Taxes

Swiss nationals who move abroad permanently are no longer fully liable to tax in Switzerland. Individuals who work in an EU/EFTA member state must normally pay taxes in that country. Exemptions apply to diplomatic staff, employees of international organisations and, in certain circumstances, employees of companies based in Switzerland.

Swiss residents who spend a short time abroad working for a Swiss employer (generally less than 183 days a year) are normally still liable to income tax in Switzerland.

If you are planning to work abroad, you will need to establish whether double taxation relief is available. You should contact the tax authorities or use the services of a tax adviser in the country where you live.

Switzerland has entered into double taxation agreements with all the EU/EFTA member states. These double taxation agreements ensure that the same income and assets are not taxable in more than one country.

The Agreement on the Free Movement of Persons (AFMP) between Switzerland and the EU and EFTA member states does not affect the provisions of bilateral double taxation agreements. It is important to note, however, that tax rules regarding residence and cross-border commuter status may vary from the provisions of the AFMP.

Double taxation agreements are especially relevant to Swiss nationals living in an EU/EFTA member state who (continue to) receive certain types of income from Switzerland, including property income, income from gainful employment, pensions, dividends and interest. The agreements restrict Switzerland's right to tax income derived from sources in Switzerland and/or require the EU/EFTA member state to offset Swiss taxes against tax payable in respect of that income in the country concerned. 

Old-age and survivors' pensions are not taxed at source in Switzerland, whereas lump-sum payouts from Swiss pension funds (pillar 2) and tied pension schemes (pillar 3a) are always subject to withholding tax. You can reclaim withholding tax if there is a double taxation agreement between Switzerland and your country of residence that assigns the right to levy taxes to that country. Taxpayers must certify applications to reclaim withholding tax with the tax authorities at their place of residence before submitting this to the relevant cantonal tax authority. Pension funds will provide a form for this purpose.

Withholding tax is only deductible from pensions (annuities) and board members' compensation if Switzerland has the right of taxation.

Withholding tax at a rate of 35% is also deducted from dividends paid by Swiss companies, interest on bonds issued by Swiss borrowers, and interest on Swiss bank deposits. It is possible to reclaim part of the tax (or the full amount in exceptional circumstances) under any double taxation agreement that may apply between Switzerland and your country of residence.

The factsheet 'Steuerentlastungen für schweizerische Dividenden und Zinsen' (tax relief on Swiss dividends and interest) issued by the Federal Tax Administration (FTA) sets out the withholding tax rates on dividends and interest payments permitted under the various double taxation agreements. The document also indicates which form you need to use in order to reclaim withholding tax. You can access the forms from the 'Residence abroad forms' link. Forms must be submitted to the FTA. 

The cantonal tax authorities are responsible for levying and, where applicable, refunding Swiss taxes payable on other income.

Further information for non-Swiss residents receiving income from Switzerland is available in FTA circular 'Quellensteuern – Merkblätter und DBA-Übersichten für die Quellensteuer' (withholding taxes – factsheets and overview of DTAs for withholding tax purposes).

EU VAT rules are mainly set out in directives, which are binding on all member states to whom they are addressed, while leaving national authorities the power to choose the form and methods to achieve the result. Each member state is responsible for transposing the rules into national law and ensuring that they are correctly implemented within their territory.

On 27 May 2015, Switzerland and the EU signed an agreement on the automatic exchange of information in tax matters (AEOI). Since 1 January 2017, Swiss financial institutions have been collecting information on accounts held by EU residents which is then submitted to the tax authorities in EU member states on an annual basis. The Multilateral Competent Authority Agreement (MCAA; SR 0.653.1 – de, fr, it) facilitates the AEOI between Switzerland and EFTA member states. The provisions of the Swiss-EU agreement are in line with the provisions of the MCAA.

The AEOI also applies to Swiss nationals resident for tax purposes in an EU/EFTA member state who hold an account or custody account at a Swiss financial institution that is subject to reporting requirements. Information must also be exchanged regarding deposit accounts set up to receive state pensions.

In response to the introduction of the AEOI, some countries have set up voluntary disclosure programmes allowing taxpayers to regularise their tax affairs on a penalty-free basis by duly declaring any undeclared assets within a specified time limit. Please check with the relevant national tax authorities to find whether this option is available in the relevant EU or EFTA member state.