For members


What Switzerland’s proposed income tax change could mean for employees?

Swiss employees could soon have part of their income tax deducted directly from their wages each month. Here's what you need to know about the change.

Currently, Swiss citizens and permanent residents pay income taxes by monthly instalments, the amounts of which are based on the previous years’ income. Final payments are then due once the tax return is assessed by the authorities.

But this week MPs voted in favour of introducing a taxation system for all employees that is already applied to certain foreign nationals working in the country: taxing income at source.

Deputies approved the idea of taxing everyone in Switzerland at source, arguing that that having small amounts automatically deducted from wages is more manageable for most workers than being faced with a lump-sum payment.

According to MP Emmanuel Amoos, who launched the motion, this system would prevent tax debt, which impacts nearly 10 percent of Switzerland’s population. This has a significant impact on municipalities, cantons, and the federal government.

Every year, public administrations have to write off hundreds of millions of francs in tax debts as bad debt losses.

What does this mean for Swiss taxpayers?

In future, income taxes should automatically be deducted by the employer from the employee’s salary and transferred to the responsible tax office directly unless employees themselves decide on different arrangements.

Should an employee then claim deductions on their tax return, they would get their money back upon doing so – just like foreign employees.

Voluntary tax payments already possible

Further to this, employees can already make voluntary tax payments if they wish to do so, but many choose not to.

Parties which opposed the motion have indeed argued that the main problem of indebted people is in fact not the lack of a voluntary tax deduction option, rather than people’s handling of their own money. They argue even this reform may not solve the nation’s tax debt problem.

In addition, the new deduction would only affect the income tax on people’s wages, but not their remaining income from other sources such as rent, or the wealth tax.

What happens next?

The proposal will now go to the Economic Commission of the Council of States  for consideration. If agreed, the National Council must draw up a legislative proposal. If the request is not heard by the Council of States commission cannot agree then the Council of States has to decide.

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For members


Why does Zurich have the highest wages in Switzerland?

Various studies show that when it comes to salaries, Switzerland’s largest city has an edge over other regions. What is the reason for that?

Why does Zurich have the highest wages in Switzerland?

Switzerland’s wages are famously high overall, but if you analyse them closer, you will see that, salary-wise, some regions fare better than others.

Logically, earnings are higher in large cities than in small towns and rural areas, as that is where most economic opportunities are.

However, income disparities exist even between the urban centres.

This has been shown in various surveys, including the latest one, released this month by HES-SO, the umbrella association of Swiss universities of applied sciences (UAS). 

Unlike general universities, UAS doesn’t offer Master or Doctorate degrees, but rather Bachelor’s programmes linked with a specific professional field. They are often attended by people who had completed their vocational training and wish to further their education.

What did this survey find?

What emerged from this study is that graduates of universities of applied sciences earn significantly more in 2023 that they did two years ago, when the last study was carried out.

Their median annual wage currently amounts to 104,000 francs, compared to 100,000 in 2021.

However, the results also indicate that there are regional disparities, with wages being higher in German than in French-speaking Switzerland.  

Among the cantons, Zurich is in the lead, with a median income of just over 111,000 francs per year.

This is not exactly a new piece of information: statistics show that salaries in Zurich are 10.8 percent higher than in Geneva, and 5.4 percent higher than in Basel.

How can this discrepancy be explained?

The Local put this question to Fabian Büsser, director at Michael Page recruitment agency.

He said that it is a matter of what kind of jobs are most in demand and their geographical location.

“Some of the highest paying jobs are in finance, insurance, IT, and engineering,” he pointed out, most of which are located in the German-speaking part of Switzerland.

“This region accounts for nearly 90 percent of advertised jobs in these sectors and is home to the largest banks, insurers and technology companies, as well as other firms requiring engineers, such as real estate and property,” Büsser said.

According to the latest Michael Page Swiss Job Index, while 89 percent of these jobs can be found in the German-speaking region, only 10 percent are in the French-speaking area (and even fewer — 1 percent — in Ticino).

There is, however, some positive news for the Swiss-French part

The HES-SO survey found that while this region trails behind the German-speaking part, the wages there have increased significantly.

The median annual salary in the Geneva area is 92,300 francs, which corresponds to an increase of 8.4 percent compared to two years earlier.
This is particularly the case in the IT branch, with a median salary of 112,000 francs, followed by finance and insurance, with 106,000 francs.

How do these wages compare to those who graduate from ‘regular’ universities?

Switzerland has several kinds of higher education establishments: cantonal universities and two federal polytechnic institutes: one in Zurich (ETH) and the other in Lausanne (EPFL).

They are considered the ‘highest’ educational institutions.

Graduates of these establishments can earn as much as 10,170 francs a month, which amounts to 122,000 a year.

READ ALSO: How much can you earn with a Swiss university degree?