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Switzerland: Revised tax-at-source rules for payroll processing, effective 2021

Switzerland: Tax-at-source rules for payroll processing

The revised tax-at-source rules (“Impôt à la source” or “Quellensteuer”) will be effective 1 January 2021.


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The aim of these revised rules it to comply with the equal treatment rules stipulated in the EU/EFTA agreements on the free movement of persons by eliminating disparities in treatment between individuals subject to tax-at-source and those under ordinary taxation, and to harmonize the practice and rules at the Swiss level.

Employers with employees subject to tax-at-source will need to understand the new regulations and their implications in terms of payroll processing. The new rules provide for:

  • Two calculation models of the tax-at-source (an annual model and a monthly model, depending on the canton where the tax-at-source is calculated)
  • Declaration of the tax-at-source to the appropriate canton
  • A specific calculation for part-time workers
  • A specific calculation on compensation paid before starting or after ending the employment agreement

Action steps for employers

Employers need to read and understand the revised rules and determine to what degree the new rules will impact their payroll processes, both from the side of the employer and the affected employees. The new rules require companies to register with the tax-at-source authority of each canton where employees reside. Also, payroll software may need to be updated.

Read a July 2020 report prepared by the KPMG member firm in Switzerland

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