Withholding tax (Quellensteuer) is a method of collecting income tax in Switzerland that primarily concerns foreign workers who do not hold a C settlement permit. Unlike ordinary assessment where the taxpayer receives an annual tax return, withholding tax is deducted directly by the employer from the employee's salary, then remitted to the cantonal tax authority.
For employers, managing withholding tax represents a significant administrative obligation: choosing the scale, monthly withholding, reporting and payment. Any error can result in back-payments, default interest and joint liability of the employer. This guide details all the rules applicable in 2026. At AX-Fiduciaire, withholding tax management is included in our payroll packages.
Who is subject to withholding tax?
Withholding tax applies to several categories of taxpayers who do not have the possibility - or the obligation - to complete an ordinary tax return in Switzerland:
Foreign workers without a C permit
Any foreign worker domiciled in Switzerland who does not hold a C settlement permit is subject to withholding tax. The following permit holders are concerned:
- B permit (residence permit): the most common category, employees who reside in Switzerland on a long-term basis
- L permit (short-term permit): workers with a contract of less than 12 months
- G permit (cross-border worker): persons residing abroad and working in Switzerland, with specific rules depending on bilateral agreements
- F permit (provisional admission) and N permit (asylum seeker): subject to withholding tax as soon as they engage in gainful employment
Upon obtaining the C permit, the worker is subject to ordinary assessment and receives a tax return like any Swiss resident. The employer then ceases to deduct withholding tax.
Cross-border workers
Cross-border workers (G permit) constitute a special case whose tax treatment varies by canton and applicable double taxation convention. As a general rule, French cross-border workers working in the canton of Geneva are taxed at source in Switzerland, while those working in the cantons of Vaud, Valais, Bern, Neuchatel or Basel are taxed in France (see Cantonal Specificities section below).
Other income subject to withholding
Beyond salaries, other income is subject to withholding tax when the beneficiary is domiciled abroad:
- Board fees and attendance fees paid to directors domiciled abroad
- Income of artists, sportspeople and lecturers performing in Switzerland
- Pension benefits (2nd pillar BVG, tied 3rd pillar) paid to beneficiaries domiciled outside Switzerland
- Annuities and pensions paid by Swiss institutions to foreign residents
- Receivables secured by Swiss real estate for the benefit of foreign creditors
Withholding tax scales
The amount of withholding tax is determined by a scale that depends on the taxpayer's personal and family situation. Since the federal harmonisation that came into force on 1 January 2021, scales are designated by uniform letters throughout Switzerland:
| Scale | Family situation | Description |
|---|---|---|
| A | Single, no children | Single person without family dependants. Highest rate at equal income. |
| B | Married, spouse without income | Married couple where only one spouse is gainfully employed. Splitting or double scale depending on the canton. |
| C | Married, spouse with income | Married couple where both spouses work in Switzerland or receive replacement income. |
| D | Secondary income | Applied to income from secondary employment (second employer). |
| E | Simplified accounting procedure | Flat-rate scale for minor income amounts. |
| H | Single-parent family | Single person (unmarried, divorced, widowed) living in a shared household with dependent children. |
Each scale is then broken down into sub-categories according to the number of dependent children (A0, A1, A2... B0, B1, B2... etc.). The higher the number of children, the lower the tax rate.
Determining canton
The applicable scale is that of the canton of domicile of the taxpayer. For cross-border workers, it is the scale of the canton of the workplace that applies. If an employee domiciled in the canton of Vaud works in Geneva, it is the Vaud scale that applies (except in special cases). Rates vary considerably from one canton to another, making the determination of the relevant canton crucial. For a comparison of rates by canton, consult our page on tax rates by canton.
Employer obligations
The employer plays a central role in the withholding tax system. They are the debtor of the taxable benefit (DPI) and assume the following responsibilities:
1. Scale determination
When hiring an employee subject to withholding tax, the employer must collect the information necessary to determine the applicable scale:
- Type of residence or work permit
- Marital status (single, married, separated, divorced, widowed)
- Gainful employment of the spouse (if applicable)
- Number of dependent children
- Canton of domicile (or workplace for cross-border workers)
- Religious denomination (for cantons levying church tax)
2. Monthly salary withholding
Each month, the employer calculates the withholding tax amount on the employee's gross salary and deducts it directly. The gross salary subject to withholding tax includes:
- Base salary
- 13th month salary (monthly pro rata or upon payment)
- Bonuses, incentives and gratuities
- Holiday allowances
- Benefits in kind (company car, accommodation)
- Representation allowances (for the portion exceeding actual expenses)
Not subject to withholding tax: family allowances, reimbursement of actual expenses (with receipts), and employer social insurance contributions.
3. Reporting and payment
The employer must report withholding tax deductions to the competent cantonal tax authority, in principle monthly (some cantons allow quarterly reporting for small employers). Payment of the amounts withheld must be made according to deadlines set by each canton, generally within 30 days of the end of the withholding month.
4. Collection commission
In return for its intermediary role, the employer receives a collection commission that varies by canton:
| Canton | Collection commission |
|---|---|
| Geneva | 2% |
| Vaud | 1% |
| Valais | 1% |
| Fribourg | 2% |
| Neuchatel | 1% |
5. Employer liability
The employer is jointly liable for the payment of withholding tax. If they fail to withhold or remit the tax, they can be required to pay the missing amounts from their own funds, without the possibility of recourse against the employee (except in cases of employee fraud). This liability makes rigorous management indispensable, which we handle in our payroll management packages.
Calculating withholding tax: practical examples
Withholding tax calculation is based on the gross monthly salary to which the rate corresponding to the scale and income bracket is applied. Here are two examples for the canton of Geneva:
Example 1: Scale A0 (single without children) - Geneva
A single employee, French national, holding a B permit, domiciled in Geneva, no children, earning a gross monthly salary of CHF 6,500:
- Applicable scale: A0 (single, no children, no denomination)
- Approximate rate for this income bracket: approximately 13.5%
- Monthly withholding tax: CHF 6,500 x 13.5% = CHF 877.50
- Net salary (before social deductions): CHF 6,500 - CHF 877.50 = CHF 5,622.50
Example 2: Scale B2 (married, spouse without income, 2 children) - Geneva
A married employee, Portuguese national, holding a B permit, domiciled in Geneva, whose wife does not work, with 2 dependent children, earning a gross monthly salary of CHF 8,000:
- Applicable scale: B2 (married, spouse without income, 2 children)
- Approximate rate for this income bracket: approximately 8.5%
- Monthly withholding tax: CHF 8,000 x 8.5% = CHF 680
- Net salary (before social deductions): CHF 8,000 - CHF 680 = CHF 7,320
These examples are indicative. The exact rates depend on the scales published annually by each canton and take into account, on a flat-rate basis, the usual deductions (professional expenses, insurance contributions, child deduction).
Subsequent ordinary assessment (TOU)
Since the withholding tax reform that came into force on 1 January 2021, the rules on subsequent ordinary assessment (TOU) have been profoundly modified and harmonised at the federal level.
Mandatory TOU
Subsequent ordinary assessment is mandatory in the following cases:
- Gross annual income exceeding CHF 120,000: in Geneva, any taxpayer subject to withholding tax whose gross annual income exceeds this threshold is automatically subject to TOU (the threshold may vary by canton)
- Taxable wealth: when the taxpayer holds significant movable or immovable assets in Switzerland
- Income not subject to withholding: when the taxpayer receives other income not subject to withholding (property income, self-employment income, foreign income)
TOU on request
Taxpayers residing in Switzerland (but not cross-border workers, except by exception) may request TOU even if their income is below the CHF 120,000 threshold. This request is worthwhile when the taxpayer can claim deductions not taken into account in the flat-rate scales:
- 2nd pillar buybacks (BVG): fully deductible under TOU
- Pillar 3a contributions: deductible up to CHF 7,258 (employees affiliated with a 2nd pillar) in 2026
- Actual professional expenses: if actual costs exceed the flat-rate deduction included in the scale
- Alimony payments
- Childcare costs
- Mortgage interest and maintenance costs on real property in Switzerland
The TOU request must be filed before 31 March of the following year. It is irrevocable: once TOU is requested, the taxpayer will be subject to ordinary assessment for the entire duration of their stay in Switzerland.
Corrections and adjustments
Errors in withholding tax deductions can occur for various reasons. The system provides for correction mechanisms:
Change of situation during the year
The employer must adjust the scale from the month following the change of situation:
- Marriage: switch from scale A to scale B or C depending on the spouse's employment
- Birth of a child: addition of a dependent child (switch from B0 to B1, etc.)
- Divorce or separation: return to scale A or switch to scale H (single parent)
- Obtaining a C permit: end of withholding taxation, switch to ordinary assessment
- Spouse starts working: switch from scale B to scale C
Taxpayer complaint
If the taxpayer considers that the scale applied is incorrect or that elements have not been correctly taken into account, they can file a complaint with the cantonal tax authority. The complaint deadline is in principle 30 days from notification of the withholding (in practice, from receipt of the payslip). The complaint does not suspend the obligation to pay.
Employer correction
The employer can correct withholding errors until 31 March of the following year in most cantons. After this deadline, corrections must be requested directly from the tax authority.
Cantonal specificities
Although the 2021 reform harmonised the rules at the federal level, significant differences remain between cantons, both in terms of rates and practical arrangements.
Geneva
The canton of Geneva has the major particularity of taxing French cross-border workers at source. Under the 1983 Franco-Swiss tax agreement, cross-border workers residing in the French border zone (departments of Ain and Haute-Savoie) and working in the canton of Geneva are taxed in Switzerland. Geneva pays financial compensation of 3.5% of the gross payroll of cross-border workers to the relevant French departments.
This rule is an exception to the general principle of the Franco-Swiss tax convention which provides for the taxation of cross-border workers in their state of residence. It concerns more than 80,000 cross-border workers working in the canton of Geneva.
Geneva is also distinguished by some of the highest withholding tax rates in Switzerland, reflecting the canton's overall tax burden (cantonal, municipal and federal taxes integrated into the scale).
Vaud
The canton of Vaud applies the standard regime for cross-border workers: those residing in France are taxed in France, not at source in Switzerland. Vaud scales integrate cantonal, municipal (at the rate of the municipality of domicile) and direct federal tax. Vaud was one of the first cantons to implement online reporting platforms for employers, simplifying administrative procedures.
Valais
The canton of Valais also follows the standard regime for French cross-border workers (taxation in France). Withholding tax rates in Valais are generally lower than in Geneva, reflecting a more moderate cantonal tax burden. Valais is a bilingual canton, and forms and scales are available in both French and German.
Good to know: Complete withholding tax management is included in our payroll packages. Scale determination, withholding calculations, monthly declarations, management of situation changes: we take care of everything to keep you compliant. Request a quote.