Novelties in Tax Law 2021

On January 1, 2021, the revised withholding tax ordinance will enter into force. This will have fundamental effects on both employers and employees.

In addition to various changes with regard to the application of certain rates, the most important change for employers with employees subject to withholding tax who are domiciled in different cantons is the settlement of withholding taxes with the corresponding canton of domicile. Settlement for all employees at the employer's domicile will no longer be possible.

In addition, further changes will directly affect the withholding tax payers, i.e. the employees. Previously, a so-called subsequent ordinary assessment (within the tax return filing process) was only provided for withholding tax payers with an annual gross income of more than CHF 120,000. For withholding tax payers with a gross income below this amount, only the possibility of a so-called tariff correction existed, which had to be applied for by March 31 of the following year. In some cases, this led to very unsatisfying situations. As of the 2021 tax period, withholding tax payers with a gross annual income below CHF 120,000 may apply for a subsequent ordinary assessment until March 31 of the following year (i.e. for the first time until March 31, 2022). It is important to note that the application for such voluntary subsequent ordinary assessment may also  worsen the tax payer’s position. By filing an application, the withholding tax payer is obliged to file a tax return in the following years as well. It is therefore urgently recommended that a careful assessment of each specific individual case is performed before submitting an application for voluntary subsequent ordinary tax assessment.