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  #21  
Old 01.11.2020, 20:14
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Re: Pro-rata taxation

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Thank you for your responses guys - much appreciated!

@eyebeebe - for high earners and considering progressive nature of taxation it would be unfair for that to be the case. Of course, not saying not possible, I have come across other irrationalities here! It would just be massively annoying.

@newtoswitz - thank you. You are right indeed, this is how it is done in the UK. Only difference is that HMRC after a couple of months send you a check in the post with excess taxes you have paid, without needing to file a tax return. Should they not, you just give them a call and within a week you get the check.

@kri - does it mean that even if I file a tax return I would not receive the amount I have "overpaid"? I would declare the income I have actually received (3/12 of salary).
It's totally fair, just a different system
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  #22  
Old 01.11.2020, 20:20
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Re: Pro-rata taxation

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Sorry I was being unclear. What I meant is will I get money back when I file my tax return (ie will my earnings be assessed over a 12 month period and tax calculated accordingly)?
In my case, I didn't get tax back directly but my employer took lower tax for the following year.

I can't remember if that was automatic via the tax authorities or if they gave me something to give to them.
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  #23  
Old 01.11.2020, 20:25
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Re: Pro-rata taxation

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It's totally fair, just a different system
Allow me to disagree.

Let me explain it through an example. Say someone is a seasonal worker (not my case) and earn less than 120k/ year. In that case the system is incredibly punitive on the tax rate assigned on the individual and doesn't allow them to make whole.

In every other country you would (only) have a timing problem - taxed a lot in the beginning and then with some delay receive the amount you have overpaid. Here they are just keeping it...
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  #24  
Old 01.11.2020, 20:26
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Re: Pro-rata taxation

Strange, as the tax rate is based on your salary. Mine didn´t change the next year.
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Old 01.11.2020, 20:28
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Re: Pro-rata taxation

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Allow me to disagree.

Let me explain it through an example. Say someone is a seasonal worker (not my case) and earn less than 120k/ year. In that case the system is incredibly punitive on the tax rate assigned on the individual and doesn't allow them to make whole.

In every other country you would (only) have a timing problem - taxed a lot in the beginning and then with some delay receive the amount you have overpaid. Here they are just keeping it...
Where do you get that idea? They don't keep overpaid tax (afaik), you can get it back.

Assuming a level of stability to income helps to avoid some of the potential scams in timing that you see in other countries.

And it's hardly punitive, Switzerland has generally low tax rates anyway.
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  #26  
Old 01.11.2020, 23:09
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Re: Pro-rata taxation

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Allow me to disagree.

Let me explain it through an example. Say someone is a seasonal worker (not my case) and earn less than 120k/ year. In that case the system is incredibly punitive on the tax rate assigned on the individual and doesn't allow them to make whole.

In every other country you would (only) have a timing problem - taxed a lot in the beginning and then with some delay receive the amount you have overpaid. Here they are just keeping it...
I agree with you. Let's say you leave CH and go travelling for 6 months making no money, they still attempt to tax as if you work the full year. Their claim is "ah but you could also make much more". It made me very mad when it happened to us and I fought it until the end with some minor wins.

Waiting to see what happens now when returning.

K
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Old 02.11.2020, 01:20
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Re: Pro-rata taxation

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I agree with you. Let's say you leave CH and go travelling for 6 months making no money, they still attempt to tax as if you work the full year. Their claim is "ah but you could also make much more". It made me very mad when it happened to us and I fought it until the end with some minor wins.

Waiting to see what happens now when returning.

K

It's in all modesty ridiculous.

Refusing to accept a tax return below CHF120k is also inadmissible - what happens to those who invest in 3a and need to claim the tax back?

I need to find a decent accountant. I'll provide an update
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  #28  
Old 02.11.2020, 04:49
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Re: Pro-rata taxation

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It's in all modesty ridiculous.

Refusing to accept a tax return below CHF120k is also inadmissible - what happens to those who invest in 3a and need to claim the tax back?

I need to find a decent accountant. I'll provide an update

In this case, the taxpayer would file an "Antrag für quellensteuerpflichtige Arbeitnehmende auf Neuveranlagung der Quellensteuer" (Application for source-tax employees for a new assessment of source-tax). As an example, the Ct. Zurich form for 2019 is at this link:



https://www.zh.ch/content/dam/zhweb/...agung_2019.pdf
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  #29  
Old 02.11.2020, 08:13
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Re: Pro-rata taxation

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Sorry I was being unclear. What I meant is will I get money back when I file my tax return (ie will my earnings be assessed over a 12 month period and tax calculated accordingly)?
No, they will be assessed for the period you lived here.

Tom
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  #30  
Old 02.11.2020, 08:17
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Re: Pro-rata taxation

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It's in all modesty ridiculous.

Refusing to accept a tax return below CHF120k is also inadmissible - what happens to those who invest in 3a and need to claim the tax back?

I need to find a decent accountant. I'll provide an update
No, it’s a different system to what you are used to.

The tax at source is calculated at the average rate for the canton including standard deductions. If you earn 10k in a month the tax will not be the same as if you file a taxable income of 120k for the year, it will be at a rate more similar to taxable income of 100k i.e. social security, a level of pension contribution and other deductions will be assumed.

What can actually be a much bigger number than 3a is paying the average cantonal tax rate when you live in a low tax Gemeinde and not being able to make a tax return. Conversely, there have been lots of people complain on here over the years that they got a shock in their tax bill, as they live in a higher than average Gemeinde and have to make up the difference when they file. This is a a common if you live in Zurich city for example.
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Old 02.11.2020, 08:56
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Re: Pro-rata taxation

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It's in all modesty ridiculous.

Refusing to accept a tax return below CHF120k is also inadmissible - what happens to those who invest in 3a and need to claim the tax back?

I need to find a decent accountant. I'll provide an update
Have a look at the tax rates in other countries, that is ridiculous compared to here. Also as mentioned a couple of times, you can file a tax return and get money back.
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  #32  
Old 02.11.2020, 09:41
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Re: Pro-rata taxation

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It's in all modesty ridiculous.

Refusing to accept a tax return below CHF120k is also inadmissible - what happens to those who invest in 3a and need to claim the tax back?

I need to find a decent accountant. I'll provide an update
Look for an accountant if you like, they will not be able to change the system and will go by the book - infact they will be even less motivated than you to fight it.

I understand it's new but it's not ridiculous especially if you worked the rest of the year. It's ridiculous to extrapolate if you can prove you did not work - but that is not your case.

You may not like the process but it is what it is - trying to find ways to fight it will not work.

K
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  #33  
Old 02.11.2020, 11:08
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Re: Pro-rata taxation

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It's in all modesty ridiculous.
Pro rata tax when you have only been a tax resident for part of the year is the most fair solution overall.

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what happens to those who invest in 3a and need to claim the tax back?
They can file a simplified return.

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Refusing to accept a tax return below CHF120k is also inadmissible
Good news everyone. With tax year 2020 the simplified return will be abolished and anyone on tax at source can do a full tax filling. With all strings, hooks, bells, and whistles attached.

2021 Changes in tax at source reassessment [Kreisschreiben 45]
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  #34  
Old 02.11.2020, 12:24
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Re: Pro-rata taxation

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Good news everyone. With tax year 2020 the simplified return will be abolished and anyone on tax at source can do a full tax filling. With all strings, hooks, bells, and whistles attached.

2021 Changes in tax at source reassessment [Kreisschreiben 45]
AKA be careful what you wish for. I foresee incoming threads complaining that people in ZH city filled in a tax return to get tax back on their 3a investment, only to find their tax liability has increased.
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  #35  
Old 02.11.2020, 14:06
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Re: Pro-rata taxation

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AKA be careful what you wish for. I foresee incoming threads complaining that people in ZH city filled in a tax return to get tax back on their 3a investment, only to find their tax liability has increased.
Which is exactly why you do the calculation first before you actually commit to doing it.

Same as you always ask plumbers what they charge before you let them start work.
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Old 06.11.2020, 21:05
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Re: Pro-rata taxation

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It doesn‘t work like the UK. When you are taxed at source you get taxed on the monthly amount, not the annual amount.

All, I spoke with an accountant today. It is exactly as eyebeebe (and others) explained it.
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  #37  
Old 07.11.2020, 00:19
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Re: Pro-rata taxation

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AKA be careful what you wish for. I foresee incoming threads complaining that people in ZH city filled in a tax return to get tax back on their 3a investment, only to find their tax liability has increased.
I predict replies expressing amazement that people live off less than 120k in Zurich.
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