This GMS Flash Alert reports on new rules in Switzerland for the taxation of employment income which aligns Switzerland’s rules more closely with EU rules.
In December 2016, the Swiss parliament adopted new rules1 for the taxation of employment income for individuals who are:
The changes include how refunds of Swiss social security contributions are taxed, the ability of Swiss residents subject to taxation at source to file a tax return, and how remuneration of board members who are nonresidents of Switzerland paid to the assigning company will be treated for tax purposes.
In recent years, the Federal Court of Switzerland found, in several cases it considered, legal provisions in Swiss tax law where the taxation at source rules were not in line with the European Union Agreement on the free movement of people (in effect since 1 June 2002). The predominant aim of the revision to the taxation at source rules is therefore to align Swiss tax law with the EU Agreement.
Under the new provisions, there will be the following important changes:
In addition, according to the new taxation at source provisions, there shall be no distinction between EU citizens and non-EU citizens, with the result that non-EU citizens can also benefit from the new provisions.
There are cantons (such as St. Gallen and Basel-City) that have already a 90% rule in place.
It appears unlikely that there will be a petition for a referendum; therefore, the Federal Tax Administration will likely issue a new ordinance and a circular in summer 2017 with more detailed rules for the implementation of the new provisions and the date when they become effective (which may be 1 January 2020).
1 See (in German) Bundesgesetz über die Revision der Quellenbesteuerung des Erwerbseinkommens (PDF 604 KB).
Also, see (in French) Loi fédérale sur la révision de l’imposition à la source du revenu de l’activité lucrative (PDF 570 KB).
And (in Italian), Legge federale sulla revisione dell’imposizione alle fonte del reddito da attività lucrativa (PDF 610 KB).
For additional information or assistance, please contact your local GMS or People Services professional or one of the following professionals with the KPMG International member firm in Switzerland:
Tel. +41 58 249 36 68
Tel. +41 58 249 48 05
The information contained in this newsletter was submitted by the KPMG International member firm in the Switzerland.
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