At its meeting on April 11, 2018, the Federal Council decided to bring the Federal Act on the Revision of the Withholding Tax on Income from Employment (together with several amendments to ordinances based on it), which was adopted on December 16, 2016, into force on January 1, 2021.
The Swiss parliament had already passed the Federal Act on the Revision of the Withholding Taxation of Income from Employment on 16 December 2016, after the Federal Supreme Court had ruled in several rulings - the first on 26 January 2010 (BGE 136 II 241) - that the withholding tax law in certain cases violates the Agreement on the Free Movement of Persons concluded with the European Union. The Federal Department of Finance (FDF) had also opened the consultation process on the total revision of the Ordinance on Withholding Taxes on 21 September 2017 (see our contribution of 21 September 2017).
The revision of the law on the withholding tax on earned income and the total revision of the FDF withholding tax ordinance require extensive implementation work by the cantons and employers, as well as on the uniform salary notification procedure. In addition, various formal adaptations are necessary in other ordinances. In order to give all the players concerned sufficient time to implement the changes, the new withholding tax provisions are not to enter into force until 1 January 2021.
According to the FDF's media release of 11 April 2018, the reform "aims to reduce unequal treatment between persons subject to withholding tax and those subject to ordinary taxation. While resident withholding taxpayers with an annual gross income of CHF 120,000 or more continue to be subject to a mandatory retrospective ordinary assessment (NOA), residents below the aforementioned threshold can now also apply for an NOA. So-called "quasi-resident" withholding taxpayers can now also apply for a NOV. Quasi-residents are employees who are not domiciled in Switzerland and who derive most of their income from an activity that they perform in Switzerland.
The following documents have been published:
The press release and the related documents are available here.
