Withholding tax
Withholding tax for foreign nationals
Foreign nationals resident in Switzerland and cross-border commuters have their income taxed at source. Tax is deducted directly from the salary on a monthly basis. ETH Zurich as the employer transfers the tax to the relevant tax authority in Switzerland.
Foreign nationals who hold a C permit or whose partner is a Swiss national or has a C permit are not subject to withholding tax and are instead taxed under the statutory assessment procedure.
Withholding tax is levied at a flat rate. The deductions taken into account in the withholding tax rates are generally final and – except in the case of a retrospective ordinary assessment – cannot be changed in favour of or to the disadvantage of the person subject to the tax.
The level of withholding tax deduction is regulated by the applicable rate. The applicable rate is based on the personal circumstances of the person subject to withholding tax at the time of the payment, transfer, credit or maturity of the taxable amount. Changes that require a reclassification (e.g. marriage, divorce, separation, birth of a child, commencement/cessation of gainful employment by the taxpayer’s spouse or registered partner, change of religious affiliation) are taken into consideration in the withholding tax from the month following the change. Rates vary between cantons.
Child tax deduction
The child tax deduction is based on the number of minor children or children still in initial vocational or school education for whose maintenance the employee is primarily responsible. The employer is required to grant the child tax deduction in the applicable rate, subject to the following conditions:
- For minor children who are in the parental care or legal care of the person subject to withholding tax, according to the birth certificate, allowance decision, adoption certificate or family record document. The birth or adoption of children must be registered in ETHIS with a birth certificate or adoption documents.
- For children of full age in initial education for whose maintenance the person subject to withholding tax is primarily responsible. Evidence of the initial education must be provided (e.g. enrolment confirmation, apprenticeship contract, allowance decision).
- Single parents must also provide evidence that their child is part of the same household, according to the certificate of tax residence of the municipality of residence or the residence permit. It is assumed that the parent with whom an adult child lives has main responsibility for the child’s maintenance.
Church tax
Regardless of their place of residence, employees must pay a church tax, which is based on their denomination and charged using the withholding tax procedure. Church tax liability applies to the three national denominations of Switzerland: Roman Catholic, Christian Catholic and Protestant Reformed. The rate designations use an additional letter to indicate a church tax liability:
AY Rate A with church tax liability (Y = Yes)
AN Rate A without church tax liability (N = No)
If an employee leaves the church, the employer needs official confirmation from the church in question so that no further deductions are made.
Checking the monthly salary statement
All employees receive a monthly remuneration statement, which provides a detailed breakdown of their salary for a defined period and information on the payment made. The withholding tax rate is also shown on the statement and employees should check this regularly. If the rate does not reflect an employee’s individual circumstances, personal data can be submitted via the ETHIS web portal. More information can be found in the next section under “Duty to report changes in personal circumstances”.
Personal circumstances have a direct effect on the Swiss withholding tax rate and thus influence the amount of tax payable. For this reason, all employees subject to withholding tax are required to immediately provide ETH Zurich with the following information via ETHIS:
- Commencement or cessation of other gainful employment; income from other employers, from self-employment or from any secondary employment
- Receipt of compensatory income (daily allowance paid by an insurer, pension, etc.) > see section “Duty to report additional employment and compensatory income outside ETH Zurich”
- Marital status/change of marital status
- Change of home address in Switzerland and abroad
- Commencement or cessation of gainful employment by spouse
- Receipt of compensatory income by spouse (unemployment benefits, pension, maintenance, etc.)
- Number of children/adopted children/birth of a child
- Receipt of C permit by spouse
- Religious denomination
Commencement or cessation of gainful employment by spouse/receipt of compensatory income
If an employee’s partner takes up/leaves gainful employment or receives any compensatory income (unemployment benefits, pension, maintenance, etc.), the employee is required to report this in ETHIS.
This applies regardless of whether the partner receives the income in Switzerland or abroad. The income amount does not have to be disclosed to the employer.
Receipt of C permit / naturalisation
If an employee or their partner receives a C permit or Swiss citizenship, this should be reported immediately via ETHIS. Receiving the C permit or naturalisation releases persons subject to withholding tax from this liability from the following month. They will be taxed under the ordinary tax procedure in their place of residence.
More information on this subject can be found in the BDO presentation protected page Overview of the Swiss tax system on pages 13-14.
According to the Swiss Withholding Tax Ordinance, all income from all employers and from compensatory income must be disclosed and added together to determine the rate of withholding tax. When determining the applicable tariff code, it is not relevant whether the income was earned in Switzerland or abroad.
The calculation is based on external page Circular No. 45 of the Federal Tax Administration (FTA).
In addition to income from ETH Zurich, the following income or compensatory income is relevant:
- Income from other employers, self-employment or secondary employment
- Compensatory income (e.g. daily allowance paid by an insurer)
All employees subject to withholding tax are therefore legally required to report any additional income to ETH Zurich on an ongoing basis after their starting date. This means, for example, that where someone has several jobs with different employers, an income extrapolation must be performed to arrive at a total income figure.
The necessary details must be provided via ETHIS > Pers?nlich > Anstellung & Lohn > Withholding tax. Please also check the existing data and any partner data in ETHIS.
Procedure for irregular additional income outside ETH Zurich
Irregular additional income should be recorded in ETHIS after receipt of payment as follows. A retrospective extrapolation can also be performed:
- ETHIS > Pers?nlich > Anstellung & Lohn > Withholding tax > Further income
- Record information about additional employers or self-employment
- Record the value in the relevant payment month with “Valid from / Valid to”, e.g. for March 2023 enter 01.03.2023 – 31.03.2023
More information can be found in the BDO presentation protected page Overview of the Swiss tax system on pages 13-14.
Withholding tax must in principle be paid on all gross income from employers as well as compensatory income. As an employer, ETH Zurich must know the employee’s total gross income in order to determine the correct rate.
The income, and thus the applicable tax rate, is determined by calculating the actual total gross income or the effective total employment level.
Taxation of multiple jobs with different employers
Employees are required to notify all Swiss employers (e.g. University of Zurich, EPFL, ASVZ, etc.) if they undertake other employment or self-employment activities or whether they are in receipt of compensatory income. This applies regardless of whether the additional income is earned in Switzerland or abroad. It is also not relevant whether foreign income is taxed in another country.
If an employee works for more than one Swiss employer at the same time, the employer must calculate the income determining the tax rate for each individual employment relationship.
Joining / leaving during a month
If an employment relationship starts or ends in the course of a month, the gross income earned in the month of joining/leaving is extrapolated to 30 calendar days to calculate the income determining the tax rate.
Calculating the income determining the tax rate with 13th month salary
The 13th month salary is added to other benefits in the month of payment, resulting in a higher rate being determined and therefore a higher deduction of withholding tax.
Scholarships and financial contributions from public or private institutions received by employees subject to withholding tax are not taxable at source by ETH Zurich. The tax classification of scholarships and financial contributions must be assessed on a case-by-case basis by the responsible cantonal tax authority.
Employees subject to withholding tax are therefore obliged to declare these contributions to the relevant tax authority. Generally, this is done when registering with the relevant municipality of residence in Switzerland.
Please note the following points:
- No action is required for scholarships or financial contributions that have already been declared to the tax authority in the municipality of residence. In the City of Zurich, for example, the form “Clarification of tax liability/living costs” is sent by the external page Tax Office of the City of Zurich shortly after submission of an application for a residence permit, and must be returned by post.
- The person subject to withholding tax must make any subsequent declaration of scholarships/financial contributions directly to the relevant municipality of residence (or to the Tax Office of the City of Zurich). Certification of the benefits received from the scholarship provider are required for the declaration.
- Employees who are still resident outside Switzerland are obliged to declare the scholarship/financial contribution in their country of residence.
The responsible tax authority will examine the individual tax situation and assess whether the person is required to complete an ordinary assessment. See also the external page Information sheet for employees liable to tax at source in the canton of Zurich (point 13.1).
More information can be found in the BDO presentation protected page Overview of the Swiss tax system on pages 15-18.
Persons subject to withholding tax who are resident in Switzerland and who are not required to complete a retrospective ordinary assessment can apply for a retrospective ordinary assessment (ROA). A request for a retrospective ordinary assessment must be submitted to the tax office of the canton of residence by 31 March of the following year.
If the requirements for a retrospective ordinary assessment on request are met, a retrospective ordinary assessment will be conducted in subsequent years until the end of the withholding tax obligation. The withholding tax is credited to the ordinary taxes without interest.
A request can be made:
- to be treated in the same way as persons subject to the ordinary assessment procedure, or
- to apply for a refund of withholding tax, or
- to retroactively claim a tax reduction for deductible expenses that are taken into account only at a flat rate or not at all in the withholding tax rate.
This may include the following expenses in particular (not exhaustive, see external page Canton of Zurich information sheet):
- Education and retraining costs
- Contributions to pillar 3a (additional private pension)
- Contributions to 2nd pillar (pension fund)
- Childcare costs
- Maintenance and support payments
- Costs related to illness and disability
- Interest on debt
- Donations
More information can be found in the BDO presentation protected page Overview of the Swiss tax system on pages 19-29.
If a person subject to withholding tax is resident in Switzerland and meets the following conditions, they are required to complete a retrospective ordinary assessment:
- Gross annual income of at least CHF 120,000
- Additional private income that is not subject to Swiss withholding tax and exceeds the cantonal limit (canton of Zurich thresholds for 2023: worldwide assets of at least CHF 80,000 for single person/CHF 160,000 for persons who are married or in a registered partnership; income of at least CHF 3,000 from securities, rental income, etc.), see external page Canton of Zurich information sheet
- These amounts are for the canton of Zurich; each canton sets its own threshold and thus the amounts vary. Please seek information directly from your canton of residence.
Persons who are not subject to ordinary assessment, but who will reach the gross annual income by 31 December in the tax year will be requested by the tax office to submit a tax return.
More information can be found in the BDO presentation protected page Overview of the Swiss tax system on pages 19–29
Tax residence, limited and unlimited liability for withholding tax
The BDO presentation gives more formation on this subject protected page Overview of the Swiss tax system on pages 5–12.
Civil servant status in cross-border employment
The BDO presentation gives more information on this subject protected page Overview of the Swiss tax system on page 30.
Individual, fee-based tax advice from BDO
BDO is one of the world’s largest business advisory firms and offers the following services linked to personal taxes:
- Preparation of personal Swiss tax returns
- Examination of tax optimisation opportunities
- Determination of the exact Swiss tax status and review of tax rules taking into account the relevant double taxation treaties for cross-border situations
- Review of withholding tax return
- Advice on cross-border social security topics
For individual, fee-based tax advice, please contact the tax experts at external page BDO:
Janine Bienz, Senior Tax Manager | +41 44 444 36 37 |
Dejan Milosevic, Tax Manager | +41 44 444 58 70 |
Please note:
This is not a public information point on the subject of taxes. The information on this page is meant for information purposes for employees and students of ETH Zurich. No responsibility is taken for the correctness of this information. The rules and regulations may have changed in the meantime. For legally binding information please contact the responsible authority.