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Old 15.02.2011, 13:18
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Paying more tax when you have an incomplete year of earning?

Swiss Tax question: you pay Quellensteuer as if you earn X per year. You leave the country before the end of year, thus earning 0.75X. You are told you need to pay MORE tax. Don't people who earn less pay less % and therefore I should expect a large(ish) refund???

Did I miss something obvious?
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Old 15.02.2011, 13:47
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Re: Paying more tax when you have an incomplete year of earning?

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Swiss Tax question: you pay Quellensteuer as if you earn X per year. You leave the country before the end of year, thus earning 0.75X. You are told you need to pay MORE tax. Don't people who earn less pay less % and therefore I should expect a large(ish) refund???

Did I miss something obvious?
you pay tax at source on X per month not year.
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Old 15.02.2011, 13:52
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Re: Paying more tax when you have an incomplete year of earning?

That would probably be the case in America or the UK, but not in Switzerland.

If you do a tax return, my understanding is that your income is annualised for purposes of determining which tax band you fall into.

If you just have Quellensteuer, you should have been paying at the correct monthly rate all along.

Unless your HR department got it all wrong, of course...
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Old 15.02.2011, 15:24
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Re: Paying more tax when you have an incomplete year of earning?

Of course you pay per month. I thought that was irrelevant as you still only earn a lower amount intotal, and overall tax is assessed annually. As big yin says, I would have got a large refund from the UK (and did, when I left) despite paying PAYE monthly. Perhaps not here...

big yin: HR didn't get it wrong, the difference is small (but of course I expected large in my favour!). So you are saying that - despite having filled in an annual tax return - I am assessed the same as someone earning X? And you think this is correct under CH law?

How does this apply to someone who becomes unemployed after earning large X in January? Or a consultant who earns sporadically?
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Old 15.02.2011, 15:32
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Re: Paying more tax when you have an incomplete year of earning?

If you lived here for a year, and only worked for two months, you would pay on the total earned over the year, i.e. very little.

If you lived and worked here two months, then you pay the rate that you would pay had you worked twelve months at the same pay, i.e. more.

Tom
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Old 15.02.2011, 15:44
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Re: Paying more tax when you have an incomplete year of earning?

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Of course you pay per month. I thought that was irrelevant as you still only earn a lower amount intotal, and overall tax is assessed annually. As big yin says, I would have got a large refund from the UK (and did, when I left) despite paying PAYE monthly. Perhaps not here...

big yin: HR didn't get it wrong, the difference is small (but of course I expected large in my favour!). So you are saying that - despite having filled in an annual tax return - I am assessed the same as someone earning X? And you think this is correct under CH law?

How does this apply to someone who becomes unemployed after earning large X in January? Or a consultant who earns sporadically?
If you're only in the country for a portion of a year that portion is annualized for purposes of calculating brackets. If you're in the country for the whole year but work sporadically it wouldn't be annualized, but the Quellensteur would likely be calculated on an annualized basis so be too high (ie you would get a refund).

This is different from more countries where a partial year is better for you from a tax perspective, but most of those countries don't have as many expats as CH so I can't blame them.

All that being said, I don't think the tax people here have any idea what it is they're doing. Ask for further explanation from them before paying a bill. I got billed an extra 1k for taxes here in my first year and paid it, but really wish I'd fought it. It's unbelievable to me how long it can take them to review your taxes here, I'm ranting here, but spoke to the tax office yesterday to tell them I was leaving soon, and they just told me it would be completely impossible to look at my 2009 return in the next three weeks. So appartently it takes more than three weeks work for them to review the return that took me two hours to complete. This does not inspire confidence.
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Old 15.02.2011, 16:28
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Re: Paying more tax when you have an incomplete year of earning?

Regarding looking back at previous taxes, my company accountant told me that you can't do anything after 30 (?) days - you are deemed to have accepted the assessment. Just what I was told; certainly I'd be very interested if that's not the case.
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Old 16.02.2011, 16:26
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Re: Paying more tax when you have an incomplete year of earning?

I don't know about dealing with the Zurich tax office - they have yet to contact me about my 2009 taxes (the year I arrived), and I am told it is best to let sleeping dogs lie...

The annualisation thing can work out quite expensive for some people - if they arrive towards the end of the year, and get a housing allowance (which is taxable), which is then annualised, pushing them into a higher tax bracket.
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Old 16.02.2011, 16:29
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Re: Paying more tax when you have an incomplete year of earning?

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big yin: HR didn't get it wrong, the difference is small (but of course I expected large in my favour!). So you are saying that - despite having filled in an annual tax return - I am assessed the same as someone earning X? And you think this is correct under CH law?
I'm not sure about the CH law, but the small difference might be due to the difference between local and cantonal average tax rates.

Quellensteuer is done based on the average tax rate for the canton, whereas your tax return is based on the town in which you live in.
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Old 16.02.2011, 16:43
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Re: Paying more tax when you have an incomplete year of earning?

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I'm not sure about the CH law, but the small difference might be due to the difference between local and cantonal average tax rates.

Quellensteuer is done based on the average tax rate for the canton, whereas your tax return is based on the town in which you live in.
Generally you should expect to receive a small bill. The usual reason for this is that there has been an extra payment such as a 13th salary or a bonus that is then annualized. ie the average monthly salary is increased and this is then extrapolated to give your synthetic annualized salary. You might think that you pay per month the correct amount but this is all done according to an annualized table and not each month totally individually. If your salary pro rata was high enough you can then make some decent deductions which will produce your anticipated refund.
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