The withholding tax has been revised as of January 1, 2021 in Switzerland and this new tax collection system will be rolled out and harmonized at the country level.
From now on, Swiss residents are subject to a subsequent ordinary taxation (TOU) instead of withholding tax if one of the following conditions is met by the taxpayer:
- He has been subject to an ordinary subsequent taxation (mandatory or on request) in the previous year;
- He owns real estate in the canton;
- He has a gross annual income of more than CHF 120’000.00 (in case of a tax liability of less than 12 months, the threshold is calculated by annualizing the periodic income). And for a married couple, if one of the spouses has an annual income of more than CHF 120’000.00;
- He has taxable assets;
- He receives income that is not subject to withholding tax (alimony, income from assets, housing allowances, income from real estate or rental value, etc.);
- He has requested a subsequent ordinary taxation within the legal time limits.
As soon as the resident is subject to subsequent ordinary taxation, either compulsory or on request, the latter applies for all subsequent tax periods until the end of the tax liability at source, even if the conditions of the TOU are no longer met. The same applies to married couples in case of separation or divorce.
Non-resident taxpayers (cross-border commuters) may also apply for subsequent ordinary taxation, provided that at least 90% of their gross income for the tax period is taxable in Switzerland (quasi-resident status). These taxpayers have to renew the request for subsequent ordinary taxation for each tax year.
If the conditions for the mandatory subsequent ordinary taxation are met, or if the taxpayer wishes to benefit from the TOU, the notification must be made by March 31 of the year following the taxation year.
Finally, as of the 2021 tax period, it is no longer possible to file an application for a withholding tax adjustment to claim deductions such as 3rd Pillar payments, pension extra contributions, childcare costs and alimony payments, as it was the case until the 2020 tax period. However, the adjustment request remains applicable to allow for the consideration of family expenses and adjusted scales for couples.