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Old 03.01.2012, 19:39
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120,000 Quellensteuer limit - calculations and implications

Hi,

I did try to do a really good search to find a suitable thread, but I couldn't decide where to put it, so apologies in advance...

Perhaps we are in a unique position, perhaps not.

My husband's base salary is very comfortably 'under' the 120K limit and so we paid 'at source' (Quellensteuer). However, we receive a tuition discount for our children (childcare and/or schooling) and that is a taxable.

Unfortunately for us, as we have only just discovered, the grossing up of the children's school fees plus a small 'bonus' for my husband taking additional duties, means that for 2009 we went over the 120K limit. By a small amount.

That means we are now (and permanently!) in the 'Swiss system' and have to not only lodge 2009 but also 2010 and all future years on top of the Quellensteuer. *even though his gross income dropped and will continue to drop on as our children move out of the school and he loses his 'bonuses'*.

In Zurich, the local taxes are higher than Quellensteuer, so unless we find some miraculous way of tax minimisation, we will pay several thousand francs extra each year on top of the 'at source'.

I have to say, as a caveat, the tax guy was completely helpful, patient and just rubbed it in that we are now being taxed 'just like swiss locals'...

So, point is, watch out - go over that 120K limit by just a single frank and you may find yourself paying a lot more tax, for lots of years...

On the 'plus' side, because our employer failed to fill our salary declarations properly (they had no idea about grossing up the salary either) the tax office will only catch up with is between March and May, and we can expect a combined bill from 2009, 2010 and 2001 to be payable somewhere towards the end of 2012, or early 2013.

Happy new year!

PS. is this my first 'real' complaint
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Old 03.01.2012, 19:53
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Re: 120,000 Quellensteuer limit - calculations and implications

Hi
Sorry to hear that.
Are you sure that the communal tax level of where you live is higher than Zurich? It could reduce the burden somehow (it's called "steuerfuss").
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Old 03.01.2012, 20:33
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Re: 120,000 Quellensteuer limit - calculations and implications

maybe if it is for a small amount you can look for deductions to push you back under e.g. charitable donations, interest payments etc.

EDIT: i guess if it is 2009, it is too late to forfeit some of the bonus?

Last edited by Phil_MCR; 03.01.2012 at 22:58.
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Old 03.01.2012, 22:51
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Re: 120,000 Quellensteuer limit - calculations and implications

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maybe if it is for a small amount you can look for deductions to push you back under e.g. charitable donations, interest payments etc.
Nope. The need to file is based on gross, not net.
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Old 03.01.2012, 23:01
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Re: 120,000 Quellensteuer limit - calculations and implications

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Hi,

I did try to do a really good search to find a suitable thread, but I couldn't decide where to put it, so apologies in advance...

Perhaps we are in a unique position, perhaps not.

My husband's base salary is very comfortably 'under' the 120K limit and so we paid 'at source' (Quellensteuer). However, we receive a tuition discount for our children (childcare and/or schooling) and that is a taxable.

Unfortunately for us, as we have only just discovered, the grossing up of the children's school fees plus a small 'bonus' for my husband taking additional duties, means that for 2009 we went over the 120K limit. By a small amount.

That means we are now (and permanently!) in the 'Swiss system' and have to not only lodge 2009 but also 2010 and all future years on top of the Quellensteuer. *even though his gross income dropped and will continue to drop on as our children move out of the school and he loses his 'bonuses'*.

In Zurich, the local taxes are higher than Quellensteuer, so unless we find some miraculous way of tax minimisation, we will pay several thousand francs extra each year on top of the 'at source'.

I have to say, as a caveat, the tax guy was completely helpful, patient and just rubbed it in that we are now being taxed 'just like swiss locals'...

So, point is, watch out - go over that 120K limit by just a single frank and you may find yourself paying a lot more tax, for lots of years...

On the 'plus' side, because our employer failed to fill our salary declarations properly (they had no idea about grossing up the salary either) the tax office will only catch up with is between March and May, and we can expect a combined bill from 2009, 2010 and 2001 to be payable somewhere towards the end of 2012, or early 2013.

Happy new year!

PS. is this my first 'real' complaint
on the plus side, maybe now a good trigger to negotiate a pay rise!
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Old 03.01.2012, 23:29
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Re: 120,000 Quellensteuer limit - calculations and implications

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on the plus side, maybe now a good trigger to negotiate a pay rise!
That's exactly what my husband's first thought was!

And no, there is no way to reduce the 'brutto' (grossed-up-salary including 'bonus' and 'school fee reduction')...once it's done, it's done...

Fortunately, we moved to Adliswil, just over the zone 10 border, which not only gives us a very mild tax improvement, the rent is cheaper
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Old 03.01.2012, 23:38
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Re: 120,000 Quellensteuer limit - calculations and implications

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So, point is, watch out - go over that 120K limit by just a single frank and you may find yourself paying a lot more tax, for lots of years...
Just wait until you get a C Permit
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Old 03.01.2012, 23:45
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Re: 120,000 Quellensteuer limit - calculations and implications

I guess it's a good example of 'paying for the privilege'...of being able to be a permanent resident, own investment property, maybe vote in an election one day....
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Old 04.01.2012, 00:16
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Re: 120,000 Quellensteuer limit - calculations and implications

did i read correctly that some one earning gross 120001 chf /month could have a less take home than some one earning gross 119999 chf/month....
..doesnt that violate some accounting principle..
or rather punishes harder work..?
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Old 04.01.2012, 00:21
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Re: 120,000 Quellensteuer limit - calculations and implications

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did i read correctly that some one earning gross 120001 chf /month could have a less take home than some one earning gross 119999 chf/month....
..doesnt that violate some accounting principle..
or rather punishes harder work..?
It's per year!

Actually it depends very much on circumstances. There are many things that one can deduct and avoid/recover by completing a Swiss tax form...
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Old 04.01.2012, 00:24
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Re: 120,000 Quellensteuer limit - calculations and implications

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It's per year!
i never knew there should be such poverty in switzerland!
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Old 04.01.2012, 01:41
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Re: 120,000 Quellensteuer limit - calculations and implications

That's exactly what happened when I filed tax report my wife's salary inclusive last year and fool's hope to get few bucks extra out of postfinance's deposit tax claim. It all slightly exceeding the above amount and pushed us towards not-so-cool tax bracket. Once they gotcha - no retreat, no surrender. Just keep it, when next time around at the table, under your sleeve an ace (argument) for future salary negotiations with your HR dept.
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Old 04.01.2012, 08:59
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Re: 120,000 Quellensteuer limit - calculations and implications

But surely the new tax bracket only applies to earnings above that 120k? It's not that is retrospectively applied to the whole 120k. right?

If I'm right, it not that bad and no different from any other country where you pay tax based on each tax bracket you cross over....or am I being a numpty
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Old 04.01.2012, 09:13
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Re: 120,000 Quellensteuer limit - calculations and implications

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But surely the new tax bracket only applies to earnings above that 120k? It's not that is retrospectively applied to the whole 120k. right?

If I'm right, it not that bad and no different from any other country where you pay tax based on each tax bracket you cross over....or am I being a numpty
You're being a numpty, whatever that is. No offense, I don't know the term. ;-)

Whether you have to additionally file a tax return or not when paying tax at the source in Switzerland is determiend based on your gross income - did you cross the 120k barrier?

However, your income tax rate is selected and your actual income taxes are paid (in all countries that I know of) based on your yearly income. Therefore, if earning 125k makes you liable for 10% income tax at the end of the year, you must make sure that you've paid 12'500 CHF. If you've paid 1'000 CHF per month in Quellensteuer, then you have to pay up another 500 - there's nothing retroactive about it.

Think of it another way - as of the end of January, you've only earned a bit over 10k. Thus, your tax rate may well be 0% for that month (or at least some low number), but that does not mean that you don't pay anything. Rather, you've paid Quellensteuer based on what you think you're going to earn that year. If your estimate turn out to be low, you pay up more at the end of the year, and if they're high you get some back.

Quellensteuer tosses a little knot into the thread, because it's actually a sort of "flattening out" of taxes across the canton. Each municipality has it's own tax rate, but to keep things simple for the people collecting, Quellensteuer is calculated based on the average rate. However, once you're filing a detailed return anyway, there's no real incentive to keep it simple - you have to provide all the relevant details, including any deductions for which you're eligible, so they just calculate exactly what you owe. Sometimes it works in your favor, sometimes not.

Tough luck to the OP - hope your hubby can swing a little extra bonus this year to cover the difference!
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Old 04.01.2012, 09:29
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Re: 120,000 Quellensteuer limit - calculations and implications

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did i read correctly that some one earning gross 120001 chf /year could have a less take home than some one earning gross 119999 chf/year....
..doesnt that violate some accounting principle..
or rather punishes harder work..?
It depends where you live. When I was on Quellensteuer and on over 120k, I got a refund each year.

A numpty is somone rather daft.
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Old 04.01.2012, 09:44
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Re: 120,000 Quellensteuer limit - calculations and implications

Numpty = fool

so another example in laymans terms

If the tax rate was 10% up to 120k and 15% above 120 and someone had a salary of 130k

Is the Tax due:
12000 chf (120k @10% ) + 1500 chf (130k - 120k @15%)
Giving a total of 13500 chf Tax

Or

19500 chf (130k @ 15% tax ) ... in which case if you theoretically crossed over the limit by just 500chf, you end up much worse off.
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Old 04.01.2012, 09:59
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Re: 120,000 Quellensteuer limit - calculations and implications

I've seen a lot of threads mentioning that in Zurich, your tax return will often mean you owe taxes. Is the tax calculated on some national average only then? But if you do a return it is done at a local level?

I thought it also went further than that. For instance, I moved from Kloten into Bassersdorf earlier this year. If I was Swiss, I would have expected that my tax bracket would change (even my health insurance premium changed as a result of the move). However, it did not.
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Old 04.01.2012, 10:00
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Re: 120,000 Quellensteuer limit - calculations and implications

The tax is always incremental - and the Kanton Steueramt pages will have the banding.

A simple XLS will work out the approximate due. A rough rule of thumb is to take your taxable income - deduct 20% - then work out the tax.
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Old 04.01.2012, 10:03
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Re: 120,000 Quellensteuer limit - calculations and implications

Taxes have three components: federal, cantonal, and municipal.

Federal is the lowest of the three, about half the cantonal, and the municapal is a percentage of the cantonal, usually in the range of 60-150%.

Source taxes are based on the cantonal average, so if your town is above that average, you will pay more if paying normal taxes, and if it is below you will pay less.

Simple.

Tom
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Old 05.01.2012, 10:24
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Re: 120,000 Quellensteuer limit - calculations and implications

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Taxes have three components: federal, cantonal, and municipal.

Federal is the lowest of the three, about half the cantonal, and the municapal is a percentage of the cantonal, usually in the range of 60-150%.

Source taxes are based on the cantonal average, so if your town is above that average, you will pay more if paying normal taxes, and if it is below you will pay less.

Simple.

Tom
Thanks so much for this post. I wish it was up in a sticky as I've had some confusion over it for a bit now.
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