Expatriate tax ebook - Switzerland

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
The employer is required to apply for a residency and work permit prior to the employee taking up employment in Switzerland. It is therefore important that the expatriate's employment contract and benefit package is structured in a tax efficient manner before filing the application.

Employment visas

• Employment of non EU/EFTA citizens
  Switzerland imposes very strict regulations on foreign workers. Each year, the federal authorities review the numbers of work permits that may be issued. In particular, the applicant employer must demonstrate that in spite of all his efforts he was unable to find a suitable person on the Swiss or EU/EFTA labour market.
  
  However these conditions are waived for the executives or qualified specialists of internationally operating firms within the scope of an intercompany transfer and for executives or highly qualified specialists who are indispensable for important research projects, or essential for the fulfillment of extraordinary assignments.
  
  
• Employment of EU/EFTA citizens
  One of the numerous agreements signed between Switzerland and EU is the Agreement on free movement of persons (including recognition of professional diplomas), entered into force on 1st June 2002. Similar rules are applicable since the same date with Iceland, Norway, Liechtenstein (EFTA countries).
  
  As from 1st June 2004, the priority of Swiss employees and the check on wage and working conditions were lifted and, as from 1st June 2007, the quota system is abolished, as regards the 15 western EU and EFTA countries, as well as Malta and Cyprus. For the citizens of these countries, the permit is delivered upon mere presentation of the employment contract.
  
  For the citizens of eastern EU countries, certain restrictions still apply, until 30th April 2011 at the latest (priority of local and western EU/EFTA labour market, check on compliance with working conditions, quotas). Please note that free movement for Bulgarian and Romanian citizens has become effective as of 1 June 2009. However, certain restrictions may continue until 2016.  

Tax year
The Swiss tax year runs from 1 January to 31 December.

Tax returns and compliance
Swiss taxpayers as well as foreign holders of a permanent residency permit (C permit granted after five or ten years of residence depending upon the nationality) are required to file an annual tax return. For foreign holders of a B permit (one year for non EU/EFTA citizens, five years for EU/EFTA citizens) or a L permit (less than one year), the tax on salary is collected at source and paid by the employer (see below).

The personal tax return should normally be filed as of 31st March following the end of the tax year concerned.

Income tax rates
Swiss tax residents are subject to federal, cantonal and communal taxes. The taxable income is subject to a progressive scale. The tax rate is determined on the basis of the worldwide income and net wealth.

For a single person with no children, the global rate calculated on a gross income of CHF 150’000 could vary between 13 and 25%, depending on the place of residence.

For a married person with no children, the global rate calculated on a gross income of CHF 150’000 could vary between 11 and 20%, depending on the place of residence.

Sample income tax calculation

Information about Switzerland: