A guest article by MWP Treuhand
Source-taxed individuals can optimize their taxes by voluntarily submitting a Subsequent Ordinary Assessment (SOA) – thus opting for regular taxation. This can be worthwhile.
People residing in Switzerland who do not yet have a permanent residence permit, i.e. a C permit, are taxed at source. This means: Taxes are directly deducted from their non-self-employed income. It's non-complicated and efficient. The rates for source taxation vary from canton to canton. However, not all those affected know that as a source-taxed individual in Switzerland, they can submit a Subsequent Ordinary Assessment (SOA). The financial benefit they derive from this can be considerable. Or, in other words: Thanks to the SOA, taxes can be saved. We explain how the SOA works and what specific advantages it brings to you.
The Advantages of the SOA at a Glance
If you have an annual gross income of less than CHF 120,000, which is taxed at source, you are normally not required to fill out a tax return. Nevertheless, you have the option to voluntarily submit an SOA. This is particularly sensible in two cases:
• The first case: Your monthly income is irregular. While source tax is calculated monthly – meaning the tax burden fluctuates higher or lower depending on the income – the SOA applies the average tax rate for the year and balances out fluctuations in the tax burden.
• The second case: You want to claim additional deductions that are not covered by the source tax rate. For example, the source tax rate does not take into account contributions to Pillar 3a or the pension fund, nor alimony payments or expenses for further education. The SOA, on the other hand, can result in a partial refund of the taxes paid.
We have selected two practical examples to show how you can maximize your tax potential with an SOA:
• Suppose you have a monthly salary of CHF 8,000 and receive a 13th month's salary in December. You are single, childless, and live in Zollikon, canton of Zurich. Your tax burden according to source taxation is CHF 11,128. If you submit an SOA as required, you could get a refund of about CHF 1,174.
• In our second example, your monthly salary is also CHF 8,000 and you receive a 13th month's salary in December. You are single, childless, and live in the city of Lucerne. Additionally, you have paid the maximum amount into the third pillar. According to source taxation, your tax burden is CHF 13,808. If you submit an SOA within required date, you will be refunded about CHF 2,420 in taxes.
Meet the Deadline
As you can see: With the SOA, you can achieve significant financial benefits. Indeed, the SOA is a valuable opportunity to optimize your tax burden in Switzerland and save money. You must submit your application for the SOA at the latest by 31 March of the following year to the tax administration. If you miss the deadline, your application will not be considered.
Seek Our Advice
Are you unsure whether an SOA is advisable in your case? Do you feel uncertain about your tax situation? Are you confronted with complex financial matters? Then we recommend that you seek advice. Our tax experts will answer your questions and help you carry out your SOA correctly. Simply contact us and fill out this form. Because: Saving taxes is always worthwhile!
MWP Treuhand AG – +41 55 442 35 30 – email@example.com
Partner | dipl. Treuhandexperte
LL.M. UZH in International Tax Law