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Old 05.12.2007, 09:41
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difference between source and income tax ?

Hello everyone
can anyone tell me the difference between source tax and income tax and when they are applied as i understood they depend on the kind of permit hold?
thanks a lot
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Old 05.12.2007, 09:49
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Re: difference between source and income tax ?

Tax at source or Pay-as-You-Earn (PAYE) is deducted by the employer directly when your salary is paid.

Income tax is paid when you fill in your tax declaration at the end of the year.

It is indeed dependent on the type of work permit held.
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Old 05.12.2007, 10:07
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Re: difference between source and income tax ?

Thank you for your explanation;one more question... in order to have the source tax you need to have at least the B permit, is it correct? and for income tax what kind of permit do you need to have? do you have to be swiss?
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Old 05.12.2007, 10:11
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Re: difference between source and income tax ?

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Thank you for your explanation;one more question... in order to have the source tax you need to have at least the B permit, is it correct? and for income tax what kind of permit do you need to have? do you have to be swiss?
C permit holders and B permit holders who own a house or otherwise voluntarily request it are taxed the traditional way. All other permits are taxed at source.
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Old 05.12.2007, 10:20
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Re: difference between source and income tax ?

i'm getting a B permit and renting (not owning) a flat here in switzerland since i work here, so what kind of tax you reckon i should be given? thanks again Shorrick Mk2...........
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Old 05.12.2007, 10:27
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Re: difference between source and income tax ?

Hello!

Actually... your tax status depends first on your permit but then each canton has some conditions under which you are a tax declarer no matter what.
Typically, you become a tax delcarer if you marry a Swiss Perosn, if you are a home owner, if your income is more than a certain threshold (120.000 CHF in Zurich) etc.

So, if you have a B permit, and rent a horuse an dyour income is not higher than your canton threshold, you will be taxed at source.

Cheers,
Cristina
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Old 05.12.2007, 10:34
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Re: difference between source and income tax ?

Hi Cristina
thanks for your quick reply, that was helpful....................i'd like to ask you one more question if you don't mind...is source tax higher or lower than income tax? and in what measure?..........thanks a lot again
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Old 05.12.2007, 10:47
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Re: difference between source and income tax ?

Hello :-)

that is a tricky questions... I will try to explain...

Tax at source was designed for simplicity.
If you take 2 people with 1 salary and exact same situation, they will pay the same amount whether it is at source or declaration 8ok maybe not exactly the smae but really really close ;-)
BUT
If someone has a house, and they are taxed at source, the tax at source would not consider the taxes which need to be paid for owning a house, therefore, the tax would be lower but you would not be paying all your taxes...

SO
You cannot really choose whether you are under one regime or the other, it depends on your situation and which taxes you need to pay.

Unless you are Swiss and you are naturally a tax declarer... this one I d on to know how to explain unfortunately ;-)

Ciao
Cristina
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Old 05.12.2007, 11:00
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Re: difference between source and income tax ?

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Hello :-)

that is a tricky questions... I will try to explain...

Tax at source was designed for simplicity.
If you take 2 people with 1 salary and exact same situation, they will pay the same amount whether it is at source or declaration 8ok maybe not exactly the smae but really really close ;-)
Oh no it's not...
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Old 05.12.2007, 11:03
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Re: difference between source and income tax ?

There can be a big difference between tax-at-source and tax-after-declaration.
It's the allowances, stoopid


Saying that, I expect to break even for 2007 (but 2006 and 2008 I have/expect refunds)
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Old 05.12.2007, 13:13
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Re: difference between source and income tax ?

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There can be a big difference between tax-at-source and tax-after-declaration.
It's the allowances,
what do you exactly mean for allowances? at the end do you get to pay more or less? sorry for all the questions............
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Old 05.12.2007, 13:18
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Re: difference between source and income tax ?

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what do you exactly mean for allowances? at the end do you get to pay more or less? sorry for all the questions............
It depends what you claim and where you live...
Each community has a different tax rate.

All things being equal, the bloke a few kms away from me (same salary, kids, allowances etc) could pay more or less than me because of where he lives

AFAIK, source tax aims to match some kind of "average" rate across the whole kanton. Could be more, could be less.

*there is no right answer*
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Old 05.12.2007, 13:31
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Re: difference between source and income tax ?

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Tax at source or Pay-as-You-Earn (PAYE) is deducted by the employer directly when your salary is paid.

Income tax is paid when you fill in your tax declaration at the end of the year.

It is indeed dependent on the type of work permit held.
There are differences per canton too

In Geneva I was Taxed at Source and didn't have to do a tax declaration.

In Zürich, at the Richterswil county still taxed at Source it was mandatory to fill the tax declaration that lead me to pay some extras at the end of the year.
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Old 05.12.2007, 13:52
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Re: difference between source and income tax ?

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Typically, you become a tax delcarer if you marry a Swiss Perosn, if you are a home owner, if your income is more than a certain threshold (120.000 CHF in Zurich) etc.
If your income is greater than CHF 120k, you can choose to be a tax declarer or you can choose to remain taxed at source.
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Old 05.12.2007, 14:48
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Re: difference between source and income tax ?

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There can be a big difference between tax-at-source and tax-after-declaration.
It's the allowances, stoopid
I think there's a standard 15k deduction on the source tax anyhow. I doubt the allowances will make up the 10 grand in tax I need to dish out extra for the privilege of having a C permit.
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Old 05.12.2007, 15:00
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Re: difference between source and income tax ?

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I think there's a standard 15k deduction on the source tax anyhow. I doubt the allowances will make up the 10 grand in tax I need to dish out extra for the privilege of having a C permit.
Bummer. That'll be your above average "Socialist republic of Geneva" then...
I do Ok by Zürich airport...
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Old 05.12.2007, 15:32
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Bummer. That'll be your above average "Socialist republic of Geneva" then...
I do Ok by Zürich airport...
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Old 06.12.2007, 13:11
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Re: difference between source and income tax ?

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Bummer. That'll be your above average "Socialist republic of Geneva" then...
I do Ok by Zürich airport...
Rest assured the politicians are aware we're paying more in taxes and charges than any other Canton and have swiftly launched an initiative to raise taxes even further...
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Old 25.03.2008, 22:00
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Re: difference between source and income tax ?

I many times wondered myself what the answer would be. In reality what you are really asking is how much tax you have to pay on your income?

Taxation at source means that you will have an estimated amount deducted from your pay. If too much is deducted, then you get a refund after you file a return/tax declaration. Otherwise you will pay the difference between what you and what was deducted at source (from your pay).

For people that do not get taxed at source (income tax is not deducted from each pay), they have to pay the entire tax due at tax return/declaration time. However, such people have to usually pay provisional taxes (called estimated taxes based on previous year income) and then pay the difference at tax return/declaration time. Provisional taxes can be very annoying if your income varies greatly from Year to Year.

Typically taxation at source (deductions from your pay) do not take into account your full situation, such as allowable deductions, and thus more than likely deduct too much.

Best regards,
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