On 21 September 2017, the Swiss Federal Department of Finance (FDF) submitted the total revision of the Withholding Tax Ordinance for consultation. The ordinance specifies the prerequisites for non-residents to be entitled to subsequent ordinary tax assessment.
The Swiss Parliament consented to a full legislative revision of withholding tax applied to earned income on 16 December 2016 to abolish unequal treatment. Thus, residents as well as “quasi-residents” (employees who are not domiciled in Switzerland and who generate a major part of their income from an activity performed in Switzerland) can request a subsequent ordinary tax assessment. The subsequent ordinary tax assessment is obligatory for people resident in Switzerland and taxed at source, if their gross annual income from salaried income totals CHF 120,000 or more.
Quasi-residency was adopted into Swiss law pursuant to the Federal Supreme Court ruling of 26 January 2010 (Decision of Swiss Federal Court 136 II 241), which stated that in certain situations the Swiss withholding tax system was contrary to the Agreement on the Free Movement of Persons with the EU. According to the Federal Supreme Court, Switzerland must grant quasi-residents the same deduction options as to residents. According to the draft ordinance, a person should be eligible for a subsequent ordinary tax assessment, if at least 90% of his/her gross global income is earned in Switzerland.
Also, the legislative revision involves a series of formal adaptations in further ordinances. The Federal Act and the relevant ordinances are expected to come into effect in 2020.