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Old 10.06.2011, 19:45
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withholding tax vs tax at source

I am British Citizen on B-Permit and living in Switzerland for past 15 months.
recently I have changed my employment (contract) and new employer has deducted 14.7% (single person earning, married, two kids) as with holding tax, where as my previous employer used to deduct 7.1% for stadt opfikon.

My current contract is for 12 months and previous contract was no end date contract though it ended after 12 months. Does it make any difference?

Question: Does anyone has any idea, when withholding tax is applicable. I have seen the general definition of the withholding tax, but how come this be different for two different employers?
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Old 10.06.2011, 20:08
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Re: withholding tax vs tax at source

Was your first month's pay at the new job higer than before?
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Old 14.06.2011, 12:10
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Re: withholding tax vs tax at source

no it is not. But how does it matters. actually as this is contract job, daily rates are different.
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Old 14.06.2011, 12:25
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Re: withholding tax vs tax at source

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no it is not. But how does it matters. actually as this is contract job, daily rates are different.
Your monthly pay is multiplied by 12 to calculate the tax rate. A 13th month salary is very highly taxed as you earn twice as much in the 12 month!

Withholding tax is due because you don't have a 'C' permit, if the salary is identical I guess one of the companies made a mistake unless other deductions such as insurance make the difference.
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Old 14.06.2011, 12:47
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Re: withholding tax vs tax at source

Thanks for reply, seems I am talking to the right person,

Tax I am taking about is for month of May and it was the first salary I received from the new company.

I was with my old company till April, and for the month of April, which was the finally pay (and also for the previous months also) they deducted Tax at source as 7.47%.

Where as new company treating me as a temp worker in Switzerland and arguing that I don't hold C-permit and does not have Swiss Wife , so ot will be with holding tax of 14.4% .

Do you have anything to say, why I shlould not be taxed with withholding tax?
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Old 14.06.2011, 12:52
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Re: withholding tax vs tax at source

The 14.4% might be correct, and the 7.1% wrong. In which Canton are you working? Direct taxation is about where you work not where you live.

Last edited by Ittigen; 14.06.2011 at 13:34.
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Old 14.06.2011, 12:56
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Re: withholding tax vs tax at source

Careful! Withholding tax is not the same as tax at source. Withholding tax is called "Verrechnungssteuer" which is 35% in Switzerland and applies for payment your recive i.e. dividend payments or royalty payment. If you show all these earnings in the tax return the 35% that has been decucted by the bank will be fully reimbursed to you. Tax at source is called "Quellensteuer" which is what applies in your case. But I am sure your employer got confused with the names as well as the translation for both is withholding tax in English. But I can't help you with the different percentage being deducted. Maybe the tax rate changed? Check on http://www.steueramt.zh.ch/html/engl...tent/index.htm
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Old 14.06.2011, 13:13
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Re: withholding tax vs tax at source

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The 14.4% might be correct, and the 7.1% wrong. In which Canton are you working?
This is quite possible... 7.1% tax would be very low indeed.

When I first moved here I was in a similar situation to the OP (B permit, non-working spouse, child) and was taxed 15% at source - albeit in a canton that has a reputation for high taxes.
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Old 14.06.2011, 13:25
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Re: withholding tax vs tax at source

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Thanks for reply, seems I am talking to the right person,

Tax I am taking about is for month of May and it was the first salary I received from the new company.

I was with my old company till April, and for the month of April, which was the finally pay (and also for the previous months also) they deducted Tax at source as 7.47%.

Where as new company treating me as a temp worker in Switzerland and arguing that I don't hold C-permit and does not have Swiss Wife , so ot will be with holding tax of 14.4% .

Do you have anything to say, why I shlould not be taxed with withholding tax?
I think yoiu need to look at the Canton tax tables, they should be online. Without talking exact no's it's difficult to know however most peoples tax bill is 1 to 2 months salaries when they have a 'C' permit, depending on earnings, so 14.4 % would seem very normal.
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Old 14.06.2011, 15:12
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Re: withholding tax vs tax at source

thats good info...

I am taking about Opfikon as taxed cantone, Dubenforf is place of work, end client, billing company is in Zurich city.

My personal circumantances are, 2 kids, married, wife not working.

For some ones question, we are taking abt tax at source here, not total dedictions you need to aware of AHV, penson etc. Yeah with that all it comes around 17% may be.

14% and 7% is confirmed on these websites. They are Withholding tax and tax at source.

Big question is what it is with holding tax??
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Old 14.06.2011, 20:32
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Re: withholding tax vs tax at source

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thats good info...

I am taking about Opfikon as taxed cantone, Dubenforf is place of work, end client, billing company is in Zurich city.

My personal circumantances are, 2 kids, married, wife not working.

For some ones question, we are taking abt tax at source here, not total dedictions you need to aware of AHV, penson etc. Yeah with that all it comes around 17% may be.

14% and 7% is confirmed on these websites. They are Withholding tax and tax at source.

Big question is what it is with holding tax??
The with holding tax is instead of 3 taxes,
Local village tax, Canton tax, & contry wide (Bern) & possibly some church tax.

Pension, AHV, & various insurance will be 12-15% depending on if your employer picks up 100% NBU or not, most pay 50%
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Old 17.06.2011, 17:26
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Re: withholding tax vs tax at source

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The 14.4% might be correct, and the 7.1% wrong. In which Canton are you working? Direct taxation is about where you work not where you live.
Really? Do you have a reference to an explanation of how this works?

I was under the impression that individuals always file a tax return in their place of residence - as was the tax advisor I know who lives in Canton Schwyz but works in Zurich.

Otherwise, where would be the advantage in moving to a lower-tax town or canton?
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Old 17.06.2011, 17:32
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Re: withholding tax vs tax at source

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Really? Do you have a reference to an explanation of how this works?

I was under the impression that individuals always file a tax return in their place of residence - as was the tax advisor I know who lives in Canton Schwyz but works in Zurich.

Otherwise, where would be the advantage in moving to a lower-tax town or canton?
Only people earning over 120,000 get a tax return to fill in by default if they not Swiss or 'C' permit holders, others may benefit by doing so, however don't bother.
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Old 17.06.2011, 17:44
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Re: withholding tax vs tax at source

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Really? Do you have a reference to an explanation of how this works?

I was under the impression that individuals always file a tax return in their place of residence - as was the tax advisor I know who lives in Canton Schwyz but works in Zurich.

Otherwise, where would be the advantage in moving to a lower-tax town or canton?
+1 message too short
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Old 17.06.2011, 17:45
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Re: withholding tax vs tax at source

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Only people earning over 120,000 get a tax return to fill in by default if they not Swiss or 'C' permit holders,
Or if they are married to a Swiss (this was the case when I got married and still had a B).

Tom
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Old 18.06.2011, 00:08
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Only people earning over 120,000 get a tax return to fill in by default if they not Swiss or 'C' permit holders, others may benefit by doing so, however don't bother.
Of course, that is well known and has been discussed on EF more than a few times.

However, the general understanding of how companies should apply Quellensteuer / tax at source is to use the average tax rate for the canton of residence. It sounds like some smaller employers don't do this correctly.
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Old 18.06.2011, 13:01
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Re: withholding tax vs tax at source

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Really? Do you have a reference to an explanation of how this works?

I was under the impression that individuals always file a tax return in their place of residence - as was the tax advisor I know who lives in Canton Schwyz but works in Zurich.

Otherwise, where would be the advantage in moving to a lower-tax town or canton?
I believe employers play it safe by deducting tax at the rate that is applicable in the area that you work in; I mean not at the rate that is applicable in the area that you live in.

If you live in a different area & fill in a tax return then sooner or later you will get a refund or a demand for more tax - this depends on how the tax rate where you live compares with the rate that is applicable in the area that you work.
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Old 18.06.2011, 13:15
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Re: withholding tax vs tax at source

When I was first here, I did a brief stint with a payroll/body leasing company, and the contractors always paid source tax based on where they lived, not where they worked.

Mind you, the company I worked for was known for right royally screwing things up. No, I'm not mentioning any names.
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Old 18.06.2011, 16:45
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Re: withholding tax vs tax at source

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I believe employers play it safe by deducting tax at the rate that is applicable in the area that you work in; I mean not at the rate that is applicable in the area that you live in.
This is the complete opposite to my understanding. In fact, it's the complete opposite of what actually happened when I moved to a different Kanton. My deductions were changed. Based on where I was living. Not where I was working.

Not saying you are wrong, just that it's not what happened to me and it's also not what happened to several other people I know. I mean, why else do people move to Wollerau, Pfäffikon, Zug etc?

Or are you talking about the case of living and working within the same Kanton?
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Old 18.06.2011, 19:11
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Re: withholding tax vs tax at source

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This is the complete opposite to my understanding. In fact, it's the complete opposite of what actually happened when I moved to a different Kanton. My deductions were changed. Based on where I was living. Not where I was working.

Not saying you are wrong, just that it's not what happened to me and it's also not what happened to several other people I know. I mean, why else do people move to Wollerau, Pfäffikon, Zug etc?

Or are you talking about the case of living and working within the same Kanton?
Yes I was talking about living and working within the same Kanton.
Could be I am wrong? Been wrong before.
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