authorities have changed this agreement with my employer and now it is taxable. I learned about this just before the tax year end. This sits on my salary as a taxable item. There is some compensation from my employer but not enough to cover incremental tax completely. As a result I am now 10% poorer as result of the change. (every year). (However some other employees are covered 100%.)

As said there was no warning of this change.

Surely if Tax authorities make a change, they give enough warning to take evasive action. Is my employer is obliged to protect me 100% on changes to my personal tax as a result of their relationship with the Tax Authorities.

Is there legal basis to ask for the loss of Net Salary?
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Old 09.12.2015, 23:01
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Re: No warning for change in Tax Conditions - legal?

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Hi,

Need some perspective here please.

If there is a change in the corporate tax arrangements between my Employer & the tax authorities, are they legally obliged to tell me about this change & give me fair warning if the change will result in a net loss in my personal income?

My employer pays my kids school fees. Normal tax rule is that this is tax free for 5 years. However my employer had a special arrangment with Tax authoriites that it would be tax free "forever". However Tax authorities have changed this agreement with my employer and now it is taxable. I learned about this just before the tax year end. This sits on my salary as a taxable item. There is some compensation from my employer but not enough to cover incremental tax completely. As a result I am now 10% poorer as result of the change. (every year). (However some other employees are covered 100%.)

As said there was no warning of this change.

Surely if Tax authorities make a change, they give enough warning to take evasive action. Is my employer is obliged to protect me 100% on changes to my personal tax as a result of their relationship with the Tax Authorities.

Is there legal basis to ask for the loss of Net Salary?
Your getting private education totally free for 5 years, now it's costing JUST 10% of your net income & your complaining.

No your employer does not have to indemnify you for changes in tax law.

You can resign if your not happy, if you make a fuss no doubt you will get sacked & no redundancy is payable by law in CH, just notice terms need to be respected
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Old 10.12.2015, 00:53
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Re: No warning for change in Tax Conditions - legal?

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Surely if Tax authorities make a change, they give enough warning to take evasive action. Is my employer is obliged to protect me 100% on changes to my personal tax as a result of their relationship with the Tax Authorities.

Is there legal basis to ask for the loss of Net Salary?
You seem to have a pretty naive view regarding the tax authorities being rational entities

Long story short, why would the tax authority need/care to give fair warning? Their business is to collect tax revenues. Be glad they did not make the change retroactive.
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Old 10.12.2015, 00:58
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Re: No warning for change in Tax Conditions - legal?

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Is there legal basis to ask for the loss of Net Salary?
Your contract is the legal basis.

And a contract that states net salary is rare as hens teeth... for the good reason demonstrated here.
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Old 10.12.2015, 01:06
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Re: No warning for change in Tax Conditions - legal?

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Your contract is the legal basis.

And a contract that states net salary is rare as hens teeth... for the good reason demonstrated here.
I always advise my clients to have a clause in their contract to state that tax on benefits is grossed up and paid by the employer. If you have such a gross-up clause, then you should be covered. If not, then you're SOL.

As fmf said, unless you are a star employee (in which case you can negotiate with your employer), then it may be cheaper for them to fire you than pay the higher costs.
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Old 10.12.2015, 08:52
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Re: No warning for change in Tax Conditions - legal?

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... Be glad they did not make the change retroactive.
No country would do that, surely ?
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Old 10.12.2015, 13:09
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Re: No warning for change in Tax Conditions - legal?

Some people (myself included) find themselves in a similar situation. From a technical legal point of view it depends how your contract is written. It was written in our contracts we would get expenses tax free (similar to the ex-pat Verordnung and not the money itself for free as someone else mentions) but it seems to be the case that the employer falsely made this statement. They also didn't qualify it with "for five years" and everyone more than 5 years with the company suddenly stops getting the expenses without any warning. Generally one considers the bottom line when it comes to accepting a contract. This situation is different to if say the tax percentage varies over time. Clearly you have no right to compensation for that, but if something is offered which later turns out that the company can't honour it would seem to me they should compensate you for it but it would probably only be for the notice period at best. They might offer you to keep your job *or* you lose it and take compensation for the notice period. Making no offer is unprofessional in my opinion but not untypical. Despite employment laws, contract laws and professionalism, employers very often make things up as they go along and it's difficult to fight it.
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Old 10.12.2015, 13:21
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Re: No warning for change in Tax Conditions - legal?

For example, your contract might say:

(only) "We will pay your school fees". The company is not promising any tax-free-ness in this case, even if an agreement was in place.

"We will pay your school fees tax free". Here there is an implication that you can also receive this benefit tax free but it's not clear.

"Subject to an agreement with the tax authorities, we can pay you the fees tax free". If the agreement is withdrawn, so is the tax free advantage.

"We have an agreement that we can pay you the fees tax free and you will incur no additional tax liability". Here if the company cannot honour this, then I would say you would need a contractual change and you should get notice and probably compensation for any loss during that notice period.

Most likely if you feel you're not being treated fairly your productivity and loyalty will decrease.
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Old 10.12.2015, 15:20
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Re: No warning for change in Tax Conditions - legal?

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For example, your contract might say:

(only) "We will pay your school fees". The company is not promising any tax-free-ness in this case, even if an agreement was in place.

"We will pay your school fees tax free". Here there is an implication that you can also receive this benefit tax free but it's not clear.

"Subject to an agreement with the tax authorities, we can pay you the fees tax free". If the agreement is withdrawn, so is the tax free advantage.

"We have an agreement that we can pay you the fees tax free and you will incur no additional tax liability". Here if the company cannot honour this, then I would say you would need a contractual change and you should get notice and probably compensation for any loss during that notice period.

Most likely if you feel you're not being treated fairly your productivity and loyalty will decrease.
Normally the tax authorities give special treatment for 5 years, after that your considered a permanent resident, so must pay taxes like anyone else.

Nothing to stop the OP sending his kids to local school, which is free, after 5 years I assume the children have integrated & can speak the language fluently.

Very much a first world problem here.
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Old 10.12.2015, 15:24
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Re: No warning for change in Tax Conditions - legal?

Come on guys, stop picking on the OP. They came on here for help and support through a difficult time.

@OP
It is completely illegal and you should sue the kantonal tax authorities.
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