This report covers draft rules for nonresident taxpayers subject to Swiss source tax withholdings on their Swiss employment income to be able to file an ordinary tax return in Switzerland.
On 21 September 2017, the head of Switzerland’s Federal Department of Finance (FDF) submitted the draft version of the revised Federal Withholding Tax Ordinance1 for consultation. Among other items, this Ordinance defines the requirements for nonresident taxpayers subject to Swiss source tax withholdings on their Swiss employment income to be able to file an ordinary tax return in Switzerland, if they so choose.
On 16 December 2016, the Federal Parliament agreed to a complete revision of the Federal Withholding Tax Ordinance. For more details on the rules adopted, please refer to the GMS Flash Alert 2017-032 (21 February 2017).
The inclusion of the status as “quasi-tax resident” in Swiss law goes back to a Federal Court judgement of 26 January 2010 (BGE 136 II 241). At that time, the Federal Supreme Court stipulated that under certain conditions the Swiss withholding tax regime was not in line with the Agreement on the Free Movement of People with the EU and, under certain circumstances, was deemed discriminatory.
This Ordinance defines the requirements for nonresident taxpayers subject to Swiss source tax withholdings on their Swiss employment income to avail of filing an ordinary tax return in Switzerland (if appropriate):
[ CHF 1 = EUR 0.866 | CHF 1 = USD 1.025 | CHF 1 = GBP 0.77 | CHF 1 = JPY 115.370 ]
Until 21 December 2017, interested parties such as cantonal and communal authorities, political parties, and interest groups may voice their opinions.
Given the pervasive nature of the withholding tax regime in Switzerland, this statutory revision will result in a series of formal adjustments in other rules and regulations.
It is envisaged that the Federal Law and the Ordinance pertaining to this law will enter into force in 2020.
The information contained in this newsletter was submitted by the KPMG International member firm in the Switzerland.
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