Switzerland - Tax Guide for Freelance Contractors

Tax Residents in Switzerland:   are liable to pay Swiss tax on their worldwide income,
Non-residents in Switzerland:   are liable to pay tax only on their Swiss-sourced income.

In Switzerland, an individual considered as a normal taxpayer is liable for the following taxes:

•  Federal tax (flat rate),
•  Cantonal tax (varies from canton to canton),
•  Communal tax (varies from commune to commune),
•  Wealth tax (variable),
•  Church tax (not mandatory, only exists in certain cantons). 

Taxation at source
 
In principle, any foreign individual working in Switzerland is taxed at source.

The deductions are made and paid by the employer on a monthly basis to the tax authorities.Tax is due at both federal and cantonal levels. In certain cantons there may also be an optional church tax.

Normal taxpayers

Swiss Nationals take care of their taxes personally and file a tax return usually between the month of February and May each year depending on the canton.

The annual tax payment is split into 10 instalments (in favour of the canton and the commune) and one instalment (in favour of the Federal Confederation).

Individuals will qualify as resident

• If they are working in Switzerland,
• If, their main home or centre of economic interests is in Switzerland on a permanent or temporary basis

Married persons are taxed jointly.

Taxable income includes:

• employment income,
• investment income,
• social security payments,
• income from property, dividends, etc.,
• moving costs are not deductible and are taxable if reimbursed by your employer,
• benefits in kind,
• wealth.

For foreign employees taxed at source, the tax rate applicable is more favourable due to the fact that it takes into account the various standard deductions.

For Normal taxpayers, certain deductions are permissible including:

• health premiums up to CHF 1’700 per year for a single person,
• child allowances (1st child CHF 6’100, for two children CHF 12'200 and for three children CHF 18'300) under 18 years of age or pursuing studies,
• medical costs can be deducted under certain conditions,
• basic allowance dependant on canton of work,
• donations exceeding CHF 100 per year.

Some of the above amounts may vary from one canton to another.

Income tax rates for 2012:  vary from one canton to another, below some rates on a few cantons :

• 16.06% in Geneva for a salary of CHF 100’000,
• 9.54% in Zürich for a salary of CHF 100’000,
• 16.16% in Basel for a salary of CHF 100’000.

Tax Returns

A tax return must be completed annually between February and May of the following year.