B to C Permit - messy answer from the tax office

#1

Hello everybody,

I would like your suggestion on something.

I live in Ticino and I’ve got my C permit in November 2018. Until then I was taxed at source and my income taxes were around 15k in 2018.

At the beginning of 2019 I made my tax declaration (the expected/hoped tax for the year was 13.5k) and I just received the answer from the tax office and I noticed 3 problems:

  1. They considered source taxes for the whole year.
  2. They removed the reimbursement for the withholding taxes (they reimbursed them in 2017)
  3. The 3rd pillar contributions affect only the tax rate for the income from dividends and not my job income (so almost no benefit from the contributions).

I called the tax office and they told me that only December would be taxed with normal taxation and the first 11 months would stay at source. Furthermore the 3 pillar calculations are correct.

I’ve been told that I can chose to have it corrected but my current situation should be favorable to me as I was not taxed for December.

I don’t know if it’s correct to be taxed only for 1 month regularly and not for the whole year. On the Ticino source tax directive it’s stated:

The subjection to the withholding tax is normally replaced by the ordinary one, from the beginning of the month following the month in which the foreign worker obtained a residence permit (permit C) or obtained Swiss citizenship.

But it doesn’t clarify what happens for the rest of the year taxed at source.

Furthermore I don’t know how taxes are calculated for only 1 month with regular taxation and I can’t be sure if the current situation is favorable or if I should ask for a correction.

Does anybody have some suggestion on how to proceed?
I’m currently thinking about going to an accountant to have my papers reviewed…

#2

That really doesn’t make any sense. Most people do not have dividends or even stocks… why would they pay into the 3rd pillar then?

#3

On a quick google search, that pro-rated taxation (“unterjährige Steuerpflicht”) seems to be what many (all?) cantons are doing.

Which one? The ordinary “big” declaration?

As far as I understand, it get’s pro-rated (would that be the correct term? Or would it be pro-rated in “in reverse” or something?). E.g. a 7000 CHF/month salary would be treated as a 84 000 yearly salary (less deductions, where it could get a bit intricate) for determination of the applicable tax rate.

#4

Thank you all for your answers!

I agree

Yes, I’ve been doing it since I moved to Ticino in 2016 but I was taxed at source…

So they will get the tax rate for the whole year and apply it to December only.

The source taxes that my employer reimboursed me were 1’300 francs.
I estimate the taxes for December to be 13.5k/12=1’125 or less.
The 3rd pillar tax reduction for the whole year should be 1’750 or 1’600 for 11 months.

With the 3rd pillar tax reduction I can get more than 1 month taxes that I’m not getting now. I think that it makes sense to ask them to recalculate and make sure that they include the 3rd pillar.
Any other input?

#5

No 13th salary or bonus in that month?

Are you going to get that reduction?

I mean… wouldn’t you have needed to file two separate tax returns? First, the form to partly reclaim withholding tax (“Quellensteuer-Tarifkorrektur”, same as for 2017) for the period that you were taxed at source (january through november). Second, your ordinary tax return for december, in which you were ordinarily taxed?

If I’m not mistaken, Quellensteuer-Tarifkorrektur might be (and is, at least somewhere) subject to a filing deadline of March 31. I’m not saying they’re necessarily going to argue that position, but…

#6

I don’t know how it works in Ticino, I can only speak for Vaud, but I have a question for you: when you filled your yearly tax return (even though you were taxed at source), were you being taxed at the same rate as any other Swiss or C permit-holder person? Why were you filling a “full” declaration in the first place?

Depending on your answer, what your tax office is telling you might or might not make any sense.

#7

I’ve been in the same situation in the same canton about 10 years ago.
Did try the same path (I wrote a letter to ask for the full ordinary taxation) but got exactly the same answer…

#8

It is. This is well documented online, and this is the way it works for everyone in Switzerland. Tax at source, until the end of the month where you receive C-permit. From then, regular taxation. You are considered part-year subject to regular tax for the month with C-permit (as if you’d moved to Switzerland).

You are NOT supposed to be given any choice in the matter (according to federal govt), and Kantonal office shouldn’t be giving you any choice. This is to make things fair for everyone, no gaming the system in a transition year.

So what happens is that for N months you get the regular tax-at-source process (and part of 3A should be applicable, pro-rated), and for 12-N months you get the regular tax process (and the rest of 3A and other deduction are applicable, pro-rated).

#9

Not in that month.

I was completing the full declaration because I have received the papers to do it when I moved to Ticino. When I was in Neuchatel I had never done it. I was taxed only on the non job related income (dividends). I was completing the full declaration but all the deduction were scrapped for the calculation of the rate. Considering that it was only affecting few hundreds francs I never investigated too much.

I couldn’t find an answer during my researches but I found some instances in which it was for the whole year (e.g. link)
They shouldn’t even give me the choice on how to tax December but apparently they are…

I guess that this is the main question now. Do you think that I can receive the 3rd pillar tax reduction for the part of the year I was taxed at source? I haven’t filled the “Quellensteuer-Tarifkorrektur” but they have all the information considering that I filled the full declaration.

#10

Did the letter include the dates you were subject to normal taxation?

Fair point, that’s a bit of special case though.

#11

To be safe - file it. You are late doing it, but you should still try.