Tax Liability for Expats in Switzerland: Everything You Need to Know

Switzerland is one of the most popular destinations for international professionals. Attractive working conditions, high salaries, and excellent quality of life bring thousands of expats into the country each year. However, those who live and work in Switzerland also become taxable here. The rules are complex and depend on residence status, income, and place of residence. This guide covers everything you need to know about tax liability in Switzerland – from basic principles and withholding tax to double taxation agreements and special cases.

Tax Liability in Switzerland: The Basics

Unlimited Tax Liability

Expats who establish residence in Switzerland or stay for a certain period become subject to unlimited tax liability. This means they must declare not only their Swiss income but also worldwide income and assets in their Swiss tax return.

Staying Without Residence

Tax liability also arises without permanent residence if certain time limits are exceeded:

• More than 30 days with gainful employment
• More than 90 days without gainful employment

Even shorter stays can trigger tax liability if work is carried out in Switzerland.

Withholding Tax: The Standard Solution for Expats Without a C Permit

Most expats with a B or L residence permit pay withholding tax. The employer deducts it directly from the monthly salary and transfers it to the tax office. This usually fulfills most tax obligations.

Amount of Withholding Tax

Withholding tax depends on:

• Gross salary
• Marital status (single, married, with or without children)
• Canton of residence

Since each canton has its own rates, the tax burden varies significantly by place of residence.

Tax Return Despite Withholding Tax

In certain cases, expats must also file a tax return:

• Annual gross income above CHF 120,000 (so-called subsequent ordinary assessment, NOV)
• Income or assets in Switzerland not subject to payroll withholding (e.g. property, investment income)
• Voluntary filing to claim additional deductions (e.g. Pillar 3a, interest on debt, medical expenses)

Voluntary filing is often attractive for expats, as it can lead to substantial tax savings.

Double Taxation: Switzerland and the Home Country

Many expats worry about being taxed twice. This is where double taxation agreements (DTAs) come in: Switzerland has signed such agreements with more than 100 countries.

Basic Principles of DTAs

• Employment income is taxed where the work is performed – usually Switzerland.
• Real estate is taxed in the country where it is located.
• Investment income may be taxable in both countries, but Switzerland usually grants credit for foreign tax.

Example: Germany
A person working in Switzerland but living in Germany pays taxes primarily in Switzerland. In Germany, the income is only considered for determining the tax rate but is not taxed again.

Example: USA
U.S. citizens are taxable worldwide, even if resident in Switzerland. The DTA ensures that Swiss taxes paid are credited in the U.S.

Special Situations for Expats

Posted Employees

If an employee is seconded to Switzerland by a foreign company, special rules apply depending on the length of stay. In many cases, tax liability remains in the home country if the stay is less than 183 days per year and the salary is paid by the foreign employer.

Cross-Border Commuters

Those who work in Switzerland but live abroad are subject to special rules. In some cases, tax is levied in the country of residence, in others directly in Switzerland. Special agreements exist with France, Germany, and Italy.

Marriage or Family in Switzerland

Expats with families can benefit from child deductions, childcare costs, and the second-earner deduction. However, these must be claimed actively – they are not automatically included in withholding tax.

Practical Tips for Expats

• Keep records: salary statements, rental contracts, bank statements, and insurance documents should be carefully stored.
• Check withholding tax rate: ensure your employer applies the correct tariff – errors in marital status or number of children can lead to excessive deductions.
• Use deadline extensions: if you need to file a return, request an extension in time.
• Avoid double taxation: clarify early which income must also be reported in your home country.
• Seek advice: especially for complex situations (foreign property, stock options, international income), professional tax advice is highly recommended.

Conclusion: Tax Liability for Expats Is Complex but Manageable

Expats in Switzerland are subject to different rules depending on permit type, income, and residence status. For many, withholding tax is the standard solution. However, those with higher incomes or who want to claim additional deductions must file a tax return. Double taxation agreements protect against being taxed twice. With good organization and reliable information, expats can manage their tax obligations efficiently – and often optimize their tax burden at the same time.