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Old 08.12.2013, 03:47
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Tax Return on Permit B

Hello guys!

I have a simple question. I am working for about 9 months in Switzerland on a permit B, which means that I am taxed at source. I have no assets or anything else in Switzerland, just a salary from one company which is below 120k.

The problem is that for some months, I am getting significantly higher salaries compared to other months (some months it is just my normal salary and some others it may be 150% or even 200% because of additional overtime/shift work, relocation bonus, etc.). When the salary is more than normal, I get overtaxed (instead of 9% tax rate can easily go to 15%).

Is there anyway to claim this additional tax back? I am on permit B, which means no tax forms submitted. Or am I wrong and I can claim this back?
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Old 08.12.2013, 07:13
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Re: Tax Return on Permit B

If on b and less than 120 then you pay tax based on your monthly income. You earn more in a month then you pay more tax... pretty standard and normal.

Im confused what you are trying to do.... are you asking if you can still pay your "normal" lower tax rates on the higher monthly salaries? If so , no.

You earn more , you pay more tax. Done.
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Old 08.12.2013, 07:17
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Re: Tax Return on Permit B

To my understanding, the tax you pay when submitting a tax declaration might be more than what you pay when taxed at source. Whether this is the case depends on your canton, gemeinde, salary, family situation and possibly other factors. To avoid unnecessary efforts resulting in nothing but a huge disappointment, you should first find out what is your expected tax burden with the tax declaration. The best place to seek for such answers is the tax office.
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Old 08.12.2013, 14:10
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Re: Tax Return on Permit B

Let me give you an example:

Month 1: 7000 Gross, 8.5% Tax Rate.
Month 2: 9000 Gross, 10.5% Tax Rate
Month 3, 7000 Gross, 8.5% Tax Rate
Month 4: 12000 Gross, 14% Tax Rate

So, lets say the basis salary is 7000 Gross. If you do 7000x12 then the annual tax rate is 8.5%, which is the monthly tax rate too. But now I am not getting the same amount of money each month.

The annual income is 7000+9000+7000+12000+.... which would correspond to an annual tax rate of let's say 10%, which means that for months 2 and 4 I am overtaxed. Is there a way to do an annual return and be taxed based on the annual income and not the individual month's salaries?

In my case it would account for about 1k chf tax returned back, this is why I am asking...
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Old 08.12.2013, 14:51
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Re: Tax Return on Permit B

Best to ask your employer not to pay out any salary over say 9k a month & then to top up months that you earn below 9k if that is something you would like to him to do.

If you do a tax return, you might have extra tax to pay, someone paid 6k into a pension, then did a return to reclaim the tax paid on the pension. He ended up with an additional tax bill of about 2k, so he was not happy.
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Old 09.12.2013, 01:29
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Re: Tax Return on Permit B

If your employer knows what they are doing... Then they adjust the rate each month accordingly.

So if your pay increases in month 3, they add up everything earned and deducted so far, work out if under or over taxed over the full 3-month period, and then make the adjustment so that you pay the correct amount. So some months you are over taxed and others under taxed.

You can see this if earning the same amount in different months. The tax rate changes even if the monthly payment is the same. Eg your month 3 won't necessarily be 8.5%. If it is, your employer is probably making a mistake.

It all works out in the end ( if they know what they are doing ).
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Old 09.12.2013, 09:39
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Re: Tax Return on Permit B

Are all of your nine months in the same tax year?

Did you work for any of the other months?

Where were you tax resident previously?

If you pro-rata your nine months to twelve does it take you above the 120K threshold?
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Old 09.12.2013, 09:49
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Re: Tax Return on Permit B

Did you make additional contributions to Pillar 2 or contributions to Pillar 3a (for that one, I believe there is still time)? If so, at least in Basel, you can file a specific form that lets you adjust your tax even if you're on Quellensteuer.
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Old 09.12.2013, 11:26
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Re: Tax Return on Permit B

Yes, all these 9 months are in 2013. From April till December 2013.
Before that I was in London, on PAYE scheme, taxed at source.
No, I don't think that if I pro-rata my 9 months to 12 it gets be above 120k, around 105-110.
Contributions for pillar 3 no, but for pillar 2 yes. My company is automatically deducting a percentage of my salary for the company pension scheme.

In addition to the above:
I am also studying abroad (London) with some annual tuition fees of the order of 4000 GBP per year. Can they be deducted? Or not because it is not in Switzerland? It is not undergraduate, it is postgraduate (Ph.D.).
I am commuting every day to work, having to buy train monthly train tickets. Somebody had mentioned that this can be deducted. Is this true?
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Old 09.12.2013, 11:29
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Re: Tax Return on Permit B

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Contributions for pillar 3 no, but for pillar 2 yes. My company is automatically deducting a percentage of my salary for the company pension scheme.
I meant additional contributions - you can often purchase more "cover years", especially if you came from abroad and haven't always worked in Switzerland.
In any case, why don't you speak to the tax department of your Kanton? The people in Basel are very helpful, I would think you would get assistance from Zurich as well.
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Old 09.12.2013, 12:12
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Re: Tax Return on Permit B

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Hello guys!

I have a simple question. I am working for about 9 months in Switzerland on a permit B, which means that I am taxed at source. I have no assets or anything else in Switzerland, just a salary from one company which is below 120k.

The problem is that for some months, I am getting significantly higher salaries compared to other months (some months it is just my normal salary and some others it may be 150% or even 200% because of additional overtime/shift work, relocation bonus, etc.). When the salary is more than normal, I get overtaxed (instead of 9% tax rate can easily go to 15%).

Is there anyway to claim this additional tax back? I am on permit B, which means no tax forms submitted. Or am I wrong and I can claim this back?
A rather large part of your tax at source is the average tax rate of all of the communities (gemeinden) in Kanton Zurich. The city of Zurich is one of the cities that normally has much higer tax rate than this average tax rate. Assuming you live in zurich, and you fill out a tax return, you could end up paying much more in taxes than you do now....consider yourself warned
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Old 09.12.2013, 12:13
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Re: Tax Return on Permit B

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I am commuting every day to work, having to buy train monthly train tickets. Somebody had mentioned that this can be deducted. Is this true?
It's worth noting that tax at source is not charged at the same rate as an end-of-year tax return; it is adjusted downward in order to take account of deductible expenses such as the cost of a daily commute, or taking lunch at work, for example. Thus, do not assume that making a tax return and claiming back expenses will necessarily result in lower overall taxation. Also, depending on the canton, it is possible that you may be asked for proof of your various expenses - I don't know which or how often - should you make a tax return.

As I understand it, it is optional to submit a tax form where earning below 120k (gross) and mandatory above that (feel free to correct me on this), so you can make the tax return with no issues if you decide that it is in your best interest financially.

I don't know about where you live, but some cantons supply tax return software that automatically calculates your liability once filled in. You could download such software, fill it in, and compare your actual tax paid to the tax which would be paid should you file a tax return. Of course, this requires you to go through the effort of filling in a tax return (not submitting one), and assumes that where you live has such a facility.

Also, remember that a tax return will not be in English, so if you don't understand enough or have issues with the details then there may be an additional overhead in your time and/or expense to actually make a tax return.
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Old 09.12.2013, 12:16
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Re: Tax Return on Permit B

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Let me give you an example:

Month 1: 7000 Gross, 8.5% Tax Rate.
Month 2: 9000 Gross, 10.5% Tax Rate
Month 3, 7000 Gross, 8.5% Tax Rate
Month 4: 12000 Gross, 14% Tax Rate

So, lets say the basis salary is 7000 Gross. If you do 7000x12 then the annual tax rate is 8.5%, which is the monthly tax rate too. But now I am not getting the same amount of money each month.

The annual income is 7000+9000+7000+12000+.... which would correspond to an annual tax rate of let's say 10%, which means that for months 2 and 4 I am overtaxed. Is there a way to do an annual return and be taxed based on the annual income and not the individual month's salaries?

In my case it would account for about 1k chf tax returned back, this is why I am asking...
They should fix this at the end of the year. At least they do in Vaud, they add up everything for the year, and re-calculate the tax based on the annual pay you received in the 12 monts, and the tax rate it corresponds to.

The reason they wait till the end, is that there are other factors that affect the recalculation (not only salary fluctuations). For example, if a baby is born, they will have to use smaller rates, not only for the period after the brith, but for the whole year. So they will do the racalculation at the end of the year to make sure all the changes are captured.

PS: you cannot claim for commuting, as average commuting costs are already included in the tax at source rates. For studying, it depends if it's considered really studying or career development (eg MBA); but most likely if you are in CH working you cannot claim to be a student too. Also, with all tax things you should be very careful. Remember, switzerland is very different than UK, there is no single tax system, but a series of parallel systems with very different tax rates. Eg normal taxation, tax at source, tax by negotiation,... so you may persuade them that you can deduct for stydy and travel to work, but then realise that you have been put onto nornal taxation which can be 5,000 worse than tax at source, and you can do nothing about it.
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Old 09.12.2013, 16:55
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Re: Tax Return on Permit B

I have similar doubts over the correctness of my tax sometimes.. I'm just a simple techie so I don't claim to properly understand it

But I'm taxed at source, since Mar 13.. I have no exact numbers to hand but it *feels* like when i get paid a bit more I get hit a lot harder with tax..

Standard month difference between gross and net is around 15%
I get and extra 2k maybe and the difference between gross and net is over 25%

When my tax should be 8% i thinks (married, 2 kids, reside VD, wrk GE) .. plus all the other bits and pieces that are deducted of course.

I understand the total amount deducted would change but should not the percentage between gross and net stay roughly the same??
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Old 09.12.2013, 16:58
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Re: Tax Return on Permit B

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I have similar doubts over the correctness of my tax sometimes.. I'm just a simple techie so I don't claim to properly understand it

But I'm taxed at source, since Mar 13.. I have no exact numbers to hand but it *feels* like when i get paid a bit more I get hit a lot harder with tax..

Standard month difference between gross and net is around 15%
I get and extra 2k maybe and the difference between gross and net is over 25%

When my tax should be 8% i thinks (married, 2 kids, reside VD, wrk GE) .. plus all the other bits and pieces that are deducted of course.

I understand the total amount deducted would change but should not the percentage between gross and net stay roughly the same??
2k extra it's assumed you earn 24k more a year so will likely be in a substantially higher marginal tax bracket that month.
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Old 09.12.2013, 17:08
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Re: Tax Return on Permit B

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2k extra it's assumed you earn 24k more a year so will likely be in a substantially higher marginal tax bracket that month.
This is what i don't understand ..
There's no sliding scale here is there? Earn 100k and pay 8% tax .. 200k is not 8% too?

Like i say .. Im useless with these affairs :
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Old 10.12.2013, 23:18
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Re: Tax Return on Permit B

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This is what i don't understand ..
There's no sliding scale here is there? Earn 100k and pay 8% tax .. 200k is not 8% too?
No, it's not. In CH the rates are progressive, with a near-infinite number of rates. So, e.g., Earn 100k and pay 8 % tax, earn 105k and pay 8.1 % tax. It always goes up. So when you get the 13th salary (at source), your net is not double the usual but a bit less due to the higher tax rate.
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Old 11.12.2013, 00:15
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Re: Tax Return on Permit B

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So when you get the 13th salary (at source), your net is not double the usual but a bit less due to the higher tax rate.
That is different to my experience. I'm taxed at source in Geneva and each month, my monthly gross is taxed (of course) and 1/12th of my 13th month salary too.

When I receive my 13th month, tax on it is already fully deducted and my net is more than double a usual month.

I guess different payroll systems calculate in different ways.
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Old 11.12.2013, 00:25
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Re: Tax Return on Permit B

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I have no exact numbers to hand but it *feels* like when i get paid a bit more I get hit a lot harder with tax..

I understand the total amount deducted would change but should not the percentage between gross and net stay roughly the same??
At times my experience has been similar.

I think this is because if I was paid a bonus in November (for argument sake), this additional income moves me to a higher tax rate.

The higher rate is retrospectively applied to my earnings from Jan - Nov and the adjustment to recover back tax (I can't think of a better word) is taken from November's salary.

At least, that is how it is handled where I work.
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Old 11.12.2013, 00:38
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Re: Tax Return on Permit B

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That is different to my experience. I'm taxed at source in Geneva and each month, my monthly gross is taxed (of course) and 1/12th of my 13th month salary too.

When I receive my 13th month, tax on it is already fully deducted and my net is more than double a usual month.

I guess different payroll systems calculate in different ways.
See this is what I expected.. But my 13th salary (halved between June and November) came and I expected net plus half . Noooo it was more like net plus a quarter.. Or less.
Same if I work some extra hours, say gross is plus 2k with the extra hours.. I only see 1k extra in the net, very roughly.

I work for a big bank, am sure they know what they are doing and it will work out :-/
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