The desire to harmonize the approach to calculating withholding tax has been longstanding. Payroll and HR experts around the country were looking forward to these changes with high expectations. The Federal Tax Administration and the Swiss Tax Conference have, via Circular No.45, provided the details around the new regulation. In this short article, we would like to highlight the most important changes as well as what remains unchanged.
Highlights of the upcoming change
Generally, the changes are not as revolutionary as some of us may have expected. The two models, annual basis and monthly basis remain. As a reminder, the annual model concerns the cantons of Fribourg, Geneva, Ticino, Vaud and Valais while all the other cantons are applying a monthly model.
There is a long list of changes that will have to be applied as of January 1, 2021. Hereafter, we highlight what we consider the most seen topics that may have an impact on your payroll. This overview is very high level, please do not hesitate to approach us for more details on any of these topics.