Who Is Subject to Source Tax (Quellensteuer)?
Foreign nationals without a Swiss C permit (permanent residence) who are employed in Switzerland are generally subject to source tax (Quellenbesteuerung). The employer deducts the tax directly from the salary and remits it to the cantonal tax authority on behalf of the employee. Source tax covers federal, cantonal, and communal income tax in a single withholding.
Source Tax Rates
Source tax rates are published annually by each canton in tariff tables. The applicable tariff depends on marital status, number of children, religious affiliation (for church tax), and monthly gross salary. Rates vary significantly by canton — a Geneva expat and a Zug expat earning the same salary will have very different source tax deductions.
When Does Ordinary Assessment Replace Source Tax?
Since 2021 (new source tax rules effective 1 January 2021), an expat must file an ordinary tax return (nachträgliche ordentliche Veranlagung, NOV) if any of the following apply:
- Annual gross salary exceeds CHF 120,000 (from any single employer)
- Additional income not subject to source tax (e.g. rental income, foreign income, capital gains from professional trading)
- Significant deductions the expat wishes to claim (mortgage interest, additional pillar 3a contributions, childcare costs)
- Resident in Switzerland but employed by a foreign employer (no Swiss withholding agent)
The "Quasi-Residency" Correction Claim
Expats with gross Swiss income below CHF 120,000 may still request an NOV (correction claim) if their Swiss-source income constitutes at least 90% of their worldwide income. This allows access to personal deductions (pillar 3a, mortgage interest, charitable donations) otherwise unavailable under the standard source tax.
Special Expenses Regime for Executives
Senior executives (Kader) may be entitled to flat-rate expense deductions under Art. 17a of the federal executive expenses ordinance: flat representation expenses, vehicle allowance, and overseas assignment supplements. These must be agreed in an expense regulation (Spesenreglement) approved by the cantonal tax authority.
Cross-Border Commuters
Under the DTA with Germany, Italian commuters, and French commuters, special rules apply to employees who live in a neighbouring country and commute to Switzerland. The source tax deducted in Switzerland may be partially reclaimed or credited in the country of residence, depending on the applicable DTA provisions.
Source basis: DBG Art. 83–102 (Quellensteuer) · StHG Art. 32–37a · Revised Source Tax Rules 2021 · ESTV Circular Quellensteuer 2021.