I'm a little confused about how the Quellensteuer is calculated vs. my annual tax liability (and what, if any, true-up happens between the two).

I received my first paycheque this month, and the withholding tax was LOTS%. This is much higher than I expected, but appears to be in line with the monthly tables provided on the BS website. My first monthly pay was much higher than normal because it included my relocation allowance, six-weeks pay instead of four (because I worked part of a month as well), and a number of other one-off payments.

If I read the tables at this website correctly:

http://www.steuerverwaltung.bs.ch/19...und_tarife.pdf

the Quellensteuer is based on your gross income in a given month.

For example, if I earned:

• Sept: CHF 10000 (Quellensteuer 13.69%)
• Oct: CHF 10000 (Quellensteuer 13.69%)
• Nov: CHF 10000 (Quellensteuer 13.69%)

But if I earned:

• Sept: CHF 30000 (Quellensteuer 25.6%)
• Oct: CHF 0 (Quellensteuer 0%)
• Nov: CHF 0 (Quellensteuer 0%)

Have I got this right? Depending on the phasing of when I receive my money, my overall tax burden is higher?

Is there a true-up at the end of the year (eg, both people have earned CHF 30k and therefore should have the same tax liability), or does one person end up paying 13.69% tax while the other person pays 25.6% tax because of the way the payments were phased?

Having read the info in this thread, I think I've worked it out now...

First yr in CH - total income pro-rata for tax?

The first guy in my example above gets screwed, and unless he earns over CHF120,000 a year, he's unlikely to get any of it back.

Right?

You can always file a request to have your tax-at-source burden reviewed at the end of the year, even if you do not file a tax statement.

Careful . . . your tax liablity may well be more than the 13.69% tax at source, dependent on where you live and your direct state tax.

From my calculation it's the second guy that gets screwed...

First guy: 13.69% on 10k = 1.369k x 12 => 16.32k over a year
Second guy: 25.6% on 30k = 7.68k for 3 months then 1.369k for 9 more months => over one year it would be 20k

so second guy gets taxed 4k more, because he got paid 3 months wages in one go...

so according to these givens yes he gets royally ****ed!

everyone again always tells me oh you will probably end up paying if you try and get things adjusted!
I always say screw it, rather get charged more and find out how it works than get charged more and not know how it works ;-)


will be good to know what you find out sir!

Cheers

TLD

The quoted example is exaggerated and unrealistic.

A taxpayer filing a normal return, might be assessed as follows:
October income =30K.
Equivalent annual income = 30x12 = 360k
Hence, pertinent tax rate is for 360k, which could well be 30% (I do not have the exact BS data)

So you are not paying more as TDS (Quellensteuer=Tax Deducted at Source).

Moreover, TDS payers do not need to declare global income and assets. Filing a proper tax return would require revealing all your assets and incomes, including those prior to coming here. Could be expensive

if you're global assets are all in liechtenstein, Panama or under the floorboards in some old house in the middle of nowhere then noone should know ;-)

Not entirely unrealistic. I will only earn income in 4 months this year (having just arrived in Switzerland).

My first month's paycheque is approximately 4x larger than my regular paycheque due to a number of one-off payments. So I get whacked with a very high tax rate in September.

Oct - Dec should be taxed appropriately (although I'll get whacked again in December due to a 13th month payment plus an annual bonus).

Overall, I will have earned about 7/12ths of my "notional" annual salary this year. I'll need to do my sums, but I'm convinced that with the big tax hit in September, I would be much better off if assessed from a total income perspective as I've only been earning for part of the year (so my overall income in the year is relatively low).

after the fact, sorry, but maybe you should have asked your company to spread out this one-time payment over several months ? This is what my company does, even end of the year bonus gets payed over 4 months just to avoid the situation you described...

A few points:

The true up happens when you file a return or if you request a Quellensteuer review.

The rates applied are average (kantonal) rates, this means that if you file at the end of the year you are either entitled to a refund (in case of a gemeinde with a low tax base/multiplier) or you have to pay additional tax (mirror situation).

In this way the additional monthly one offs, like bonus payments etc, are leveled out in terms of your tax rate.

A complicating factor may be assets held outside CH, although not always taxable in CH (real estate for instance) they have an impact on the determination of your tax rate.

All in all, a nice puzzle....

For the time / effort involved vs. the money I would be due, I suspect it's not really worth the hassle. So this year, I've done a little extra for the Swiss economy.

What you can do is download the tax return software from the website of the TA and run through the numbers and see what you (roughly) end up with.

So the rate withheld is not the effective rate until your tax return is reviewed and set to final?

I have downloaded the ZH software and got a fright when the rate and tax amount calculated is way higher than what was withheld according to my annual salary certificate . How reliable is that software? (The answer I'm hoping for is 'not very' )

If you live in City of Zurich, then the taxes will be higher, as Zurich has the highest tax rate in the Canton. Recall tax at source uses the Cantonal average. Also tax at souce is calculated monthly. So if there were any low months, then this will be taxed at a much higher rate based on your annual income.

The software probably still has the 2008 tax tables and deductions. There may be some inaccuracy if you use it to calculate your 2009 tax liabilities. However, the discrepancy between the 2008 calculation and the 2009 calculation is probably less than 5%.

Just had my tax return done due to crossing the Quellensteuer threshold by 9 francs in 08. That 9 francs is going to cost me about 1500chf. I was surprised as I always assumed I would be paying over the odds on Quellensteuer but it turns out that's the cheaper option if you live in Oerlikon.