The annual tax return is a chore for many people. Different regulations apply to the tax return in the individual cantons.
In principle, everyone who has reached the age of 18 and has their own income is required to file a tax return.
You will receive a request for your tax return each year from the cantonal tax administration responsible for you. If you would like to make your work easier, you can consult a tax advisor or use a tax program recognized in your canton.
Who must file a tax return?
A tax return must be filed in Switzerland by all citizens who are liable to pay tax. You will receive a written request from your responsible cantonal tax administration to submit a tax return. Persons over the age of 18 are subject to self-employment tax. From the year when a person comes of age, this person is obliged to submit a tax return. The tax return is always filed retroactively for the previous year. For example, if you turn 18 in 2022, you must file a tax return retroactively for 2022.
Tax return for married couples in Switzerland
Unlike in various other countries, there is no spousal splitting in Switzerland. For married couples in Switzerland, joint assessment applies. Married couples must therefore always file a joint tax return. The joint tax return is due for the first time for the year in which they were married. A joint tax return must also be filed for registered partnerships. It is also necessary for the first time for the year in which was married. In the event of divorce or separation, a separate tax return is due for the first time for the year in which it occurred. If a spouse or civil partner dies, the surviving partner is solely liable for tax from the date of death.
Unlimited and limited tax liability in Switzerland
In Switzerland, a distinction is made between unlimited and limited tax liability. You are subject to unlimited tax liability if you are resident and work in Switzerland for tax purposes. Unlimited tax liability also applies to diplomats abroad if they do not pay taxes abroad.
For individuals who earn income in Switzerland but are not resident for tax purposes, limited tax liability applies. Relevant for the limited tax liability in Switzerland is the economic affiliation. There are several ways to do this:
- Persons who earn income from gainful employment in Switzerland but are not cross-border commuters
- Owners, partners or beneficiaries of business operations in Switzerland
- Members of the management or administration of legal entities in Switzerland
- natural persons who maintain permanent establishments in Switzerland
- Owners of real estate in Switzerland and persons who have rights of use to real estate in Switzerland and earn income therefrom
- Creditors and usufructuaries of claims secured by real property rights or rights in rem on real property in Switzerland
- Recipients of pensions, retirement pensions or other benefits based on a previous public employment relationship in Switzerland
- Recipients of benefits from occupational pension schemes under private law in Switzerland
What does the limited income tax liability mean?
A limited tax liability in Switzerland means that the federal government levies an income tax on individuals as a direct federal tax. In addition, there are cantonal and municipal taxes. The tax burden in Switzerland can vary greatly depending on the canton.
Different tax rates apply in the cantons and municipalities. Differences also exist in the cantons and municipalities with regard to the determination of taxable income. Double taxation agreements with various countries restrict the right of taxation in international situations. According to the double taxation treaty, the center of vital interests is decisive for residency and basic taxation. For each type of income, the double taxation agreements regulate individually which country has the right of taxation.
No obligation to file a tax return with ID B
If you live in Switzerland and have a B permit, you are not required to file a tax return. Only those who have the C permit, the residence permit, are required to file a tax return. Permit C is the residence permit with gainful employment and differs from Permit B, which is only a residence permit. Again, other tax regulations apply to cross-border commuters. You have the G card.
Anyone who lives abroad, for example in Germany or Italy, and would like to live in Switzerland in the future because they earn their income there, must apply for a residence permit from the relevant cantonal authority.
Only those who have an employment contract in Switzerland of at least 12 months or for an indefinite period of time will receive the B permit. Residence in Switzerland must be proven by a regular rental contract.
Only those who hold the B permit and have an annual income of more than CHF 120,000 are required to file a tax return. All those who have a lower annual income are subject only to withholding tax, which is deducted directly from the salary. The amount depends on the salary and the canton of residence.
Tax return in Switzerland for cross-border commuters
Cross-border commuters are those who live in a neighboring country near the border with Switzerland and work in Switzerland. They travel daily from their foreign place of residence across the border to work in Switzerland. The right of taxation is divided between the country of residence and the country of activity. Switzerland is the state of activity and may withhold up to 4.5 percent tax from the gross salary. The tax paid in the State of activity is credited by the State of residence against the income tax payable on the employment income. The cross-border commuter regulation does not apply if the employee does not return to his residence abroad for more than 60 days within a calendar year. Cross-border commuters do not have to file a tax return in Switzerland, but in their country of residence.
Request to submit a tax return
Everyone who is obliged to file a tax return in Switzerland always receives a request at the beginning of the following year from the competent cantonal tax administration together with the required documents. The tax return must be filed retroactively for the previous year.
Different deadlines apply to the levy depending on the canton. Often, the delivery must be made already by the end of April. You can file your tax return online. Depending on the canton, different programs are recognized for the electronic tax return. If you have previously submitted your tax return in paper form, it is possible to switch to the electronic tax return. Once the tax return has been filed electronically, it must always be filed electronically. Receipts can also be scanned and submitted electronically along with the tax return.