What does retroactive ordinary tax assessment mean?
Retroactive ordinary tax assessment required by law
If the person liable to tax at source is resident in the canton, he/she is subject to retroactive ordinary tax assessment required by law if the following conditions apply:
Your gross annual income amounts to at least CHF 120’000:
- If a partial year tax liability applies due to moving to Switzerland from abroad, the annualised gross income taxed at source is applicable. Irregular benefits are taken into account without annualisation.
- If the person liable to tax at source is married, both spouses are assessed retroactively provided that one of the two spouses reaches the applicable income limit
- Until the liability to pay tax at source ends, retroactive ordinary tax assessments are conducted throughout the following years, even if the income temporarily or permanently falls below the applicable income limit of CHF 120‘000
- The tax deducted at source is credited to the ordinary taxes free of interest
You wish to claim back withholding tax on income from movable assets. Or your taxable income which is not subject to taxation at source (e.g. income from securities or real estate) amounts to at least CHF 3’000 or/and the taxable assets amount to at least CHF 80’000 (for individuals), respectively to CHF 160’000 (for jointly taxable persons):
- Under these circumstances, persons liable to tax at source are obligated to ask the cantonal tax office, tax at source department, to send them the tax return forms for a retroactive ordinary tax assessment. They must do so by the end of March of the following year.
- Until the liability to pay tax at source ends, retroactive ordinary tax assessments are conducted throughout the following years, even if the income temporarily or permanently falls below the applicable income limit mentioned above.
- The tax deducted at source is credited to the ordinary taxes free of interest
- The cantonal tax office may conduct such retroactive ordinary tax assessments by law.
Retroactive ordinary tax assessment upon request by a person liable to tax at source with domicile in Switzerland
Persons liable to tax at source resident in Switzerland, who are not assessed retroactively as required by law can submit a request for retroactive ordinary tax assessment on a voluntary basis:
- This request can be submitted without stating specific reasons
- Such a request is particularly required
– to obtain equal treatment with persons who are subject to the ordinary tax assessment, or
– to apply for a refund of the tax on income from movable assets, provided that the conditions set forth in section above are not met, or
– to retroactively claim tax reduction for deductible expenses which are only taken into account as a lump sum or not at all in the tax at source tariff.
This may involve the following expenses in particular:
Ø actual professional expenses
Ø advanced professional training expenses
Ø contributions to employer-sponsored and private pension plans (2. Säule / Säule 3a)
Ø expenses for childcare by third parties
Ø alimony and support payments
Ø illness and disability related expenses
Ø interest on debt
Ø donations
Deadline:
- At the latest by the end of March of the following year
- In case of failure to meet the deadline, the request will not be considered
Form:
- The request must be submitted electronically to the cantonal tax office, tax at source department
- If the request is not submitted in due form, a period of 10 days will be granted for rectification. In case of failure to meet the extended deadline, the request will not be considered
Consequences:
A request submitted in due form and time cannot be withdrawn
If the requirements for a retroactive ordinary tax assessment upon request are met, retroactive ordinary tax assessments are conducted by law throughout the following years until the liability to pay tax at source ends. The tax deducted at source is credited to the ordinary taxes free of interest
Retroactive ordinary tax assessment upon request by a person liable to tax at source with residency abroad
Persons liable to tax at source resident abroad can submit a request for retroactive ordinary tax assessment. Such a request is particularly required to claim deductible expenses which are only taken into account as a lump sum or not at all in the tax tariff (see section above.).
You must provide the evidence that:
- at least 90% of the worldwide family income is taxed in Switzerland (quasi[1]domicile), or
- the situation is comparable to that of a person resident in Switzerland, or
- there are deductions which, in line with the double taxation treaty, the country of employment has to bear
Deadline:
- At the latest by the end of March of the following year
- In case of failure to meet the deadline, the request will not be considered
Form:
- The request must be submitted electronically to the cantonal tax office, tax at source department
- A Swiss mailing address must be provided
- If the request is not submitted in due form, a period of 10 days will be granted for rectification. In case of failure to meet the extended deadline the request will not be considered
Consequences:
- A request submitted in due form and time cannot be withdrawn
- The tax deducted at source is credited to the ordinary taxes free of interest
- The request has to be resubmitted every year
Change from taxation at source to ordinary tax assessment
A person previously taxed at source and resident in Switzerland is assessed as per the ordinary tax assessment for the entire tax period if:
- that person is granted the C permit
- that person marries someone holding a C permit or a Swiss citizen
The tax previously deducted at source is no longer owed as of the month following the granting of the C permit or marriage. The tax deducted at source is credited to the ordinary
taxes free of interest
Change from ordinary tax assessment to taxation at source
On the other hand, divorce and factual or legal separation from a Swiss national or a spouse holding the C permit results in the spouse, who was originally liable to tax at source, being taxed at source again as per the beginning of the following month. Until the liability to pay tax at source ends, a retroactive ordinary tax assessment is conducted. Any advance payments already made and taxes deducted at source will be credited. If the spouse with Swiss citizenship or C permit dies, the surviving spouse, who is in principle liable to tax at source, becomes subject to taxation at source again. In the period of less than a year until the death date, the spouses are assessed jointly under the ordinary tax assessment. As of the day after the death date, the surviving spouse is assessed under retroactive ordinary tax assessment. Retroactive ordinary tax assessment is conducted until the liability to pay tax at source ends.