NEWS

 

Source tax: elimination of rate correction / voluntary subsequent ordinary assessment

The rate correction is to be applied for the first time for the tax year 2021 and the corresponding application must be submitted by March 31, 2022 (same deadline as for the rate correction).

 

By filing a rate correction, persons subject to source tax could previously claim additional tax deductions. With the introduction of the source tax revision as of January 1, 2022 (cf. also our publication), this possibility was abolished.

 

The rate correction allowed, for example, the payment into pillar 3a, the contribution into pillar 2 (BVG), the payment of alimony, etc. to be additionally claimed for persons liable to source tax. In order to ensure that those persons are not placed in a worse position in the future, the rate correction was replaced with the voluntary subsequent ordinary assessment ("NOV"). The NOV is to be applied for the first time for the tax year 2021 and the corresponding application must be submitted by March 31, 2022 (same deadline as for the rate correction).

 

The NOV will trigger a lot more work compared to the previous rate correction, as a regular tax return on worldwide income and assets must be submitted in the respective canton of residence or work, respectively. In addition, the NOV does not lead to a release from the source tax obligation; the source tax paid will be offset against the definitive tax burden determined on the basis of the NOV.

 

The new regulations require a proper analysis and assessment of the circumstances of persons subject to source tax, which must be done by the end of March 2022. It should also be noted that if a person subject to withholding tax has opted for the NOV, in the future they will always have to fill out a tax return. The taxpayer must therefore consider carefully whether it makes sense to apply for a NOV. If, for example, a pension fund purchase is only made in one year, it must be checked whether there may be a higher tax burden in the future.

 

For any further questions or advice, please contact Reto Leisibach, Swiss certified accountant, leisibach@fineac.ch or Cornelia Hager, Head individual taxation, hager@fineac.ch.

 

Follow us on LinkedIn and stay up to date.

 

WHAT we do is not unique, but HOW we do it.

 

Reto Leisibach, 13 January 2022

 

Keywords: tax, source tax, rate correction