In the multifaceted tax landscape of Switzerland, withholding tax plays a special role. It primarily affects foreign employees without a permanent residence permit (C permit) and is deducted directly from income by the employer.
Overview of withholding tax rates from 2026
As of 1 January 2026, no changes have occurred. Several amendments to the Swiss withholding tax procedure introduced in 2025 therefore remain in force. These relate in particular to digital processing, new rates as well as deadlines and calculation rules for employers. The following overview summarises the most important adjustments:
| Innovation | Valid from 01.01.2025 |
|---|---|
| Digital processing with QST-Web | Introduction of a new web solution for electronic transmission in the canton of Nidwalden. Further cantons may follow. |
| Adjustment of withholding tax rates | New rates due to 2024 inflation. Overview available on the websites of the cantonal tax offices. |
| Mandatory notification within 8 days | New hires, departures and re-entries as well as changes (e.g. marriage, birth) must be reported to the tax office within 8 days. |
| Prohibition of tax smoothing | Special payments such as the 13th month’s salary must be taxed in the month of payment. Distribution over several months is no longer permitted. |
| Obligation to settle monthly when using ELM | Employers who use ELM must settle monthly. Without ELM, quarterly settlement is still possible. |
Subsequent ordinary assessment (NOV): What remains in place in 2026
With effect from 1 January 2025, extended provisions apply to the subsequent ordinary assessment (NOV) for persons subject to withholding tax. The most important changes are:
Extended obligation to NOV: A NOV now becomes mandatory if there is additional income or assets that are not subject to withholding tax – for example from rental income, investment income or self-employed secondary activities. This regulation also applies to cross-border commuters.
Annual application in case of quasi-residency: Persons resident abroad can apply for a NOV if at least 90% of their worldwide income is taxable in Switzerland. The application must be submitted anew each year.
NOV in the event of a change of status: Anyone who switches in the course of the year from ordinary taxation to withholding tax or vice versa (e.g. due to divorce from a partner with a C permit) is automatically subject to NOV for the entire tax year from 2025 onwards.
No more revocation possible: A NOV application submitted voluntarily once is irrevocable from 2025 onwards and remains valid until the end of the withholding tax liability.
Deadline remains the same: The application must still be submitted by 31 March of the following year.
The withholding tax already deducted by the employer continues to be regarded as a security tax even in the case of subsequent ordinary assessment and is offset against the ordinary tax assessment.
Basics of withholding tax
Withholding tax, also known as “tax at source”, is a special form of income tax collection in Switzerland. It is levied directly at the source of income, i.e. at the employer, and mainly affects foreign employees who do not have a permanent residence permit (C permit). This mechanism is intended to ensure that even persons who do not have their tax residence in Switzerland meet their tax obligations.
The tax is deducted from the salary on a monthly basis and generally includes federal, cantonal and municipal taxes and sometimes even church tax. The amount of the deductions can vary depending on various factors, including marital status and level of income. The employer is responsible for the correct deduction and payment of the tax to the competent cantonal tax authority.
The cantonal dimension of withholding tax in Switzerland
In Switzerland, the specific implementation of withholding tax can vary between cantons, as tax legislation is partly regulated at cantonal level. Each canton sets its withholding tax rates, and these can differ significantly depending on various factors such as marital status, number of children and level of income.
While, for example, Zurich has higher withholding tax rates, cantons such as Zug and Schwyz are characterised by comparatively lower tax rates. The possibilities for deductions also vary; for instance, cantons such as Geneva and Vaud offer certain deduction options that are not available in other regions.
What are withholding tax rates and which ones exist?
The employer receives the withholding tax rate from the competent municipal tax office, which determines the amount of the withholding tax. The main rates are categorised as follows:
| Category | Description | Rate code |
|---|---|---|
| Single persons without children | Single, divorced, separated or widowed persons | Rate A |
| Married single earners | With or without children | Rate B |
| Married dual earners | Both spouses gainfully employed, with or without children | Rate C |
| Persons with secondary employment | Income from a side job | Rate D |
| Single parents | Single parents entitled to child deductions | e.g. rate H |
| Cross-border commuters | Residence abroad, work in Switzerland | Special rates |
A current and comprehensive list of all rates can be downloaded from the official websites of the cantonal tax offices.
Guidelines and obligations when handling withholding tax in Switzerland
- Applicability of withholding tax for foreign employees and G-permit holders in Switzerland:
- Foreign employees without tax residence or domicile in Switzerland
- Temporary or permanent residents in Switzerland, including holders of an EC/EFTA G permit
- Foreign members of the board of directors who live abroad are also subject to tax, unless they hold a C permit
- Responsibilities of employers with regard to withholding tax in Switzerland:
- Registration for withholding tax with the cantonal tax authority in whose area the foreign employee lives
- Monthly deduction of withholding tax from the employee’s salary
- Calculation of withholding tax: rates and credits:
- Different withholding tax rates depending on the employee’s life situation
- Possible crediting of the withholding tax paid against the regular tax assessment
By way of explanation: The EC/EFTA G permit is a residence permit issued to citizens of EC/EFTA states (European Community/European Free Trade Association) who work in Switzerland but live in a neighbouring country. This is particularly relevant for cross-border commuters who return to their residence abroad daily or at least weekly.
The G permit is valid for five years, provided that the job remains unchanged during this period. This permit is intended to facilitate the administrative handling of the employment relationship and to make the labour market more flexible.
Requirements for a C permit
The granting of the permanent residence permit, also known as the C permit, requires that foreign nationals fulfil certain conditions. First, a person must have lived in Switzerland for at least ten consecutive years, with the last five years spent without interruption on a residence permit.
In addition to this basic requirement, applicants must meet the following criteria:
- Proof of successful integration into Swiss society, which includes language skills and compliance with the Swiss legal system.
- Have a stable income and be financially independent to ensure that they are not dependent on social welfare.
- Have not committed any criminal offences and have no negative entry in the criminal record.
It is advisable to collect all relevant documents carefully and to familiarise yourself with the specific requirements of the municipality or canton in which the application is submitted.
The role of employers in handling withholding tax
The correct handling of withholding tax is a primary task of employers in Switzerland, covering both registration and processing of the withholding tax. The following overview is intended to provide a clearer picture of the various aspects and obligations.
Registration and processing
Employers are obliged to register with the competent cantonal tax authority. This step is essential to ensure the correct processing of withholding tax. Registration ensures that the employer receives all the necessary information to handle withholding tax properly.
Duties of the employer
Employers have a number of duties they must fulfil. These duties include, among other things, the monthly settlement of withholding tax, which is deducted directly from the employee’s salary. In addition, the employer must regularly inform themselves about changes in laws and regulations in order to always comply with the current requirements.
Important notes for employers
It is of utmost importance that employers understand and take into account the specific needs and circumstances of their foreign employees. Particular attention should be paid to the different withholding tax rates, which can vary depending on the employee’s life situation. A precise examination of cantonal particularities is also indispensable here.
Furthermore, the employer should also consider a crediting of the withholding tax paid against the regular tax assessment in order to ensure correct and fair tax processing.
With detailed knowledge of the regulations and careful implementation of the necessary steps, an employer can ensure that they properly fulfil their obligations in relation to withholding tax.
Effects of withholding tax on income
For employees without a C permit, it is important to know how withholding tax affects their income. Here are some points you should pay attention to:
- Transparent communication: Withholding tax must be clearly shown on the salary statement or in another tax confirmation.
- Different withholding tax rates: These depend on the employee’s life situation, such as marital status or additional sources of income.
- Possible exemptions: It is advisable to inform yourself about specific deductions, as exemptions may apply.