Withholding tax or ordinary assessment: which applies to you?

Two systems, one tax

Withholding tax is deducted straight from your salary: the employer settles with the cantonal tariff, which already bundles cantonal, municipal and federal tax plus flat deductions. Ordinary assessment runs through the tax return: you declare income and wealth, claim your effective deductions and receive a bill from your municipality of residence.

Taxed at source are foreign employees resident in Switzerland without a C settlement permit — typically holders of a B or L permit. Ordinarily assessed are Swiss citizens, C-permit holders and anyone married to someone with either.

Mandatory SOA from CHF 120,000

If your gross annual salary exceeds CHF 120,000, a subsequent ordinary assessment (SOA) takes place in addition to the withholding tax — uniform in all cantons since the 2021 reform. You file a tax return; the withholding tax already paid is credited against the definitive tax like a prepayment. Once triggered, the SOA also applies to all following years.

Regardless of salary, the SOA also applies if you have other income not taxed at source (e.g. securities income, property) or taxable wealth.

The voluntary SOA: an opportunity with a catch

If your salary is below CHF 120,000, you can request the SOA voluntarily — by 31 March of the following year. It typically pays off when your effective deductions exceed the tariff’s flat allowances:

• Pillar 3a contributions and pension-fund buy-ins
• Childcare and training costs
• Debt interest and maintenance payments
• High work-related costs (commuting, meals away from home)

The catch: the application is irrevocable — once you switch, you stay in the SOA in later years. That can backfire if you live in a low-tax municipality and later have no major deductions: the withholding tariff uses a cantonal average, ordinary assessment your municipality’s actual multiplier. In an expensive municipality the SOA can be cheaper even without deductions — in a cheap one, the reverse.

How to decide

1. Compute your withholding tax with the withholding tax calculator — or compare cantons directly in the withholding tax comparison.
2. Estimate the ordinary tax of your municipality with the cantonal tax comparison — it uses the cantonal capital as reference.
3. If your effective deductions (3a, buy-ins, childcare) are clearly above the flat allowances and you do not live somewhere notably low-tax, much speaks for applying — otherwise simply let the withholding tax run.

Note: if you leave Switzerland, source taxation ends with your departure; separate rules apply to cross-border commuters — more in the cross-border commuter guide.