A Swiss withholding tax is essentially an upfront tax deducted from employees' salaries each time they are processed. 📝💼
Generally, employees who aren't Swiss citizens or lack a C permit are subjected to Swiss withholding tax. Here's a glimpse of the different permit types in Switzerland:
The employer deducts the withholding tax from an employee's salary and remits it to the relevant withholding tax office in the employee's residing canton. If an employee is subject to withholding tax, the company must register them with the withholding tax office. 💼🏦
If your employees aren't Swiss nationals or lack a C permit, you must register them at the withholding tax office. It's essential to note that you need to register your employees with the canton they reside in, not where your company is headquartered. The office will provide you with a withholding tax number, used for identification purposes when submitting monthly withholding tax amounts. 📝🏢
Given that businesses submit withholding tax amounts, the withholding tax office allows a specific commission percentage to be deducted upon submission. This commission can be retained by the company. For instance, if you're permitted to deduct 2% from the withholding tax you submit, and you submit CHF 1,000 collected from your employees, you only have to pay CHF 980 and can keep CHF 20 for yourself. 📊💲
Each employee obliged to pay withholding tax is assigned a 5-digit code correlating to a specific tax rate. This code is dependent on several factors:
Based on these questions, we can determine someone's withholding tax code.
For example, if someone::
His/her withholding tax code would be ZHA1Y. If we break this down:
An employee's marital status shapes the third character of the withholding tax code. The codes could represent different statuses like single, married with one income earner, married with both earning, etc. Understanding these codes is crucial for accurate taxation. 💍💑
An employee’s marital status impacts the 3rd character in the withholding tax code. So in the example above, ZHA1Y. "A" represents single. You can see all the codes below.
The below only applies to employees working in the Canton of Ticino and living in Italy.
For employees living in France and working in the Cantons of BE, BS, BL, JU, NE, SO, VD and VS they receive a withholding tariff of SF.
An employee may opt not to pay a religion tax even if they are religious. It's a matter of personal choice for each employee. 🕌⛪
If an employee has more than 9 children, the relevant digit in the withholding tax code caps at 9. For instance, if an employee has 12 children, their withholding tax code would still feature 9 in the appropriate position. The canton tax office usually provides additional guidance for such cases. 👨👩👧👦👶
You can find the withholding tax tables at the federal government website for each canton. You simply need to find the canton and open the file to view the table. The tables can be found here - https://www.estv.admin.ch/estv/de/home/direkte-bundessteuer/dbst-quellensteuer/qst-tarife-kantone.html.
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