If you hold a B or L permit, you do not pay income tax via an annual tax return as you would in Spain. Instead, your employer deducts the tax directly from your gross salary each month, before paying you the remainder. This is known as ‘tax at source’ (imposition à la source), and it applies to almost all foreign residents without a C permit. The amount withheld depends on the canton, the municipality where you live, your gross salary and your family circumstances.
Up to 120,000 francs gross per year, the system operates automatically and, in principle, you don’t need to do anything else. Above that threshold, however, things change: you are required to file a standard tax return, known as ‘taxation ordinaire ultérieure’ or TOU, even if you have paid tax at source throughout the year. The same applies if you have additional income not subject to withholding tax in excess of 3,000 francs, or if you have significant assets to declare.
What few people realise is that, even if you don’t reach that threshold and aren’t obliged to do so, you can voluntarily apply for this TOU if you wish to claim deductions not covered by the standard deduction: contributions to Pillar 3a, actual travel expenses, childcare costs, or vocational training. The application must be submitted by 31 March of the year following the one for which you wish to claim deductions. Each canton has its own specific forms and deadlines. And when you obtain a C permit, the system changes automatically: you switch to the standard tax return like any other Swiss resident. Many people only realise this when it is already too late to claim deductions for previous years.