Paying taxes in Switzerland is a process of sending information and receiving corrections throughout the financial year. The Swiss system is designed to give you a rough estimate of what taxes you may owe and will adjust the amount you pay as each year is revised. It can take up to three years before a year is finalised and the last payment / repayment is made. The first step in paying your Swiss taxes starts with your tax return.
Submitting your Swiss tax return as an individual
The tax system in Switzerland is divided into federal, regional and local forms of taxation. The official financial year in Switzerland begins in January and ends in December. At the beginning of the new year, Swiss citizens, freelancers, and holders of a C- residence permit (also known as a settlement permit) will be sent a form to fill in from your local cantonal tax office (Steueramt). This form will be used to inform the tax authorities how much tax you will need to pay for the year just gone. The deadline for submitting this form is March 31 in the year in which you receive the form (March 15 in Canton Bern and Vaud), although extensions can be granted under limited circumstances.
Couples submitting a Swiss tax return
If you are married or in a civil partnership, you and your partner are treated as a single taxpayer. This means that all forms of income through a work contract and salary, as well as expenses from you and your partner, must be collated into a single tax return. The Swiss tax system provides multiple benefits to those who are married, such as a reduced income tax.
What information do I need to submit my Swiss tax return?
Your Swiss tax return is a detailed collection of all the income and tax-deductible expenses that you have accumulated over the last year of living in Switzerland. In this form, you are expected to provide evidence for all avenues of income and tax-deductible expenses, including:
- All forms of income, such as salary income, profit on investments, pensions, royalties and income from wills or divorces
- Tax-deductible expenses
- Rent and all other forms of bills such as for utilities
- Details on any property purchased in Switzerland and abroad
- Details of any assets you own in Switzerland or abroad
Attached to the form, you must provide evidence of all income and expenses such as payslips, statements from your bank and property deeds. Those with greater amounts of wealth or multiple income streams must declare all of these in their tax return. It is highly recommended to seek the help of a tax advisor, who will be able to collate all of this information for you.
What if I have missed something accidentally in my Swiss tax return?
If you have missed something or not included something in your tax return, you must inform the canton tax office immediately. You can declare this to the tax authority in the capital of your canton or to your local tax office based in your council.
Failure to declare a source of income will result in a request for payment from the tax authorities when it is discovered. This payment will include the cumulative interest on the payment from when it should have been declared to when it was discovered. Note that it can take tax authorities years to discover a fault, and so this interest payment could be quite hefty.
Receiving your first Swiss tax bill
Once you have submitted your tax return to the cantonal and federal authorities, they will begin the process of reviewing your submission. In this process, they will analyse all forms of income and tax-deductible expenses that have been submitted in your application. The process is divided between federal taxes and cantonal and local taxes. Around two to six months after you have submitted your application, you will receive two tax bills: one tax bill from the government and one from your cantonal and local government.
Paying a federal Swiss tax bill
Once your tax return has been successfully filed, you will receive a bill from the federal government in Bern. This bill is an estimate of how much tax you will have to pay to cover the previous year of income and expenses. This estimation will be used as the benchmark for all further tax bills in the future and will only be changed if you become unemployed or are currently looking for a job in Switzerland. You can choose whether you want to pay the bill as a single lump sum or as three instalments due sequentially throughout the year.
Paying a Swiss cantonal and local tax bill
At a similar time to receiving your federal tax bill, you will also receive a single bill for both your county and local Gemeinde contributions. This bill will detail your presumed total income and estimate how much tax you should be paying. It will also show you where your contributions will be spent, such as on schools or emergency services. This bill is payable as a lump sum upfront or as three equal payments due at intervals throughout the year.
Paying more than your Swiss tax bill
You can deliberately pay more than what is requested by your Swiss tax bill, if you believe that the amount they will charge you is likely to change. This process is allowed if you have a rough estimate of what you are going to pay and want to pay as soon as possible, or for those who believe that their bills may increase as more information is discovered. These payments are taken into account when calculating your tax rebate.
Next steps after paying your tax bill in Switzerland
The process of paying your taxes in Switzerland does not end once you have submitted your payments. All levels of government are constantly reviewing financial data and adjusting the amount taxpayers pay as the year progresses. It is not uncommon for a final, definite amount of tax to be set three years after the financial year in question ends. During this time, you will receive regular updates from both authorities as to whether you are due or are required to pay more in taxes.
Swiss tax rebates
It is highly likely that the estimate used to pay your first tax bill will be changed by the tax authorities. This can result in the tax bill being increased or reduced by up to 20.000 Swiss francs once the calculations for the year are completed. These calculations are done every six to nine months. Overpayments of Swiss taxes are also factored into the rebate that you might receive.
Interest on tax rebates in Switzerland
If the state owes you a tax rebate, you are entitled to receive the compounded interest on the outstanding balance alongside the original sum, beginning when the first tax bill was received. Conversely, if it is found that you owe taxes, you are also liable to pay interest on the outstanding balance that you owe.
How to apply for a Swiss tax rebate
Every time the calculations for a tax year are revised, you will receive a letter detailing the changes made. This will include any payments you may have to pay, or any rebate that you might receive. This is done automatically and will continue until the final figures are determined.
Appealing a decision made by Swiss tax authorities
If you believe that the calculations made by the Swiss tax authorities are incorrect, you can launch an appeal. Appeals are made if you believe that expenses have not been adequately deducted or that they have made a mistake when calculating your income. Appeals are a lengthy, complicated process, so we recommend that you employ the services of an accountant in order to submit an appeal.
Paying taxes while on a Swiss L and B residence permit
If you are new to Switzerland and have received a Swiss L or B residence permit, your taxes are modified to be simpler. If you are a resident that has an L- or B- permit, your taxes are deducted at the source by your employer (Quellensteuer). This means that you do not have to submit a comprehensive tax return as detailed above. However, once you are granted a Swiss C-residence permit, you will have to go through the extended system.