Withholding tax or ordinary return in Switzerland: who pays what

Two foreigners, same salary, same canton. One has tax deducted automatically every month, the other files a return like a long-time resident. The difference comes down to your permit and an income threshold. Here is how to tell which regime applies to you, and what it changes in practice.

Withholding tax: who, and how

Withholding tax targets foreigners who do not yet hold a settlement permit (C permit) and who are not married to a Swiss national. Your employer deducts the tax directly from your salary every month and pays it to the authorities. In principle, you have no return to file. The rate is set by your canton of residence. It depends on your income and your family situation.

The tariff codes, in plain terms

Your payslip shows a tariff code. It sums up your situation:

• A: single person, no dependent children.
• B: married couple with one income.
• C: married couple where both partners work.
• H: single parent raising a child. A wrong code passed to your employer distorts the deduction. Check it on your very first payslip.

The CHF 120,000 threshold: subsequent ordinary assessment

Here is the point many expats discover too late. As soon as your annual income passes roughly CHF 120,000, you move the following year into subsequent ordinary assessment. In practice, you must file a full return, and the tax already withheld becomes a simple down payment. You can also request this switch voluntarily, even below the threshold, if you have worthwhile deductions to claim.

The ordinary return: for C permits and settled residents

C permit holders and Swiss nationals use the ordinary return, as in most countries. Once a year you declare your income and deduct what you are entitled to:

• Third-pillar A contributions
• Professional and commuting expenses
• Mortgage interest
• Part of your health insurance premiums, depending on the canton More paperwork, but the chance to recover tax through these deductions.

Which regime costs you less

There is no single answer. Withholding tax is simple but opens almost no deductions. The ordinary return takes work, but it rewards third-pillar saving and real expenses. One detail matters a great deal: the ordinary return depends on your municipality, through the communal tax multiplier, while the withholding rate is mostly cantonal. At equal income, two neighbouring towns can cost you noticeably different amounts. Exact rates should be checked on estv.admin.ch and your canton's calculator. Our questionnaire estimates your tax burden by town of residence, so you can compare what you actually keep from one place to another. 👉 Estimate your tax burden by town.