{"id":13168,"date":"2024-02-22T02:16:09","date_gmt":"2024-02-22T00:16:09","guid":{"rendered":"https:\/\/www.nexova.ch\/?p=13168"},"modified":"2025-10-09T21:24:13","modified_gmt":"2025-10-09T19:24:13","slug":"what-entrepreneurs-need-to-know-about-withholding-tax-in-switzerland","status":"publish","type":"post","link":"https:\/\/www.nexova.ch\/en\/tax-and-legal\/what-entrepreneurs-need-to-know-about-withholding-tax-in-switzerland\/","title":{"rendered":"What entrepreneurs need to know about withholding tax in Switzerland"},"content":{"rendered":"\n<section class=\"wp-block-qweb-blog-section blog-section\"><div class=\"blog-section-wrap\"><h1 class=\"blog-section-title\">What entrepreneurs need to know about withholding tax in Switzerland<\/h1>\n<figure class=\"wp-block-image size-large resp\"><picture><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2024\/11\/shutterstock_699793144_2-edited-scaled.jpg\" media=\"(min-width: 981px)\"\/><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2024\/11\/shutterstock_699793144_2-edited-1-768x461.jpg\" media=\"(max-width: 980px)\"\/><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"\" class=\"lazyload wp-image-20099\"\/><\/picture><\/figure>\n\n\n\n<p>If you run a company in Switzerland and <strong>employ foreign workers who are not tax residents of Switzerland <\/strong>(cross-border commuters) or who do not have a <strong>permanent residence permit <\/strong>(C permit), you need to understand how withholding tax works. This tax is deducted <strong>directly from income<\/strong>. Individuals who are living in Switzerland but do not have a permanent residence permit, as well as those who are not resident in Switzerland for tax purposes, are subject to withholding tax. Our blog post explains the finer points and details of withholding tax in Switzerland.<\/p>\n<div class=\"cta-block\"><p class=\"blog-section-content\">Book a free initial consultation with our experts.<\/p><a class=\"cta-button\" href=\"https:\/\/www.nexova.ch\/en\/book-a-call\/\">Book a call<\/a><\/div><\/div><\/section>\n\n\n\n<section class=\"wp-block-qweb-blog-highlights blog-section highlights\"><div class=\"blog-section-wrap\"><div class=\"blog-highlights\"><h2 class=\"section-title\">Highlights<\/h2><ul class=\"higlight-lists\"><li class=\"higlight-list\"><span class=\"higlight-icon\"><\/span><span class=\"higlight-content\"><strong>Withholding tax<\/strong> is deducted directly from the <strong>salary<\/strong> of foreign employees <strong>without a C permit<\/strong><\/span><\/li><li class=\"higlight-list\"><span class=\"higlight-icon\"><\/span><span class=\"higlight-content\">It Includes <strong>all income<\/strong>, including <strong>basic salary<\/strong>, <strong>bonuses<\/strong> and <strong>benefits in kind<\/strong><\/span><\/li><li class=\"higlight-list\"><span class=\"higlight-icon\"><\/span><span class=\"higlight-content\"><strong>Tariffs<\/strong> are based on <strong>personal circumstances<\/strong>; <strong>cantonal differences<\/strong> also influence rates<\/span><\/li><li class=\"higlight-list\"><span class=\"higlight-icon\"><\/span><span class=\"higlight-content\"><strong>Withholding tax liability<\/strong> ends upon <strong>obtaining a C permit<\/strong> or <strong>marrying a Swiss national<\/strong><\/span><\/li><li class=\"higlight-list\"><span class=\"higlight-icon\"><\/span><span class=\"higlight-content\">Employers must <strong>calculate this tax<\/strong>, <strong>pay it<\/strong> and <strong>keep records<\/strong> for 10 years<\/span><\/li><\/ul><\/div><div class=\"blog-content-list\"><h2 class=\"section-title\">Content<\/h2><ul class=\"content-lists\"><li class=\"content-list\">What entrepreneurs need to know about withholding tax in Switzerland<\/li><li class=\"content-list\">Highlights &#038; content<\/li><li class=\"content-list\">What does withholding tax mean in simple terms?<\/li><li class=\"content-list\">Types of income subject to withholding tax<\/li><li class=\"content-list\">How do you know when withholding tax no longer applies to your employee?<\/li><li class=\"content-list\"><strong>What obligations does an employer have towards employees subject to withholding tax?<\/strong><\/li><li class=\"content-list\">Nexova AG: Your partner in accounting<\/li><\/ul><div class=\"more-button\"><span class=\"qicon q-arrow-down\"><\/span><\/div><\/div><\/div><\/section>\n\n\n\n<section class=\"wp-block-qweb-blog-section blog-section\"><div class=\"blog-section-wrap\"><h2 class=\"blog-section-title\">What does withholding tax mean in simple terms?<\/h2>\n<figure class=\"wp-block-image size-large resp\"><picture><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_1906674997_2-1024x684.jpg\" media=\"(min-width: 981px)\"\/><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_1906674997_2-1024x684.jpg\" media=\"(max-width: 980px)\"\/><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"\" class=\"lazyload wp-image-12643\"\/><\/picture><\/figure>\n\n\n\n<p>Withholding tax is a tax that is deducted directly from the income of foreign nationals who work in Switzerland and do not have a permanent residence permit (C permit). This includes foreign employees who live in Switzerland with a residence permit (B permit) or a short-term permit (L permit), as well as cross-border commuters and international weekly residents who work in Switzerland but live abroad.<\/p>\n\n\n\n<p>The employer deducts withholding tax from each paycheck of those who are subject to it. The employer then forwards the tax amount directly to the Swiss tax authorities.<\/p>\n\n\n\n<p>Collection via the employer is a secure and practical means of taxation. It ensures that foreign employees cannot simply return to their home country after their salary has been paid without first paying the taxes due in Switzerland.<\/p>\n\n\n\n<p>Withholding tax in Switzerland is <strong>specially designed for foreign employees without permanent residence status. <\/strong>This simplified approach integrates the tax directly into <a href=\"https:\/\/www.nexova.ch\/en\/outsource-payroll-accounting\/\" data-type=\"page\" data-id=\"3460\">payroll accounting<\/a>, eliminating the need for separate tax declarations.<\/p>\n<div class=\"cta-block\"><p class=\"blog-section-content\">Here you can easily calculate the costs of your accounting.<\/p><a class=\"cta-button\" href=\"https:\/\/www.nexova.ch\/en\/accounting\/\">Price calculator<\/a><\/div><\/div><\/section>\n\n\n\n<section class=\"wp-block-qweb-blog-section blog-section\"><div class=\"blog-section-wrap\"><h2 class=\"blog-section-title\">Types of income subject to withholding tax<\/h2>\n<figure class=\"wp-block-image size-large resp\"><picture><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_2208142803-1024x683.jpg\" media=\"(min-width: 981px)\"\/><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_2208142803-1024x683.jpg\" media=\"(max-width: 980px)\"\/><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"\" class=\"lazyload wp-image-12661\"\/><\/picture><\/figure>\n\n\n\n<p>The gross income of the employee subject to withholding tax is used to calculate the monthly withholding tax amount. Cash benefits and benefits in kind are added when calculating gross salary. These include, among other things:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Basic salary<\/li>\n\n\n\n<li>Overtime, bonuses, commissions<\/li>\n\n\n\n<li>Benefits in kind (car, apartment, etc.)<\/li>\n\n\n\n<li>Tips<\/li>\n\n\n\n<li>Royalties<\/li>\n<\/ul>\n\n\n\n<p>Any salary or monetary benefit arising directly or indirectly from the employment relationship is considered taxable income for withholding tax purposes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Determination of withholding tax rates<\/strong><\/h3>\n\n\n\n<p>Withholding tax is deducted from each paycheck according to a specific tax rate. The tax rate is based on each individual&#8217;s personal circumstances at the time of payment of taxable salary, bonuses or other employment income.<\/p>\n\n\n\n<p><strong>A change in personal circumstances may affect your tax situation.<\/strong><br><br>There are different tariff codes (A-U) with different rates. Lower withholding tax rates generally apply to people with several family members. Here is a list of the most common tariff groups:<br><br>Rate A: Single people without children or dependants in the same household<br>Rate B: Married couples with one income earner<br>Rate C: Married couples with two income earners<br>Rate E: Assessment using the simplified procedure<br>Rate G: Benefits paid directly by an insurance company<br>Rate H:<strong> <\/strong>Single people with children or dependants in the same household<br>Rate L &#8211; Q: People who commute from Germany to work in Switzerland<br><br>It is also important to note that the specific percentage rates for <strong>withholding tax vary from canton to canton<\/strong>. Therefore, your Canton of residence in Switzerland also plays a role in determining your withholding tax rate.<\/p>\n<div class=\"cta-block\"><p class=\"blog-section-content\">Book a free initial consultation with our experts.<\/p><a class=\"cta-button\" href=\"https:\/\/www.nexova.ch\/en\/book-a-call\/\">Book a call<\/a><\/div><\/div><\/section>\n\n\n\n<section class=\"wp-block-qweb-blog-section blog-section\"><div class=\"blog-section-wrap\"><h2 class=\"blog-section-title\">How do you know when withholding tax no longer applies to your employee?<\/h2>\n<figure class=\"wp-block-image size-large resp\"><picture><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/AdobeStock_7744795_2-1024x672.jpg\" media=\"(min-width: 981px)\"\/><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/AdobeStock_7744795_2-1024x672.jpg\" media=\"(max-width: 980px)\"\/><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"\" class=\"lazyload wp-image-12550\"\/><\/picture><\/figure>\n\n\n\n<p>The withholding tax obligation ends <strong>when a foreign employee receives a permanent residence permit <\/strong>(C permit) or marries a Swiss citizen. The employee then switches to the normal Swiss tax system, regularly fulfills their tax obligations, and submits a tax return at the end of the tax year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Tax declaration obligation for withholding tax: overview of exceptions<\/strong><\/h3>\n\n\n\n<p>In general, persons who are subject to withholding tax are exempt from filing an ordinary tax return; however, there are exceptions:<\/p>\n\n\n\n<p><strong>If the gross annual salary exceeds CHF 120,000, <\/strong>the employee must continue to pay withholding tax and submit a subsequent ordinary tax return at the end of the tax year.<\/p>\n\n\n\n<p>In such cases, the withholding tax payments are provisional and the final tax liability is determined by an assessment by the tax authorities according to the withholding tax rates. Depending on factors such as the municipality of residence and the individual\u2019s financial circumstances (debts, assets, deductions), the assessment may result in either an outstanding tax liability or a refund.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What about the voluntary retrospective ordinary assessment?<\/strong><\/h3>\n\n\n\n<p>Depending on the canton, the refund is either paid out to the taxpayer or carried forward to the next tax year. People who earn less than CHF 120,000 can also apply for a refund of overpaid withholding tax and claim various expenses retroactively for tax purposes. To do so, an application for a retrospective ordinary assessment must be submitted to the relevant cantonal tax authority.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Mandatory subsequent ordinary assessment without income exceeding CHF 120,000<\/strong><\/h3>\n\n\n\n<p><strong>If my gross income is less than CHF 120,000, when do I still need to apply for an ordinary assessment?<\/strong><\/p>\n\n\n\n<p>The application is required if you have income that is not subject to withholding tax above a certain threshold. This includes, among other things:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Income from self-employment,<\/li>\n\n\n\n<li>Rental income from Swiss properties,<\/li>\n\n\n\n<li>Alimony for minor children,<\/li>\n\n\n\n<li>Dividends from domestic and foreign shares,<\/li>\n\n\n\n<li>Pensions from AHV, IV or pension fund,<\/li>\n\n\n\n<li>Or, if you have high global assets.<\/li>\n<\/ul>\n\n\n\n<p>The mandatory ordinary assessment thresholds for income not subject to withholding tax and worldwide assets value vary from canton to canton. In contrast, the threshold of gross annual salary in excess of CHF 120,000 is stipulated by the Withholding Tax Ordinance and therefore applies nationwide.<\/p>\n<div class=\"cta-block\"><p class=\"blog-section-content\">Here you can easily calculate the costs of your accounting.<\/p><a class=\"cta-button\" href=\"https:\/\/www.nexova.ch\/en\/accounting\/\">Price calculator<\/a><\/div><\/div><\/section>\n\n\n\n<section class=\"wp-block-qweb-blog-section blog-section\"><div class=\"blog-section-wrap\"><h2 class=\"blog-section-title\"><strong>What obligations does an employer have towards employees subject to withholding tax?<\/strong><\/h2>\n<figure class=\"wp-block-image size-large resp\"><picture><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_540365830-1024x683.jpg\" media=\"(min-width: 981px)\"\/><source srcset=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2023\/12\/shutterstock_540365830-1024x683.jpg\" media=\"(max-width: 980px)\"\/><img decoding=\"async\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" alt=\"\" class=\"lazyload wp-image-12601\"\/><\/picture><\/figure>\n\n\n\n<p>Employers are assigned important tasks under the withholding tax system:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Calculate the withholding tax <\/strong>and deduct it monthly from the gross salaries of the employees concerned by applying the correct rate.<\/li>\n\n\n\n<li><strong>Register <\/strong>with the relevant cantonal tax administration where your company is based or where foreign employees live.<\/li>\n\n\n\n<li><strong>Transfer <\/strong>thewithheld amounts within the payment period of 30 days.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong><strong>Checklist for employers<\/strong><\/strong><\/h3>\n\n\n\n<p>Nexova Treuhand AG has compiled this simple checklist for the most important requirements:<\/p>\n\n\n\n<p>1. <strong>Determination of the employee&#8217;s withholding tax liability:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Check whether each employee meets the criteria for the deduction of withholding tax from their salary.<\/li>\n<\/ul>\n\n\n\n<p>2. <strong>Registration and notification:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Register with the cantonal tax authorities as a withholding tax office.<\/li>\n\n\n\n<li>Register new employees within 8 days.<\/li>\n\n\n\n<li>Determine the correct tax rate for each employee.<\/li>\n\n\n\n<li>Immediately notify of status changes of employees within 8 days.<\/li>\n<\/ul>\n\n\n\n<p>3. <strong>Monthly deduction:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use the tax guidelines to calculate the correct tax amount to be deducted.<\/li>\n\n\n\n<li>Deduct the withholding tax due directly from the employee&#8217;s taxable cash benefit upon payment\/transfer or claim it from other benefits, e.g. benefits in kind.<\/li>\n\n\n\n<li>Report the tax withheld at source transparently, both in each payslip and in item 12 of the salary statement.<\/li>\n<\/ul>\n\n\n\n<p>4. <strong>Withholding tax settlement and payment:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Report the withholding tax withheld to the relevant tax authorities within 30 days of your accounting period.<\/li>\n\n\n\n<li>The statement can be made electronically or in writing. It is also required if the gross salary is temporarily CHF 0.<\/li>\n\n\n\n<li>Transfer the invoiced withholding tax within this period.<\/li>\n<\/ul>\n\n\n\n<p>5. <strong>Record keeping and other duties:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Correct differences immediately (refund if too much withholding tax was withheld, claim the additional amount if too little withholding tax was withheld).<\/li>\n\n\n\n<li>Keep relevant documents, particularly monthly payslips, for 10 years and allow the tax authorities to inspect them on request.<\/li>\n\n\n\n<li>Submit certificates of residence and report gross payrolls for French (MB Q10) and German (MB Q12) cross-border commuters.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Incentives to comply with the regulations<\/strong><\/h3>\n\n\n\n<p>Employers receive the following commissions for their cooperation:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>2% of the withholding tax amount for electronic settlement via the cantonal logins or the standardized salary reporting procedure (ELM withholding tax)<\/li>\n\n\n\n<li>1% of the withholding tax for amounts settled on paper statements.<\/li>\n\n\n\n<li>1% of the withholding tax amount for lump-sum benefits from the occupational benefit scheme, with a maximum amount of CHF 50 per lump-sum benefit.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Payroll period for employers (example based on the Canton of Berne):<\/strong><\/h3>\n\n\n\n<p>The accounting period is determined by the total amount of withholding tax withheld per month:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The withholding tax amount is regularly over CHF 3,000 \u2192 Monthly statement<\/li>\n\n\n\n<li>The withholding tax amount is regularly less than CHF 3,000 \u2192 Quarterly settlement<\/li>\n\n\n\n<li>The withholding tax amount is regularly less than CHF 50 \u2192 Annual settlement<\/li>\n<\/ul>\n\n\n\n<p><strong>Remember<\/strong>: If you pay withholding tax via <strong>ELM<\/strong>, it must be done <strong>monthly<\/strong>.<\/p>\n<div class=\"cta-block\"><p class=\"blog-section-content\">Book a free initial consultation with our experts.<\/p><a class=\"cta-button\" href=\"https:\/\/www.nexova.ch\/en\/book-a-call\/\">Book a call<\/a><\/div><\/div><\/section>\n\n\n    <section class=\"wp-block-qweb-blog-conclusion blog-section conclusion\">\n        <div class=\"blog-section-wrap\">\n                            <h2 class=\"blog-section-title\">Nexova AG: Your partner in accounting<\/h2>\n            \n                            <figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1080\" height=\"605\" src=\"https:\/\/www.nexova.ch\/wp-content\/uploads\/2026\/02\/Team_Patch_P22.jpg-1900x1065.jpg\" class=\"nexova-team-img nexova-purple\" alt=\"Team_Patch_P22.jpg\" loading=\"lazy\" \/><\/figure>\n            \n            <div class=\"blog-section-content\">\n\n<p>As Swiss withholding tax rules continue to evolve, <strong>expert advice is crucial <\/strong>for companies to understand the new protocols and reporting requirements.<\/p>\n\n\n\n<p>Keeping up to date with the latest regulations <strong>costs companies valuable time and resources <\/strong>that they need for their core business. Let the experts at <strong>Nexova AG<\/strong> handle this administrative burden.<\/p>\n\n\n\n<p>Our team tracks regulatory changes in real time. We then translate complex rules into clear, practical steps that your company can take. <\/p>\n\n\n\n<p>Our partnership promises you timely expertise and the commitment of a qualified team to ensure effortless compliance with Swiss withholding tax.<\/p>\n\n\n\n<p>We are happy to provide detailed information about the comprehensive support we offer for your expanding accounting needs. <strong>Contact Nexova AG to find out <\/strong>more about how we can effectively design solutions together.<\/p>\n\n<\/div>\n        <\/div>\n    <\/section>\n    ","protected":false},"excerpt":{"rendered":"<p>If you run a company in Switzerland and employ foreign workers who are not tax residents of Switzerland (cross-border commuters) or who do not have a permanent residence permit (C permit), you need to understand how withholding tax works. This tax is deducted directly from income. Individuals who are living in Switzerland but do not have a permanent residence permit, as well as those who are not resident in Switzerland for tax purposes, are subject to withholding tax. Our blog post explains the finer points and details of withholding tax in Switzerland.<\/p>\n","protected":false},"author":9,"featured_media":12603,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","q_post_updated_date":"","footnotes":""},"categories":[30],"tags":[],"class_list":["post-13168","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-and-legal"],"_links":{"self":[{"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/posts\/13168","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/comments?post=13168"}],"version-history":[{"count":3,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/posts\/13168\/revisions"}],"predecessor-version":[{"id":30906,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/posts\/13168\/revisions\/30906"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/media\/12603"}],"wp:attachment":[{"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/media?parent=13168"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/categories?post=13168"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nexova.ch\/en\/wp-json\/wp\/v2\/tags?post=13168"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}