Switzerland Consulting On WHT Reforms

The Swiss Federal Department of Finance is consulting on proposals to amend the Withholding Tax (WHT) Ordinance, to more clearly define the rules for non-resident taxpayers.

Under the proposed reforms, “quasi-residents” will be permitted to request a subsequent ordinary tax assessment.

“Quasi-residents” are employees who are not domiciled in Switzerland but who generate a major part of their income from an activity performed in the country. Under the draft proposals, a quasi-resident must earn at least 90 percent of their gross global income to be able to request a subsequent ordinary tax assessment.

Under the current system, the subsequent ordinary tax assessment is obligatory for individuals resident in Switzerland and taxed at source if their gross annual income from salaried income totals CHF120,000 (USD123,000) or more. Foreign nationals living and working in Switzerland who do not hold a permanent residence permit are subject to WHT at source.

Switzerland’s Federal Supreme Court has ruled that the country must grant quasi-residents the same deduction options as residents.

The Government expects the revised Act and relevant ordinances to enter into effect in 2020.