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Swiss People's Party Opposes WHT Revision

by Ulrika Lomas,, Brussels

31 March 2014

Changes to support more non-resident workers' claims for tax relief on Swiss income are unnecessary and will increase the cost of tax administration, the Swiss People's Party has said.

All foreign workers without a permanent residence permit (permis or Niederbelassungsbewilligung C ) are, in principle, taxed on income sourced in Switzerland. Employers are required to directly deduct tax from an employee's salary without tax relief.

Employees are entitled to claim any tax deductions due through the filing of a retrospective ordinary assessment. At the moment, the Swiss Tax Administration automatically carries out this assessment for foreign nationals with gross income above CHF120,000 (USD135,287).

The Federal Council has proposed lowering this gross income threshold to CHF60,000, while also allowing filings from persons with remuneration below this amount. The measure is designed to comply with a legal ruling from the country's Federal Court.

In January 2010, the Court ruled that, although the withholding tax regime is justified, the provisions as they stand contravene the agreement on the free circulation of persons concluded with the European Union. It said that non-domiciled employees realizing most of their global income in the Confederation are entitled to the same tax breaks as those subject to ordinary taxation. It said the Government must modify the legislation to ensure the fair treatment of all taxpayers.

The SVP has said that, since the regime was harmonized 20 years ago, the current provisions are applied fairly and uniformly across Switzerland, and insisted that there is no need to amend the system now.

TAGS: individuals | tax | employees | tax thresholds | legislation | withholding tax | Switzerland | tax breaks | individual income tax | Europe | Tax

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