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Old 31.03.2021, 00:41
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Tax - withheld calculation for new expats with rellocation allowance?

Hi all,

I just registered as I'm worried that I have messed up.

I have been reading this forum since my move to Switzerland was confirmed back in August last year. I hope to make a proper introduction once I'm done with my panick attack, especially that I messed up on the dates (thought it was end of May!!)!

Officially I have started my new job in Zurich on 1st of November 2020. I have been also granted relocation allowance in form of a lump sum added to my first payroll.

Now I have trouble understanding how few details work in Switzerland.
- My job contract is less than CHF 120k annually,
- I have only worked and been paid for 2 months in 2020,
- My one time rellocation allowance would bring me over CHF 120k, however, with only 2 months my actual annual income in Switzerland for 2020 is just slightly above 30k.


I have unfortunately only realised to double check few details yesterday and I have been spending a lot of my time trying to deal with this issue googling and translating documents. Since I haven't received tax declaration by post, I have assumed that my 30k annual income was too immaterial for standard procedure. Is that right?

My next question is regarding withheld tax calculation.
Each month my employer calculated tax based on current month as if it would be my anual average (so in November I have paid over 20% tax rate). The total was 6k for 2 months of 2020, about 20% of my total income for 2020.
is that correct? I thought this would be more like:
- Either pay tax based on actual annual income (30k)
- or based on the contractual annual salary adjusted for months working (120k tax divided by 12 and multiplied by 2)
- but instead I was taxed on a one month being unusual and implying almost 300k annual income and following month on basis less than 120k

I'm so sorry asking these stupid questions so late! Tomorrow I will try to call tax office but I think I'm doomed now. I would dreally appreciate some help with it

Sincerly
Damik
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Old 31.03.2021, 10:48
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Re: Tax - withheld calculation for new expats with rellocation allowance?

The way they calculated your total earnings for the tax rate is correct - they assume that your monthly salary was consistent for the full year.

If the case is borderline I would work out roughly what your tax payment would be vs what you actually paid vs the hassle of doing a tax return.

When you phone the tax office they probably have some flexibility, so knowing what you want to do is a good starting point.

Tax at source includes some standard assumptions which can be better than the real situation, and I would guess any tax saving for two months would be pretty small. Personally I'd avoid doing the return if possible.
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Old 31.03.2021, 11:27
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Re: Tax - withheld calculation for new expats with rellocation allowance?

Tax rate for partial year is extrapolated to the full year.

Tom
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Old 31.03.2021, 19:41
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Re: Tax - withheld calculation for new expats with rellocation allowance?

Withheld tax should be calculated on the monthly gross.
You should be able to check on the zh website, just find out your tarif code and then the tarif table for your code.

https://www.zh.ch/de/steuern-finanze...lensteuer.html

https://www.zh.ch/content/dam/zhweb/...rfrei_2014.pdf

It's my first year too and I'm also a little above 120k due to relocation benefit (otherwise I would be below).
I've been told that I will receive the tax form by mail but it's not yet arrived.. anyway until you receive something in your mailbox you can forget about it (I guess / hope).
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Old 31.03.2021, 19:44
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Re: Tax - withheld calculation for new expats with rellocation allowance?

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Withheld tax should be calculated on the monthly gross.

I've been told that I will receive the tax form by mail but it's not yet arrived.. anyway until you receive something in your mailbox you can forget about it (I guess / hope).
No it is not. Not in the first year.
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Old 31.03.2021, 19:49
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Re: Tax - withheld calculation for new expats with rellocation allowance?

Here you're effectively taxed by the month when you're on tax at source.

When you receive a relocation bonus it's treated as salary and you're taxed on it as if that was your annual salary. It's usually worth asking the company to pay the amount over a few months or to actually pay some of your expenses but I guess they factor this in when they give it to you and wouldn't want the hassle.
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Old 01.04.2021, 09:11
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Re: Tax - withheld calculation for new expats with rellocation allowance?

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Here you're effectively taxed by the month when you're on tax at source.

When you receive a relocation bonus it's treated as salary and you're taxed on it as if that was your annual salary. It's usually worth asking the company to pay the amount over a few months or to actually pay some of your expenses but I guess they factor this in when they give it to you and wouldn't want the hassle.
Even if the company pays your expenses directly these are counted as benefits and taxed. For example if a company rents a temporary accomodation for you etc.

What is worth doing is asking the company to pay tax on the relo allowance, so called "grossing up".
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