If you work in Switzerland as a foreigner, you will have different tax obligations depending on your situation. The decisive factor for taxation is not only that the employee does not have Swiss citizenship, but also in which country his or her main tax residence is located. If this is abroad, different tax conditions apply than for a tax residence in popular Switzerland.
In addition to cross-border commuters and residents, there are also so-called international weekly residents. For the latter in particular, there are a number of special features from a tax perspective. In this article, we explain what distinguishes international weekly residents from employees with a different residence status, and what you need to pay attention to if you also fall into this category.
« In addition to cross-border commuters and residents, there are also so-called international weekly residents. For the latter in particular, there are a number of special features from a tax perspective. »
Resident, cross-border commuter, international weekly resident – what am I?
Residents are foreign nationals who stay in Switzerland without interruption for a longer period of time – with or without gainful employment. Their main residence is in Switzerland; they may also have a secondary residence in another country.
You are considered a resident if you work and live in Switzerland for more than 90 days per year and do not regularly return to a possible second residence in another country.
If this applies to you, you need a residence permit (B permit).
As a resident, you are subject to unlimited income tax liability in Switzerland and must also register with the health insurance company.
Cross-border commuters are foreign employees working in Switzerland who do not live in Switzerland but in a neighboring country (France, Germany, Austria or Italy) and commute to Switzerland only to work.
To work in Switzerland as a cross-border commuter, you need a cross-border commuter permit. This is obtained upon presentation of a Swiss employment contract and proof that you return daily to your place of residence abroad.
Cross-border commuters are liable to pay tax both in Switzerland and in the country where they are domiciled. To avoid double taxation, there are so-called double taxation agreements between two countries. Switzerland has such agreements with very many countries worldwide, including all EU/EFTA states.
For the taxation of a cross-border commuter, the following therefore applies: Income received in Switzerland is taxed in the country where the employee is domiciled.
International Weekly Resident
An international weekly resident is a person who is gainfully employed in Switzerland, who lives and works in Switzerland during the week (on working days), and returns to his or her residence abroad on weekends or during non-working days.
There are specific criteria that the employed person must meet in order to be considered an international weekly resident in Switzerland:
- Daily return to the main place of residence not possible (either not reasonable due to a very long commute (> 110km between home and work, or travel time longer than 1.5 hours each way), or not possible due to time, financial or professional reasons)
- weekly place of residence is also the place of work, or at least well connected to it by public transport
- Weekly resident must be registered at the weekly place of residence.
- The private center of life is at the place of residence outside Switzerland.
- A work permit for Switzerland must be available (usually B permit).
- Regular return to the main residence. In most cantons, this is the case if the taxpayer returns at least every second week.
Taxes for international weekly residents
If the criteria mentioned in the previous section are met, the international weekly resident is liable to withholding tax in Switzerland. This means that he or she pays tax in Switzerland on the income he earns in Switzerland. Additional income from the country of primary residence is then taxed there.
If there is a double taxation agreement between Switzerland and the employee’s home country, income already taxed in Switzerland is no longer taxable in the home country.
How does withholding tax work in Switzerland?
For employed persons with a B permit or for international weekly residents, the withholding tax obligation applies. In this case, the employer deducts the income tax from the monthly gross salary and transfers it to the tax authority.
This is in contrast to the regular tax principle in Switzerland, where employed persons receive their wages from their employer and then take care of paying the income tax themselves. Often, monthly or quarterly tax is paid in advance through provisional invoices. In this case, a tax return must be prepared each year to determine the exact tax burden for the tax year and possibly receive a refund or an additional payment.
Withholding tax rates
The tax rate for withholding tax varies from canton to canton and is subject to progression, i.e. the higher the income, the higher the tax rate. Depending on the circumstances of the taxpayer, a certain rate is used to determine the tax rate.
The following table provides an (incomplete) overview of the most important tariffs:
|Tariff A||Single person without children or persons in need of support in the household|
|Tariff B||Married couples with one income|
|Tariff C||Couples with double incomes|
|Tariff D||Secondary occupation|
|Tariff F||Cross-border commuters from Italy|
|Tariff H||Persons living alone with children or persons in need of support in the household|
|Tariff L-P||Cross-border commuters from Germany|
Employees in the duty for correctness of the data
The employee must take care to provide all relevant information to his employer so that the employer can pay the correct amount of withholding tax to the tax authority.
What costs can be deducted from tax as an international weekly resident?
Since you have limited tax liability in Switzerland as an international weekly resident, you are not required to file a tax return in Switzerland.
However, international weekly residents who meet the criterion of “quasi-residency” have the option of filing an application for subsequent ordinary assessment and thus submitting a tax return.
Quasi-residency is given if at least 90% of the worldwide income is subject to tax in Switzerland.
The following costs can then be deducted from tax as part of the tax return:
- Additional costs for meals during the weekly stay (flat-rate deductions)
- Rental costs at weekly residence (secondary residence)
- Travel expenses for regular return home to the main residence
- Pension contributions when paying into the occupational pension plan (2nd pillar) or tied pension plan (pillar 3a)
- Child deductions, if not already taken into account elsewhere in the withholding tax rates
The amount and type of costs that can be deducted from the withholding tax vary from canton to canton. Contact your cantonal tax authority to find out which costs are deductible in your canton.
Furthermore, a tax expert can help you recover the maximum possible of the withholding tax already paid for your individual circumstances. Want to learn more about your individual situation? Send a non-binding request and we will contact you promptly to discuss your individual situation.