Hi all

Hubby (earner) and I (non-earner) moved over in mid-March, and have been happily earning Swiss francs and paying tax at source ever since.

We're coming up to our first tax return, and I've found the answers to most of my noob questions here (thanks!), apart from one.

Hubby is taxed at source based on his TOTAL annual salary, as measured against one of those table with lots of different percentages on it, ie, if his annual salary was hypothetically 120,000 CHFs then he is having x% deducted - 'x%' being the rate for someone earning 120k who is married with two kids. He won't, however, earn his full salary this first year, as we weren't here in Jan and Feb. So by then end of this year, he won't have earned 120k, he'd have earned, say, 95k. Which is the figure which will go on the 'how much did you earn this year?' tax return.

So does this mean that he should only have the 95k tax percentage deducted? Which will of course be a much lower number. Which would mean a large rebate, at some unspecified point in a future life (see, told you I'd been reading up on this!).

Thanks for any help.

kodokan

It's pro-rata.

eg earn 77k in 7 months = 132k over 12 months.

Allowances are mostly pro-rata too. Pillar 3a at least is are 100% for the year

Thanks, gbn - super-prompt reply, even if it was the one I didn't want!

So, one more question, if I may, just so I've got this completely straight: how does this work for payrises with tax at source? If you earned 120k for ten months, then 150k for the last two months, would you be taxed at the 120k % rate for ten months, then the 150k % rate for two months? So even though on your final end of yr tax return you'd be writing '125k' in the income box, you'd never be taxed at the 125k %?

Thanks again.

kodokan

Nothing like that at all.
The source tax rates are different to the tax return rates.

Source tax is based on your monthly gross only.
Tax return rates on your annual gross with assorted deductions.

Source tax rates are based on the average of the local tax rates with average deductions etc.

For the 1st 10 months, you'd use the tax table to work out what you pay for 10k each month.
For the last 2 months, you'd look up 12.5k

Let's say the total is 18k CHF.

Tax return is filled in, your bill at "normal" rates is 17k = 1k back.

Thanks again, grateful for the help.

Soooo... let me see if I've got this straight. Imagine someone moved here in March earning 120k, then got a payrise in Nov to 150k.

From March to Oct (8 months) they'd earn 80k, paying monthly tax on an assumed annual earning of 120k. For Nov and Dec, they'd earn 25k, and pay monthly tax on an assumed earning of 150k.

By the end of the year, they've only actually earned 105k due to not starting until March. They won't, however, be taxed at the 105 %, but at the 126k % (the 105 pro-rata'ed up to assume they were here 12 months rather than 10).

Am I getting this right so far..?

Many thanks for your explanations.

kodokan

Source tax is monthly based, not annually except when the annual amount is > 120k and it's added up and set off against a tax return figure. The rate tables are monthly gross amount. Nothing annual about them

Again, monthly

At this point, earnings are > 120k pro-rata, so you'll get a tax return.
Taxes will be calculated on 126k. Then you pay 10/12 of the tax due on 126k

The important thing to note is that if you have overtime or a bonus in one month making your monthly gross 13.5k, then you pay tax on 13.5k for that month: There is no annualisation or averaging. It's month on month.

My husband is on a salary over 120k, and his work have given us a set of tax tables listing the percentage of tax payable against annual figures. The relevant percentage figure for him (earning x per annum, married, 2 kids) is printed on his payslip. So they are taking into account some sort of notional annual salary - is that because it's over 120k, when it's different even for monthly deductions..?


Yay, got that bit right - I'm getting there!

So the double pay in December will really suck tax wise, then? But does it all come out in the wash in the tax return, when it becomes part of the overall annual figure rather than some stellar single month?

Thank you for your patient answers - hubby's taken my son off to watch motocross, so I'm home with my little sleeping daughter amusing myself trying to anticipate what the tax people might need to know, and why. And researching how the 3rd pillar works. And trying to find out whether I have to pay federal stamp duty on share purchases in the UK. And... sigh... Saturday nights aren't what they used to be...

A grateful kodokan

The tables for Zurich (the whole canton) are here.
It's monthly gross figures that are used.
I don't know enough French to find your ones (but Steuramt works for all German speaking cantons)

Maybe Lausanne does it differently and quotes annual figures, or his work produced them.

And yes, you'll get hammered now for Dec tax but it comes back with interest (assuming you paid to much source tax).

Thanks gbn. I've found the 'tax at source' tables for Vaud (http://www.vd.ch/fileadmin/user_uplo...if_AB_2008.pdf in case anyone's looking for them) and they're based on the annual salary. I guess us weird foreign cantons must do it differently. At least it explains why I keep seeing tax discussions on the Forum about monthly tables and wondering why I've never seen those here.

And I guess the same 'hammered in Dec' thing will still apply; hubby will get two months' pay, the payroll computer will multiply THAT figure by 12, and go 'A ha! That's the predicted annual salary, then, so I'd better take a whopping amount of tax!' Oh well, at least the rebate will come back - eventually - having earned more than we get in the bank anyway.

Thanks for all your help. I think I've got it all straight now.

kodokan

Still does not really matter! The tax at source is still deducted based on the monthly numbers!

This is probably what his employer is using!

http://www.estv.admin.ch/f/dbst/dien...en/quellen.htm

check the Vaud files for 2008.

FYI in case you have not picked this info up from the other posts already:

It is usually in your interest to make a tax return. How divulging you be with your personal estate is up to you and will reduce/increase the benefits to you. But a lot of things are tax deductable, because you make a return even if it brings you below the 120K. If you were earning less that 120K it is at the tax offices discretion to process your return if you made one, the cost of processing it could out balance the benefit to you/them. For greater than 120K they have to process it.


Also you should play with this program (for Vaud)

http://www.vaudtax.vd.ch/

Punch in the numbers and get a feel for what you will get back. also the deductions: mortgage interest payments, CH and abroad, rent, travel to and from work, lunch at work, health insurance etc etc etc.

Expect a few things though:

1.) If this is your first time in the 'making a Swiss tax return' system you may not get asked for a return until May (Normally in Vaud deadline is in March) and then get a month to do it! For first timers the reason being that the employers do not make their returns till late March or April so the tax office do not actually know you should be in the system until the employer has submitted all their info.

In Vaud you will need a 'Numero Contribuable' with which to send your return. This will come with the request to make a return. This is not the same AVS number. Until they know you will be in the system for a return they will not issue one! I have tried!

But things like deadlines are not rigidly enforced, like in other countries. You can request a delay for months before making the return. worst case you pay/loose interest on the sum owed, with perhaps a small fine. Nothing like the UK for example.


2.) Then if you expect a rebate don't expect to see it for about a year! Though they will add the interest on it for you.

(If you know you owe them money this is probably the cheapest loan you will get! Otherwise if they owe you money then get it quick, as the rate is so low.)

These last parts are my personal experience in Lausanne.

And once you're in the system you're in and will have to make a return every year you earn/reside in CH!

HTH, Bill

Exactly, Bill.
That is why, kodokan, you get hit with a bigger % taken out on your December pay. On the PDF you posted there is a "par mois (per month)" figure listed.

Thank you, both - for some reason, the monthly colum on that table completely escaped me!

So for someone earning a monthly salary of 12,500(married, 2 kids) they'd normally be taxed at 13.84% each month. But for December's double pay, they'd be taxed on a monthly salary of 25,000, which gives a tax rate of 23.68% on the whole 25,000.

Whereas 12,500 x 13 = 162,500; the tax rate for this is 14.64%. So they would have slightly underpaid for months 1-11 and HUGELY overpaid in month 12, so they'd probably be due a rebate (too tired to do the actual monetary amounts now, but hopefully I've got the process right).

And it's very reassuring to hear that the deadlines are drawn in sand. For this first year, we have the help of a tax company to do this, so they should organise special numbers and so on - I just want to make sure I understand what they're doing, to watch for possible oversights and so I can replicate it next year!

I'll have a little play with the Vaud Tax thing in the next few days, and hopefully it should all become clear(er)... This was so easy in the UK, with just their two rates of tax and a personal allowance threshold to take off! Mind you, if the more complicated system spits lower tax out the other end, who am I to complain?

Thanks very much for explaining this for me.

kodokan

Yup, You got it, now!

Hot tip:

Get your husband's employer to divide the 13th month pay into 12 installments across the year. Most employers seem pretty happy to do this. Otherwise your tax on your December salary will be that of someone earning a lot more than twice what you do (income tax increases non-linearly when the monthly amounts get large).
The Swiss need this extra to help them with their tax bills, you don't.

Cheers

Jim