Withholding tax in Switzerland: who pays, how is it calculated and what do employers need to know?
Withholding tax in Switzerland is an income tax that employers deduct directly from the gross salary of foreign employees and pay over to the responsible cantonal tax administration at regular intervals. The deduction is made every month with the salary payment, and the settlement with the tax administration is monthly or quarterly, depending on the canton and the number of employees.
You can see the deductions for AHV/IV/EO and their impact on your net salary in the net-gross calculator.
The most important information at a glance
What is withholding tax: Withholding tax is an income tax for certain foreign employees and is deducted directly from the salary
Who is affected by withholding tax: Foreign employees with a B or L permit as well as cross-border commuters without a C permit
Who remits the tax: Employers, monthly or quarterly to the cantonal tax administration
How high is the rate: Varies by canton; for cross-border commuters from Germany with a certificate of residence, maximum 4.5%
When is a tax return mandatory: From CHF 120,000 gross salary per year (subsequent ordinary assessment)
What is anticipatory tax: Withholding tax on capital income (35%), a separate system from the salary deduction
Where can the tariffs be found: On the website of the FTA and the responsible cantonal tax administration
What is withholding tax, and who does it affect?
Withholding tax is not an additional tax, but rather the regular income tax for certain groups of persons, which the employer withholds directly from the salary each month. The legal basis is the Federal Act on Direct Federal Taxation (DBG), which legally obliges employers to make the deduction and remit the amounts to the cantonal tax administration.
Who is subject to withholding tax and who is not depends on residence status and domicile.
Subject to withholding tax:
Foreign employees with a B permit (residence permit) or L permit (short-term residence permit) resident in Switzerland
Cross-border commuters and weekly commuters resident abroad
Artists and athletes with short-term engagements, as well as board members resident abroad
Not subject:
Swiss citizens
Persons with a C settlement permit
Persons resident in Switzerland who are living in a non-separated marriage with a person who holds a C permit or a Swiss passport (this exception does not apply to cross-border commuters resident abroad)
Deductions for AHV/IV/EO appear on the same payslip as the withholding tax, which keeps the process straightforward for employers.
Employers hiring foreign employees for the first time thus face a clearly regulated, but administratively demanding duty: they must know the correct tariff code, calculate the deduction correctly, and remit the amounts on time. An error in any of these steps can lead to back-tax claims from the cantonal tax administration. To compensate for the effort, employers retain a collection commission, usually between 1% and 2% of the remitted tax amount.
How do withholding tax tariffs work in Switzerland?
Which withholding tax tariff applies does not depend on the employer, but on the personal circumstances of the employee: marital status, number of children, church affiliation, and income determine whether code A, B, C, H, or another letter applies. The withholding tax tariff codes in Switzerland are designated by the letters A to U. They are authoritatively defined in Circular No. 45 of the FTA; the cantons base their tariff tables on the calculation principles of the FTA.
The most important tariff codes for employers:
Tariff code | Group of persons | Special feature |
|---|---|---|
A | Single, no children | Standard case |
B | Married, one earner | Sole-earner household |
C | Married, dual earners | Dual-earner household |
H | Single with children | Single-parent household |
L, M, N, P | Cross-border commuters from Germany (analogous to A, B, C, H) | With certificate of residence maximum 4.5% of gross salary |
G | Replacement income (e.g. daily allowances) not paid out via the employer | Settlement by the insurer, not the employer |
Each canton publishes its own tariff tables, usually as a TXT or ZIP file on the website of the FTA and the respective cantonal tax administration. Church tax is factored into the tariff code: those who do not belong to a national church pay a lower rate.
If an employee's marital status, number of children, or church affiliation changes, the new tariff code only applies from the first day of the month following the event, not retroactively.
In practice for employers, this means: if an employee reports her marriage on 15 March, the new tariff code (B for a sole-earner household, C if both are employed) only applies from 1 April. Forgetting the adjustment or making it too early risks an incorrect payroll settlement that must be corrected during year-end closing.
How do employers calculate withholding tax?
Employers are responsible for the correct tariff assignment and timely remittance. An incorrect tariff code leads to back-tax claims at year-end closing. Because the tariff code and gross salary are fixed, the calculation follows a five-step process.
Step 1: Determine the tariff code
To-do: Determine the tariff code based on the employee's marital status, number of children, canton of residence, and church affiliation, and record it in payroll accounting.
Common error: Tariff changes following marriage or childbirth are not adjusted in the following month, even though the Zurich Cantonal Tax Office and other cantons explicitly require this.
Step 2: Determine the taxable gross salary
To-do: Calculate the total taxable salary for the month, including bonuses, overtime, and benefits in kind.
Common error: One-off allowances such as annual bonuses are forgotten, even though they form part of the taxable gross salary.
Step 3: Look up the tax amount from the cantonal tariff table
To-do: Take the tax amount from the valid cantonal tariff table of the FTA for the corresponding tariff code and salary amount.
Common error: Using an outdated tariff table from the previous year, even though tariffs are adjusted annually.
Step 4: Deduct the amount from salary and post the entry
To-do: Deduct withholding tax from the gross salary, pay out the net salary, and correctly book the deduction in payroll accounting.
Common error: Withholding tax posted to the wrong account, complicating year-end closing and settlement with the cantonal tax administration.
Step 5: Submit the settlement to the cantonal tax administration and remit payment
To-do: Submit the settlement on time to the responsible cantonal tax administration and remit the amount. Depending on the canton and the number of employees subject to withholding tax, settlements are made monthly or quarterly; payment is generally due within 30 days after the end of the settlement period.
Common error: Selecting the wrong cantonal authority. For employees resident in Switzerland, the canton of residence is responsible, whereas for cross-border commuters resident abroad, it is the canton of the employer's registered office.
Withholding tax for cross-border commuters and employees resident abroad
Whether and how much withholding tax cross-border commuters pay depends on the country of residence and the applicable double taxation agreement (DTA). The regulations vary considerably.
Germany: The cross-border commuter agreement between Switzerland and Germany (Art. 15a DTA Germany-Switzerland) caps Swiss withholding tax for cross-border commuters at 4.5% of gross salary. The prerequisite is that the employee submits a certificate of residence from the German tax authorities; without this certificate, the ordinary tariff applies. The rate is withheld directly by the employer in Switzerland and remitted to the responsible cantonal tax administration. Taxation rights thus lie proportionately with Switzerland.
France: A special arrangement applies to cross-border commuters from France: in the cantons of Bern, Solothurn, Basel-Stadt, Basel-Landschaft, Vaud, Valais, Neuchâtel, and Jura, taxation rights generally lie with the country of residence, France, under the 1983 agreement. The Swiss employer issues a certificate so that no double taxation occurs. Geneva is the most significant exception: the canton did not join this agreement and continues to tax cross-border commuters from France ordinarily at source.
Italy: A new withholding tax regime for cross-border commuters from Italy has been in effect since 1 January 2024. The new Switzerland-Italy cross-border commuter agreement affects employees in the border cantons of Ticino, Graubünden, and Valais. Among other factors, whether the municipality of residence lies within the 20-kilometre border zone is decisive.
For artists, athletes, and board members resident abroad, the organiser or debtor of the service assumes the role of deducting withholding tax. The DTA overview for all partner states is published by the FTA in annually updated information sheets and overviews (currently in Circular No. 217, as of 1/1/2026). Employers employing staff from multiple countries should check for each nationality which DTA applies and whether jurisdiction lies with Switzerland or the country of residence.
When is a subsequent ordinary assessment worthwhile?
Anyone earning less than CHF 120,000 who has no other taxable income or assets is not required to file a tax return, but may voluntarily apply for a subsequent ordinary assessment (NOV) if deductions would lower the tax burden. The threshold of CHF 120,000 gross salary per year is the key dividing line.
When NOV is mandatory:
Gross salary exceeds CHF 120,000 per year: The subsequent ordinary assessment is then mandatory. The withholding tax already paid is credited against the regular tax liability. Depending on the situation, this results in a refund or an additional payment.
Additional income or assets: Anyone who has other non-withholding-taxed income (e.g. securities income or property income) or taxable assets in addition to withholding-taxed salary is also subject to mandatory subsequent ordinary assessment, regardless of salary level.
When voluntary NOV is worthwhile:
Substantial contributions to Pillar 3a: The deduction reduces taxable income below the withholding tax level.
Further education costs or medical expenses that exceed the withholding tax deduction allowance.
Professional expenses that are covered by a flat rate in the withholding tax, but are higher in the individual case.
Deadline and process:
The application must be submitted by 31 March of the following year. This deadline applies uniformly across Switzerland; it is a forfeiture deadline and cannot be extended.
Anyone resident in Switzerland who voluntarily applies for an NOV will remain subject to ordinary assessment in subsequent years until the withholding tax obligation ends. The application cannot be revoked.
Anyone applying for voluntary NOV should carefully assemble deductions before submitting the application. Pillar 3a contributions, receipts for further training, and medical bills must be fully available before the application is lodged. If documents are missing, the application cannot be supplemented once the deadline has passed.
Withholding tax on capital income: interest and dividends
Withholding tax on capital income is regulated in Switzerland as anticipatory tax (Verrechnungssteuer) and operates under a different system than wage withholding tax. Anticipatory tax on capital income and wage withholding tax are two separate systems governed by different laws: wage withholding tax is based on the DBG, whereas anticipatory tax is based on the Anticipatory Tax Act (VStG).
Feature | Wage withholding tax | Anticipatory tax |
|---|---|---|
Act | DBG | VStG |
Tax rate | Cantonal, tariff-dependent | 35% |
Tax debtor | Employers | Paying entity (bank, AG) |
Affected income | Salary and earned income | Interest, dividends from Swiss sources |
Refund | Via NOV or annual settlement | Via tax return or application to the FTA |
The FTA does not collect anticipatory tax directly; instead, the bank or public limited company (AG) paying interest or dividends withholds 35% and remits the amount to the FTA.
Persons resident in Switzerland can reclaim anticipatory tax in full via their tax return. Persons resident abroad obtain a refund or partial refund only through the applicable double taxation agreement (DTA).
For employees who draw both salary and capital income from Swiss sources, two separate tax flows arise: the employer deducts wage withholding tax, while the bank withholds anticipatory tax on interest and dividends. Both amounts can be offset via the tax return or NOV, provided the conditions are met.
Process withholding tax directly in payroll
Recording withholding tax directly in payroll accounting software reduces manual calculation steps and lowers the risk of an incorrect tariff code. Employers enter the tariff code once per employee. In the event of status changes, the code must be updated in the following month.
Payroll software with Swiss compliance coverage handles the calculation automatically based on the entered code and gross salary, including AHV/IV/EO deductions on the same payslip. nextesy incorporates withholding tax settlement as part of payroll with nextesy, bringing tariff adjustments and periodic remittances together in a single process.
