As a foreigner relocating to Switzerland, there are several new things you will have to learn and apply in order to be in compliance with Swiss laws. One such thing is the Swiss tax system, which is essential for you to understand in order to be able to pay your taxes, as any normal Swiss resident would. As long as you are working and residing in Switzerland, you are mandated to pay tax.

The Swiss tax system can be quite complex for a foreigner to understand owing to the federalist structure of government. There are 26 cantons in the country, and more than 2200 municipalities, and each of these structures levy their own taxes, set their own rates, and have their own tax collection systems.

However, this tax system will not be too difficult to navigate, as long as you keep the following rules in mind.

  • Tax eligibility

All Swiss residents that are of age are eligible to pay taxes to the Swiss government. This rule also applies to foreigners who have successfully become Swiss residents. You are regarded as a Swiss resident under the following circumstances:

    • When you arrive in Switzerland as a foreigner that wants to stay in the country permanently
    • The date when you register with your canton as a resident of the area using its immigration office
    • The date you receive your residence permit

Once you are recognized as a Swiss resident, you are now officially required to pay tax, just like Swiss-born adult residents.  

  • Tax recipients

It is also important that you know the bodies that you are paying tax to. Usually, Swiss residents pay taxes to three bodies that include:

    • The Swiss Federation
    • The canton authority that governs the canton jurisdiction where you are living, and in whose immigration office you have registered
    • The commune authority of the area where you live (municipality)

All of these taxes are collected through the canton, and then disbursed to the necessary authorities.

It is important to note that the Federation does not control the taxes levied by the cantons. The cantons operate as sovereign states, and they have the legal authority to determine the taxes levied on the residents living in their jurisdictions, as well as the respective rates. The only taxes that the Federation has a direct authority over include:

    • Swiss VAT
    • Withholding Tax
    • Custom duties
    • Stamp duty

In addition, the canton gives authority to the municipalities to collect taxes from their residences on its behalf. This means that the canton dictates what taxes the municipality will levy, as well as the rates of each tax to be levied on the commune residents.

It is also imperative to point out that the main churches in Switzerland are authorised to levy taxes on their members. The three main churches are the Roman Catholic church, the Protestant Church, and the Christian Catholic church, and they levy taxes on their members in nearly every canton.

  • Tax calculation

Swiss taxes on residents are calculated based on the gross income of an individual, and the specific tax rates are determined by the canton. This means that tax rates, tax exemptions, and tax penalties are determined primarily by the canton authority.  The processes for collecting tax also differ from one canton to the next.

If you want to ensure that you get your taxes right, and that you are able to navigate this maze of a tax system, then Cosmos Values is your best bet. The company has the expertise to assist foreigners in all matters related to paying taxes in Switzerland including when to start paying taxes, how to file returns, and how to claim tax exemptions or reimbursements.

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