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Old 05.04.2020, 14:22
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2021 Changes in tax at source reassessment [Kreisschreiben 45]

Last June the Swiss Federal Tax Administration issued Kreisschreiben 45/ Circulaires 45
https://www.estv.admin.ch/estv/de/ho...schreiben.html

This is something which seemingly had not made the news yet, but has great impact for all those seeking a tax at source reassessment. As you might know there are currently two procedures:

1. If you are taxed at source and earn more than 120k (Geneva 500k) you will have to fill in and submit a regular tax retur and you will be taxed using the regular tax rates (some or conditions such as wealth or real estate might also trigger regular taxation).

2. If you are taxed at source and earn less than 120k (GE 500k) you can only request a simplified reassessment if you fulfill certain criteria set by your canton of residence (Must be submitted before March 31st after the tax year)

So what is the big changes?
- The simplified reassessment will be abolished and all those seeking a tax at source reassessment will have to fill in a regular tax return and will also be subject to regular taxation (btw. GE will also use the 120k limit).
- There is no longer any conditions to apply for reassessment.
Or in other words: All taxed at source can request to be regularly taxed.

Who will profit from this change?
- All those living in a relative low tax commune (bellow the cantons average).
- All those with higher tax deductions than those implied in the tax at source rate.
- Married couples where one of the spouse as a much lower income than the other partner.

What will stay the same?
- The March 31st deadline to request an reassessment remains.
- If you have permit B and you do a regular return you will still pay the tax at source (it will be accounted for in the final bill).

Where is the string?
- Once you did a regular return you will have to do a regular return for all subsequent years as well.


There are some other changes which will come with Kreisschreiben 45 but most of them are only relevant for the employer and pay-roll companies:
https://www.pwc.ch/de/press-room/exp...esteuerung.pdf
https://www.ubs.com/ch/en/help/pensi...lding-tax.html

EF threads which discuss the impact of those changes:
Question about the withholding tax ( Quellensteuer eidg )
Withholding tax for part-time employees. New tax regulations for 2021

The rules take effect from tax year 2021. For tax year 2020 the old simplified reassessment can still be done. Be aware that it must be done in most canton before March 31st.
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Last edited by aSwissInTheUS; 23.02.2021 at 18:53.
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Old 06.04.2020, 12:57
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

Many thanks for this post! We are indeed a couple that profited from the tax reassessment as we have unequal incomes and quite some deductions (childcare, 3rd pillar) deducted from the lowest income. A lawyer had to point us to our “rights”: based on free movement of people, Switzerland cannot discriminate EU nationals. We got our reassessment and the money we got back from 2016 went to the lawyer… but there is two more years (2017 and 2018) where we expect to get some money back.

An open point is once one requested the reassessment: will the reassessment be applied to the subsequent years as well? Now that is the case: if in one year you made more than 120k, the subsequent years (until one gets a C permit / citizenship) will have a reassessment, even if one earned less than the 120k.

I think we can look forward to many threads regarding these reassessments, as a reassessment could also mean paying more taxes!Maybe we should make this a sticky!
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Old 06.04.2020, 13:51
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

"An open point is once one requested the reassessment: will the reassessment be applied to the subsequent years as well? Now that is the case: if in one year you made more than 120k, the subsequent years (until one gets a C permit / citizenship) will have a reassessment, even if one earned less than the 120k."


A Ct. Zurich tax office brochure says:

"12. What does the retrospective assessment of withholding tax mean?

If the gross earnings of a person who is liable for withholding tax, in annualised terms, exceed the sum of CHF 120,000.00, a retrospective ordinary assessment of the entire income and assets of the spouses shall be conducted. In subsequent years, a retrospective ordinary assessment shall be conducted until the liability to pay withholding tax ends, even if the relevant income limit of CHF 120,000.00 is temporarily or lastingly undercut."

https://www.steueramt.zh.ch/dam/finanzdirektion/ksta/quellensteuer/fuer_arbeitgebende_arbeitnehmende/informationsblaetter_1/infoblatt_qst15_en.pdf.spooler.download.1421062415 918.pdf/infoblatt_qst15_en.pdf
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Old 06.04.2020, 13:59
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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An open point is once one requested the reassessment: will the reassessment be applied to the subsequent years as well? Now that is the case: if in one year you made more than 120k, the subsequent years (until one gets a C permit / citizenship) will have a reassessment, even if one earned less than the 120k.
According the table in the PWC publication this will be the case also for requested reassessments bellow 120k. Means once you did a regular tax return you will always have to do a regular one (tax at source has still to be paid but is accounted for in the final bill).
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Old 13.10.2020, 14:44
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

I need to revive this thread because it looks like there is not much information out there. First off, I have found another concise explanation of the changes here: https://www.swissriskcare.ch/en/entr...ill-occur-2021

But I still have two questions:

1) Does anyone know whether for this year (2020) we can still file a "simplified" reassessment form (like previous years)?

2) Once we submit a request for a regular tax return (by March 2021), will we have to fill that in with respect to 2020 or only the next year, i.e. for 2021?
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Old 13.10.2020, 15:07
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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I need to revive this thread because it looks like there is not much information out there. First off, I have found another concise explanation of the changes here: https://www.swissriskcare.ch/en/entr...ill-occur-2021

1) Does anyone know whether for this year (2020) we can still file a "simplified" reassessment form (like previous years)?
According your link for the 2020 tax year the old rules apply. The form for simplified 2020 reassessments will be available early 2021 and must be filled before March 31 2021.

I assume for the 2021 tax year you must request the tax forms (from now on the full monty) before end of March 2022.
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Old 13.10.2020, 15:09
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

Yup, I have actually found the answers to both of my questions by reading Kreisschreiben 45. For reference:

1) The change is only enforced for incomes generated in 2021, so yes we can still ask for a reassessment for the past year. (source: point 13)

2) You would get the forms to fill in for 2020 (source: point 11.3).
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Old 26.01.2021, 17:40
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

One more surprise change (rage alert!)

Wifey is drawing unemployment benefits and she just got her 'payslip' for January. Quellensteuer is 5 times more than last year. Guess why? After some research we found, it counts as side-income (Ersatzeinkünfte, practically applies everything paid by any kind of insurance) from this year, thus Tariff G applies instead of Tariff C.
And still, we are considered as a double income family (Doppelverdienende) so for me still, Tariff C applies, cannot go to Tariff B.
How on Earth does this make sense?
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Old 27.01.2021, 21:09
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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One more surprise change (rage alert!)

Wifey is drawing unemployment benefits and she just got her 'payslip' for January. Quellensteuer is 5 times more than last year. Guess why? After some research we found, it counts as side-income (Ersatzeinkünfte, practically applies everything paid by any kind of insurance) from this year, thus Tariff G applies instead of Tariff C.
And still, we are considered as a double income family (Doppelverdienende) so for me still, Tariff C applies, cannot go to Tariff B.
How on Earth does this make sense?
This is shockingly absurd. Basically downgrades the great-on-paper unemployment benefit quite a bit.

Do you know if this is the same "logic" under regular taxation?
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Old 27.01.2021, 22:47
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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This is shockingly absurd. Basically downgrades the great-on-paper unemployment benefit quite a bit.

Do you know if this is the same "logic" under regular taxation?
No, just the total worldwide net income.
But anyone on tax at source can request a regular taxation if they think they will benefit from it.
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Old 27.01.2021, 23:01
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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No, just the total worldwide net income.
But anyone on tax at source can request a regular taxation if they think they will benefit from it.
?

I meant to ask whether the same problem exists under tax at source (Quellensteuer) and regular CH taxation. So basically if I have a B permit but make more than 120k, does the same tax increase apply when on RAV?
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Old 27.01.2021, 23:07
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Re: 2021 Changes in tax at source reassessment [Kreisschreiben 45]

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?

I meant to ask whether the same problem exists under tax at source (Quellensteuer) and regular CH taxation. So basically if I have a B permit but make more than 120k, does the same tax increase apply when on RAV?
As I said: You sum up your worldwide income, subtract your deductions, and that's what's determine the tax rate and gets taxed (with some exceptions). It is one single number, regardless were the money comes from: Your shady drug deals, royalties from your records, gambling winnings, RAV, or income paid by your employer.

If you are taxed at source you can, with tax year 2021, request a normal taxation. With this the "problem" vanishes, but you have to wait for the refund which can take years. Not really the thing you need when money is scare.
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