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Old 14.07.2018, 11:27
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Tax at source correction

Yesterday I was unpleasantly surprised by a registered letter from my former employer of two years ago. In the letter with a subject "tax at source correction" they have kindly informed me that a mistake has occurred when deducting the tax from my salary and I owe them now a four figure amount.

They understand that this might come quite unexpected (no kidding ) but they happily provided me with a payment slip to pay them the missing taxes.

After original shock - and to be honest - fit of rage, I sat down to look into this matter.

So what actually happened is that in all the months where I got irregular salary (means Mays when I received bonus and Novembers when I received the 13th salary) I have been charged the same tax percentage as in the other "regular" months, i.e. I received higher salary, but did not get charged higher tax.

As a side note - a tip for you out there paying tax at source - do not quit your job November being your last working month. I though it was an excellent idea - stop working in November, have December, i.e. Christmas time, off and be covered by the 13th salary, etc. until I find a new job. Well yeah, it seemed a great idea then, but now I realise how stupid it was. Because I did get my 13th salary and unused holidays and overtimes paid out in November, i.e. I had a triple salary to cover me for a while. But triple salary also means that my taxes got higher. And not just three times, but almost EIGHT times higher!!! *facepalm*

And I do understand that if I earn more I have to pay more taxes, I do not have problem with that. But I wonder - how on earth can something like this happen in the first place? I worked there 2014-2016 and after 2 years they come to me like - hey, btw...

Did anyone else have to go through something similar?

I also did some research and found the following info on the ZH taxation office website:

If the employer charged an incorrect tax at source, this can be claimed additionally by the cantonal taxation office within 5 years from the end of the calendar year, in which the taxation took place. Separate procedure applies for claims outside the 5 year period.

https://bit.ly/2uyhCbE (german)

So, yeah, they can claim the tax from me retrospectively (no surprise there), but do you think I have the right to at least request an instalment plan? Because it's not an insignificant amount for me, so I would appreciate if I could pay it back in several payments. As it was their mistake, which left me in this messy situation, in the first place, they should agree to that? Don`t you think?

Will be glad to hear any feedback or advice on how do you think it would be best to proceed.
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Old 14.07.2018, 13:51
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Re: Tax at source correction

Hi
looks like your employer has a bigger tax problem since you have been not the only employee taxed at source?

Anyway: Quellensteueramt has a big time lag of about 12 month or even more. And yes, this can happen if the person doing wage administration has no idea how tax at source works.


Payback in some installments might be possible. But you have to be aware of negative interests.



Cheers


Andy
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Old 14.07.2018, 14:51
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Re: Tax at source correction

Thanks for reply Andytax (and greetings to Bassi )

Though it was a small company with mainly Swiss employees, I was neither the first nor the only foreigner being taxed by Quellensteuer there. So one would think they know how to handle that.

As for the interest, I will be paying my former employer back, not the Steueramt directly. (As I understood it, it is the employer who needs to pay the Steueramt.) If I am paying back the employer, can they ask interest rate from me when paying in installments? Cause that would seem kind of unfair.

I am aware that most likely it all depends on the agreement I make with them, so I`ll be writing them on Monday to agree on the terms of the pay back. I am just wondering what are my general rights in a situation like this.
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Old 14.07.2018, 15:04
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Re: Tax at source correction

The employer is responsible for correctly calculating and remitting employee source tax to the tax office. The employer is to ensure that its payroll department is properly trained to do so and can also buy inexpensive insurance to cover source tax inaccuracies should they occur.

As such, an employee is not obliged to repay a source tax shortfall to the employer although an employee would be free to do so.

Possible options for the employee:
1. Ignore the letter (and see what happens).
2. Respond to the letter advising that the employer is fully responsible for calculating correctly and remitting source tax to the tax office (and see what happens).
3. Agree to pay the employer for the shortfall.
- If the employee signs a promissory note, with or without an installment plan, this would acknowledge the debt and would give the employer support to file a debt claim (Betreibung) in the future. Possibly acknowledging the debt should be avoided.
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Old 14.07.2018, 16:00
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Re: Tax at source correction

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The employer is responsible for correctly calculating and remitting employee source tax to the tax office. The employer is to ensure that its payroll department is properly trained to do so and can also buy inexpensive insurance to cover source tax inaccuracies should they occur.

-all tax inaccuracies will be corrected... Noone has to to buy insurance. Steuramt has to correct a couple of thousands every year. Waiting time is around 18 months...

As such, an employee is not obliged to repay a source tax shortfall to the employer although an employee would be free to do so.

-Who said that.Bring us this law.

Possible options for the employee:
1. Ignore the letter (and see what happens).

-Disaster


2. Respond to the letter advising that the employer is fully responsible for calculating correctly and remitting source tax to the tax office (and see what happens).

-Disaster

3. Agree to pay the employer for the shortfall.

One and only option.
For every year you should fill the form asking for re calculation. As I said this will be very slow and you will be able to save the money...

"die Korrektur kann nur über den Antrag auf Neuveranlagung erfolgen.Wir bitten Sie, einen Antrag auf Neuveranlagung pro betroffenem Jahr auszufüllen (bei Punkt 1 "Tarifumkehr" ankreuzen) und diesen mit allen erforderlichen Unterlagen einzureichen."
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Old 15.07.2018, 11:54
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Re: Tax at source correction

Thank you Tonest for your reply. As said, I am going to contact my employer next week and see what happens. Hopefully we can find a mutually agreeable solution.
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Old 15.07.2018, 12:37
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Re: Tax at source correction

For additional information on the relationship between the tax office and employer regarding source tax, see this thread:

https://www.englishforum.ch/business...s-problem.html
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Old 15.07.2018, 13:43
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Re: Tax at source correction

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The employer is responsible for correctly calculating and remitting employee source tax to the tax office. The employer is to ensure that its payroll department is properly trained to do so and can also buy inexpensive insurance to cover source tax inaccuracies should they occur.

As such, an employee is not obliged to repay a source tax shortfall to the employer although an employee would be free to do so.
&

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The employer is liable for correctly assessing source tax on its employees. In the event that the source tax withheld is too low, the employer has the right to demand additional taxes from the employee. This is pointed out in para. 5.1 Duties of the Employer (SSL) at the below link for Ct. Bern (German):
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Old 15.07.2018, 13:51
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Re: Tax at source correction

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Old 15.07.2018, 15:09
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Re: Tax at source correction

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as such, an employee is not obliged to repay a source tax shortfall to the employer although an employee would be free to do so.
Canton Zurich regulations are silent on the employer having the right to claim underpaid source taxes from the employee.

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the employer is liable for correctly assessing source tax on its employees. In the event that the source tax withheld is too low, the employer has the right to demand additional taxes from the employee. this is pointed out in para. 5.1 duties of the employer (ssl) at the below link for ct. Bern (german)
Canton Bern regulations state that the employer has the right to claim underpaid source taxes from the employee.


For source tax, the tax debtor is the employer, not the employee.
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Old 15.07.2018, 15:29
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Re: Tax at source correction

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For source tax, the tax debtor is the employer, not the employee.
Yes, definitely. The employer has to calculate the amount of tax based on the employee's earnings with that employer.

However, the employer cannot know what the employer may be earning elsewhere. This is especially true for employees who have more than one part-time job, and the sum of those earnings may tip the employee into a higher category of tax than the rate at which any one employer had deducted. As I understand it, the employee is liable for this discrepancy.

In addition, the employee may have other sources of taxable income which do not go through an employer at all, such as rental income, or income from investments. Therefore, the employee may be liable to pay other tax for which no employer is the debtor.
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Old 15.07.2018, 15:53
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Re: Tax at source correction

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Canton Zurich regulations are silent on the employer having the right to claim underpaid source taxes from the employee.
No they are not silent and clearly state that in case of a difference the tax owning entity (Employer) can request the difference from/must reimburse the taxable person (Employee).


§145 Steuergesetz Kanton Zurich
Quote:
1 Hat der Schuldner der steuerbaren Leistung den Steuerabzug nicht oder ungenügend vorgenommen, verpflichtet ihn das Gemeindesteueramt oder das kantonale Steueramt zur Nachzahlung. Der Rückgriff des Schuldners auf den Steuerpflichtigen bleibt vorbehalten.

2 Hat der Schuldner der steuerbaren Leistung einen zu hohen Steuerabzug vorgenommen, muss er dem Steuerpflichtigen die Differenz zurückzahlen.
https://www.steueramt.zh.ch/internet...pdf/StG-ZH.pdf
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Old 15.07.2018, 16:02
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Re: Tax at source correction

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Canton Zurich regulations are silent on the employer having the right to claim underpaid source taxes from the employee.
The employer is just an intermediate who holds in the tax, the employee who is legally the person having to pay the tax has to pay for mistakes (or get money back)

EDIT: Given your Groan Mullhollander, proof me wrong I'd say.

Last edited by EdwinNL; 15.07.2018 at 17:29.
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Old 15.07.2018, 16:15
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Re: Tax at source correction

I had similar at end of last year.. I work in GE and live in VD..
My HR dept told me the canton VD had changed something which meant I hadn't been enough tax since many months.. They'll make the near 10k chf adjustment in the next months salary or if i prefer, over a few months, real nice of them eh

And I work for big bank where probably 30% are taxed at source..

Now I'm on regular tax which is just as much fun.
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Old 16.07.2018, 23:13
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Re: Tax at source correction

Thanks everyone for all your comments and inputs. You'd been indeed helpful.

@John H - sorry to hear that you had to go through similar stuff, but in a way I'm a bit glad that I'm not alone

The biggest joke, eventually, is that I got this letter like 2 days after I got my early C permit approved and therefore swapped from Quellensteuer to the regular tax
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