Tax liability in cross-border situations – Part 1: Inbounds

Taxes are often difficult to comprehend. It can especially be complicated for foreigners, or when a cross-border employment relationship is involved. Therefore, Findea explains what generally needs to be considered in Switzerland in these cases. This article is dedicated to inbounds.

What are Inbounds?

‍By inbounds, we mean people who come from abroad but are employed in Switzerland. This includes people who have settled in Switzerland temporarily or permanently, as well as cross-border commuters. International weekly residents are also included in this group.

‍Unlimited and limited tax liability

‍Swiss tax law distinguishes between individuals who are subject to unlimited and limited tax liability. Individuals with their tax residence in Switzerland (Art. 3 DBG) are subject to unlimited tax liability and must generally declare and pay taxes on their entire global assets and income in Switzerland. Those with unlimited tax liability have their tax residence abroad, but due to their economic affiliation, still need to pay taxes on part of their income in Switzerland (Art. 4 DBG).

‍Different assessment procedures

‍Depending on the employment relationship in Switzerland and personal circumstances, inbounds can be taxed differently. It is usually done through the withholding tax procedure, but under certain conditions, the ordinary assessment procedure can also be applied. Here is an overview:

‍Withholding tax procedure

Ordinary assessment procedure

Unlimited tax liability

‍Residence permit, income under 120,000 CHF (Except permanent residence permit C)XDepending on cantonal law possibleResidence permit, income over 120,000 CHF (Except permanent residence permit C)XXHolder of a permanent residence permit CXMarried to a Swiss citizenX

‍Limited tax liability

‍Cross-border commuterXInternational weekly residentXShort-term residentXFindea helps you keep your taxes simple and hassle-free.

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