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Old 07.08.2013, 13:31
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Tax obligation on backpay?

Hi all,

Long story short: my employer has just given me a backpayment for work I did in the UK (when still permanently resident and thus taxable there) in April-June 2012.

I left the UK in July 2012 and since then have been permanently resident (and thus taxable) in CH.

Employer has deducted UK income tax and national insurance on the payment. Understandable in a way, because the payment was prepared and sent by the London office. But is that correct? Should I have to pay those taxes?

I guess possibly yes because when the work was done, I was taxable in the UK.

But on the other hand, my instinct says I should be paying tax on that income to CH, like I do for 100% of the rest of the money that I get from my employer.

Any thoughts?

Cheers
24lw
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Old 07.08.2013, 13:48
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Re: Tax obligation on backpay?

Complicated case.
Theoretically, this is not taxable in Switzerland but I think that you would need to be able to prove that it is a true back payment.
This payment was for the financial year 2012 but paid in 2013. I think that checking if HMRC accepts that it is for 2012 (and no need to have UK 2013 tax statements) will be a good indication.

Best is to ask a tax consultant though.
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Old 07.08.2013, 13:55
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Re: Tax obligation on backpay?

Seems totally correct, if the income relates to work done in the UK by a UK resident (at the time) then UK PAYE is deducted.
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Old 07.08.2013, 15:25
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Re: Tax obligation on backpay?

Make sure (if you declare the additional income to the Swiss!) that you also show you've paid the tax on it, or you may be taxed twice.
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Old 07.08.2013, 15:32
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Re: Tax obligation on backpay?

If the london part of the company paid the salary then it seems they have done it correctly. You simply make sure you state the amount on your swiss tax return

Had a similar situation the year I moved when a bonus was paid in the prior country and taxed under that country but only needed to declare it in Switzerland taxes.
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Old 07.08.2013, 15:42
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Re: Tax obligation on backpay?

As the OP was not resident in CH at the time, I don't see why they would declare the earnings in CH.
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Old 07.08.2013, 16:42
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Re: Tax obligation on backpay?

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As the OP was not resident in CH at the time, I don't see why they would declare the earnings in CH.
But he was resident during the same "tax year", so I think the earnings legally should be declared - not so the Swiss take tax from that amount, but so that the Swiss know the global income and apply the correct tax bracket to the Swiss income he had for the same year.
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Old 07.08.2013, 18:58
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Re: Tax obligation on backpay?

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But he was resident during the same "tax year", so I think the earnings legally should be declared - not so the Swiss take tax from that amount, but so that the Swiss know the global income and apply the correct tax bracket to the Swiss income he had for the same year.
Very few people fill in a tax return in the year they arrive. In an case its too late...........
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