On 1 January 2021, the revised law on the Swiss source tax came into force. The revision aims to eliminate the unequal treatment of persons subject to source taxation and persons subject to ordinary taxation. From a practical perspective, the most notable changes to be discussed are the introduction of the choice to voluntarily file a Swiss tax return for certain source tax subjects and the new regulations regarding the recalculation of the source tax. As the tax returns for the year 2021 must be filed now, this change becomes relevant in the tax practice.
1. Changes regarding the voluntary tax return filing for source tax subjects
Swiss residents who are subject to source tax and have a gross compensation of CHF 120,000 or more are obliged to file a Swiss tax return. The revision has introduced the possibility for Swiss tax residents who are subject to source tax with an income below CHF 120,000 to file a voluntary tax return. This procedure offers the advantage that deductions for professional expenses, contributions to the voluntary occupational pensions etc. can be made via the tax return. However, once the choice to file a voluntary tax return has been made, the same procedure must be followed in the subsequent years. Since filing a tax return is not advantageous in all cases, it should be carefully assessed in advance as to whether this option should be selected.
This option has also newly been made available to so-called “quasi-residents”. These are non-resident source tax subjects whose worldwide family income originates at least 90% from Swiss sources. The 90% limit is determined according to the rules of Swiss tax law. It is suggested to have a calculation carried out before applying for this option to see if the threshold is reached.
Furthermore, the option to file a tax return is now available if the situation of the taxpayer is the same as that of a taxpayer residing in Switzerland or to claim deductions in accordance with a double taxation agreement. However, in these cases an application must be submitted annually.
Non-resident source tax subjects can be requested ex officio by the relevant cantonal authorities to file a Swiss tax return if there are “pressing circumstances”.
2. Recalculation of the source tax
Under the new regulation, all source tax subjects who are not obliged to file a Swiss tax return or did not opt to do so, can request a recalculation of the source tax if one of the pre-defined criteria is met. The reasons allowing a recalculation are listed conclusively in Circular Letter No. 45:
- Incorrect determination of gross wages subject to the source tax
- Incorrect determination of tax rate-determining income
- Incorrect source tax rate application
The previous tariff correction is no longer applicable. The possibility that existed in the past to claim further deductions by means of the tariff correction no longer exists since the revision of the law.
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