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Old 08.02.2009, 18:21
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Tax return?

Hi.
With my May 2008 salary in Switzerland I received a severance payment equalling three monthly salaries and paid twice higher tax than usual (Quellensteuer). Then I left Switzerland definitely and didn't earn any more money in 2008. Looking at my whole 2008 income, tax threshold used in May seems to be too high? Is there a chance for getting a tax return for 2008?
Basically I think the question comes down to the problem if taxes in Switzerland are calculated per year or per each month separately.
I need just an opinion, not a definitive answer.
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Old 08.02.2009, 22:07
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Re: Tax return?

Hi

I asked a similar question a couple of months ago, about bonuses/ 12th & 13th month pay in December, and the effect these had on tax:

First yr in CH - total income pro-rata for tax?

The conclusion seemed to be that tax at source was calculated monthly, using an assumption of multiplying whatever you earned that month by 12 (or 13), whereas tax calculated on a tax return is just done on the whole amount over the relevant tax year.

So on that basis, the tax percentage used in May would be too high. But on the other hand, the one used in Jan-April will be slightly too low (imagine the extra May money spread over 5 months rather than 1). So have a little play with the numbers and see if it's worth your while doing the paperwork!

Hope this helps; good luck with it.

kodokan

Last edited by kodokan; 08.02.2009 at 22:09. Reason: Went mad, and included some stuff about 2009 tax, which I've now taken out.
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Old 09.02.2009, 13:02
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Re: Tax return?

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So on that basis, the tax percentage used in May would be too high. But on the other hand, the one used in Jan-April will be slightly too low (imagine the extra May money spread over 5 months rather than 1).
Kodokan, thank you very much for the answer.
It encourages me to contact professional tax adviser (there is a chance of getting this refund).
One thing I don't get is why you say "spread over 5 months". With tax returns doesn't it work like "take your total yearly income and spread it over full 12 months"?
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Old 09.02.2009, 13:11
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Re: Tax return?

Your former employers HR department or a call to the tax office first might well save you paying for tax advice. Im not aware of the specific treatment given you wont have worked a whole year under quellensteuer, but it will be a common scenario. D
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Old 09.02.2009, 13:14
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Re: Tax return?

Dannyt986, good suggestion.
I will try to ask my former HR. I can't contact the tax office as I don't speak Swiss languages :-)
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Old 09.02.2009, 13:15
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Re: Tax return?

My understanding it that you are taxed on your monthly income, therefore, when you income was higher with the extra payment so was your tax. That being the case (sadly) unless you complete a tax return and have deductables, I can't see how you would qualify for a rebate.
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Old 09.02.2009, 13:21
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Re: Tax return?

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Kodokan, thank you very much for the answer.
It encourages me to contact professional tax adviser (there is a chance of getting this refund).
One thing I don't get is why you say "spread over 5 months". With tax returns doesn't it work like "take your total yearly income and spread it over full 12 months"?
You'd think, wouldn't you - that's certainly how it works in the UK (and you'd therefore pay almost no tax if you only worked for 5 months).

But apparently here it's pro-rated. So for example, if you earn 10,000 CHFs a month, then from Jan-May you've earned 50,000. But the tax people will then pro-rata it up to 120k, then charge you 5/12th of the tax due on 120k.

Gbn explained it all to me in the thread I linked above, as we moved here last March so I was asking the same thing. I'll see what actually happens in a few months when we fill in our first tax return!

kodokan
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Old 09.02.2009, 13:29
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Re: Tax return?

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But apparently here it's pro-rated. So for example, if you earn 10,000 CHFs a month, then from Jan-May you've earned 50,000. But the tax people will then pro-rata it up to 120k, then charge you 5/12th of the tax due on 120k.
Now it's clear. Thanks.
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Old 09.02.2009, 13:38
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Re: Tax return?

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I can't see how you would qualify for a rebate.
I don't know how it will work with the tax office, but based on what Kodokan wrote there is a chance.
My initial understanding was: imagine two people A and B.
A earned big 12*X in January and didn't work any more.
B earned X every 12 months.
A paid much higher tax than B, but they both earned the same per year.
And the tax is called "income tax". It would be fair to pay the same tax for the same income, but if it is really like in CH, I don't know.
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Old 09.02.2009, 13:46
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Re: Tax return?

Tax at source is calculated monthly period. There is no assumptions or multiplying it with 12 or 13.

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tax at source was calculated monthly, using an assumption of multiplying whatever you earned that month by 12 (or 13), whereas tax calculated on a tax return is just done on the whole amount over the relevant tax year.
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Old 09.02.2009, 13:46
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Re: Tax return?

It will also depend on which commune you lived in whilst in Switzerland - the tax at source is based on some sort of canton average, whereas we live in one of the communes with the lowest tax rates in Vaud so are hoping that will also work in our favour.

kodokan
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Old 09.02.2009, 13:51
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Re: Tax return?

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Tax at source is calculated monthly period. There is no assumptions or multiplying it with 12 or 13.
Sorry, yes, you're right, it's just on the monthly amount earned - but Vaud's 'at source' tax tables have columns for both the monthly figure and the corresponding yearly salary, and I always automatically think of it in terms of what the matching annual salary would be to try and compare it to the tax rates used for the annual tax return.

kodokan
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