The most important changes in withholding tax
These changes are valid from the tax year 2021. For the tax year 2020, the old provisions still apply.
The following provisions apply:
A recalculation of the withholding tax can only be requested by the taxpayer in the circumstances described specifically below. The recalculation must be requested by 31st March of the year following the tax year:
- Incorrect determination of the gross salary subject to withholding tax
- Incorrect determination of the rate-determining income
- Incorrect tariff application
Additional deductions (e.g. Pillar 3a, etc.) can no longer be claimed within the scope of the recalculation of the withholding taxes. These must be claimed as part of a subsequent ordinary assessment.
1) If the gross earned income is at least CHF 120,000, a retrospective ordinary assessment will be carried out as before. The retrospective ordinary assessment shall be maintained until the end of the withholding tax liability.
2) If a person subject to withholding tax receives additional income not subject to withholding tax (e.g. self-employment, alimony/support contributions, orphan's and widow's pensions as well as income from movable or immovable assets) or has taxable assets (e.g. real estate), he or she was previously subject to the supplementary ordinary assessment. From 2021 onwards, persons liable to withholding tax will be subject to a compulsory subsequent ordinary assessment in these cases. The taxpayer must request the tax return forms from the competent tax authority by 31st March of the year following the tax year. The obligatory retrospective ordinary assessment shall be carried out until the end of the withholding tax liability.
3) If the gross earned income is lower than CHF 120,000, the taxpayer may apply for the ordinary assessment by 31st March of the year following the tax year. The application for assessment must be submitted in writing to the tax authority responsible for the assessment. The application must be signed; in the case of married couples, the application must be signed by both spouses. Once an application has been submitted in due form and time, it may not be withdrawn. In subsequent years, a subsequent ordinary assessment shall be carried out ex officio until the end of the withholding tax liability.
The subsequent ordinary assessment may lead to a higher or lower tax burden. Whether it makes sense to apply for a retrospective mandatory assessment should therefore be examined on a case-by-case basis, in particular depending on the respective municipality of residence.
If you need more information, then please see the Federal Tax Administration’s circular letter no. 45 or reach out to one of our Caveo advisors 😊.