I wonder if someone can give me some advice. I am due to receive a payment from my employer that would total around 30'200 francs in a single month. Spreading the payment across several months is not a possibility.

I pay quellensteuer in BL at the C0d level.

http://www.baselland.ch/fileadmin/ba...Tarif10_Cd.pdf

If I read the table correctly, the withholding tax jumps from 25.56% to 32.01% when I cross the 30'000 threshold. That means that if I receive the full 30'200, I'll end up with 20'532 (net), whereas if I handed back CHF200, I'd receive 22'332 (net), or a whopping 1'800 more.

My question is this: am I really coming out ahead by taking the lower payment, or will it all come out in the wash at the end of the year when I file a tax return? 2010 will be the first full year that I spend in Switzerland, and I gather that I'll need to file a return as my income crosses the threshold.

i think u r right with the quellensteuer and also with the tax return. still, u could use that 1800 during the year if u can convience your employer to pay u 200 chf less

I'm tempted to take a day or two of unpaid leave -- should be enough to drop the payment under the 30k threshold. Not sure I want to set a precedent for them to "pay me less" so I can save on tax -- that might come back to bite me!

or ask for more in gross to offset the negative effect of tax limit change. then they see u r a normal guy

I find it very hard to believe quellensteller rates would not be implemented so blindly that you earn more, you get less, if you are near a transition point. It doesn't make sense at all.

Yup

A more rational system would have you pay tax at the higher rate only for the amount by which it exceeds the previous slab. So in this case 32% would apply only on the 200 CHF part.

I am sure the system is progressive. And then the rate you see on your paycheque is the equivalent average rate.

It comes out in the wash. You get any overpaid tax back, with interest, the following year.

You may find it hard to believe, but that's the way it works. It is not progressive (as I have verified many times against my paycheque!).

The tables are straight-forward: take your gross pay, find the corresponding tax rate in the table, and your entire pay is taxed at that rate. For the vast majority of people (earning 240k or less a year), this works out fine, because for up to 20k a month, the tax is incremented in bands of 50 francs, so the situation described above (where lower gross pay = higher taxes) doesn't happen. The problem is that above 20k, there are only three bands (20-25k, 25-30k, and 30k-1000k).

For me, the big drawback of the quellensteuer system is that it assumes your pay remains the same every month. So if you receive 30k one month, your tax is calculated as if you earn 360k a year. It penalises people who receive differing amounts of pay each month. Every ex-pat who only pays quellensteuer will complain about the tax hit they take when they receive their 13th month, their bonus, or their relocation allowance.

At least if you file a tax return, you pay the appropriate amount in the long run (never mind that the tax man has your money until then...).

It should come out in the wash, as NotAllThere pointed out.

At least you also get your interest back, although I agree it takes a while to sort it all out. We usually submit our returns by April, but don't get processed until Oct/Nov. Fortunately we don't pay at source anymore, so we only have to pay what my tax advisor says I should...

I receive the full 30'200, I'll end up with 20'532 (net), whereas if I handed back CHF200, I'd receive 22'332 (net), or a whopping 1'800 more.


Does it really make a difference if you are already earning 20K in ONE MONTH?
Count your blessings.

No need to GROAN at me...
as Notallthere says, you will get it back, with interest at the end of the year.
I don't know your situation, but I'm am guessing you will manage to "survive" on 20K a month netto until then.

At the end of the year when you are paid back what is owed to you, should you find that you have not missed or needed this money, then I suggest you think about donating it to people who really need it to survive.

Donations can also be deducted from your taxes.

i guess it is. there are people on this forum who wont sell u an item for 100 because he wants to get 120. because it makes a difference.

Consider yourself ungroaned.

It just drives me crazy that once someone earns more than xxx thousand francs a year, it's assumed that they lose all concept of the value of money?

It is a big assumption. Perhaps I'm rich not because I earn a lot, but because I don't spend a lot!

Anyway, you'll only lose out if you were able to take that extra money and generate from it more than you'll get from the interest from the tax authorities.

if you earn over the threshold and can file a tax return then you should be ok. if this was a one-off income and you don't exceed the threshold for the year then you might be stuck with some very high tax.

Hi Village Idiot
Thanks for the ungroan - much appreciated.
As I mentioned previously I do not know your situation, so did not assume anything.
reShould you overstep your yearly threshold (as Phil MCR mentioned) then i suggest making a healthy donation to offset your extra taxes - it WILL MAKE A DIFFERENCE for you and for the recipients of your wonderful gesture.