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January 22 2020

Taxation of cross-border employees – attention to deadlines!

If you are a taxpayer subject to withholding tax in the canton of Geneva, the rate, which was applied to you, included standard deductions such as professional expenses, insurance premiums as well as family expenses. Depending on your situation, you could eventually reduce your tax burden by submitting a claim for correction of withholding tax according to the following options.

1. Rectification withholding tax before May 31, 2020

Flat rate deductions may be lower than your actual expenditure on health insurance and medical costs. Your payments for the redemption of years in the 2nd and 3rd pillar A, alimony, childcare and professional training costs are not taken into account. You might therefore file a request to take these deductions into account, which might lead to partial tax returns. The request must be imperatively made before May 31, 2020.

2. The request to be subject to ordinary taxation

3. Deductions from all of your actual costs

It is also possible, within the same deadlines, to file an ordinary tax declaration in order to deduct all of your actual costs (medical costs, health insurance, donations, etc.). As long as these costs are superior to the standard deductions included in the withholding tax, it is possible that ordinary taxation concludes with a result that is more favorable to you.

In this case, you will benefit from a partial withholding tax refund, which was deducted from you during the year 2019.

Ordinary tax imposition through a “quasi-resident” status can be requested by all taxpayers residing in the canton of Geneva, as well as by taxpayers residing abroad who earn at least 90% of the household income in Switzerland.

4. Risk of adverse taxation

It is worth to note, that the rates of ordinary ICC and IFD taxation are not the same as those provided for in the scales of withholding tax. Likewise, ordinary taxation implies taking into account all of your income from all sources, even if you live abroad, for the calculation of the final rate which will be applied to you. Thus, in certain situations, higher taxation may result from your request for “quasi-resident” status, which then becomes a final choice for the fiscal period of 2019! In some cases, you may therefore have to pay additional taxes.

In order to advise you on the deductions you could claim as well as to protect you from unfavorable conditions, we are at your disposal to assist you in this proceedings by carrying out a simulation, which will determine the expediency and the consequence of a rectification of the taxation at source.

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