Tax liability in cross-border employment – Part 2: Outbounds

Tax matters quickly become complicated. If it also concerns individuals who live abroad or if a cross-border employment relationship is affected, it usually becomes even more complicated. Therefore, this series of articles provides an overview of what to consider in such cases. This second article addresses the Outbounds.

What are Outbounds?

‍Outbounds are Swiss men and women who pursue employment abroad. Most of them are cross-border commuters or people who work abroad temporarily without emigrating. But it also includes emigrants who retain Swiss citizenship.

‍Unlimited and limited tax liability

‍In Swiss tax law, tax subjects are divided into unlimited and limited taxpayers. The decisive factor for the classification here is the tax residence. If this is in Switzerland, it concerns unlimited taxpayers (Art. 3 DBG). They must generally declare and tax all their assets and income, wherever in the world it may be located or come from. If the tax residence is abroad, but there is an economic affiliation to Switzerland, they are referred to as limited taxpayers (Art. 4 DBG). They only need to declare the portion of the income that originates in Switzerland.

‍Different assessment procedures

‍Swiss people, including Outbounds, are almost always subject to the ordinary assessment procedure. However, there is an exception where they can be subject to the withholding tax procedure. The classification is as follows:

‍Withholding Tax ProcedureOrdinary Assessment ProcedureUnlimited Taxpayers