Withholding tax: who is affected?
This system aims to collect tax directly from income, thereby relieving the affected taxpayers from having to file an individual tax return.
This system aims to withhold tax directly from income, thus sparing the affected taxpayers from having to file an individual tax return.
Tax deduction at source
Employers must deduct and declare tax at source. Here are the steps they need to follow to comply with the canton of Vaud's rules.
1. Opening a debtor file
Employers must first open a debtor file for taxable benefits for each employee subject to withholding tax. This is done using the form 21488 available online.
2. Commitment and transfer announcements
Employers are required to report any new hiring or changes in the status of employees subject to source tax. Forms 21486 and 21487 allow for declaring these modifications.
3. IS calculation and payroll deductions
For each employee benefit, the employer calculates the WT according to the scales in force and deducts the corresponding amount from the employee's salary.
In the event of insufficient deductions, the IFA will require the employer to cover the difference, even if the employee concerned has left the company. This principle of causal liability means that the employer remains liable for the uncollected tax, irrespective of any fault.
4. Transmission of declarations
Withholding tax must be declared to the ACI within 30 days. To facilitate this process, three methods are available:
- Transmission via Swissdec-certified payroll accounting software
- Via the Administration's Web entry gateway
- In paper form
Electronic transmissions are subject to a collection fee of 2% of deductions made, compared with 1% for paper shipments.
5. Remittance of deductions to the Tax Administration
The amounts of source tax collected must be transferred to the ACI within 30 days following the declaration. The ACI website provides additional information on the payment methods and deadlines to be observed.
Cantonal tax cuts and new 2024 tax scales
From January 1, 2024, the new legislation provides for a 3.5% reduction in the base cantonal income tax rate for individuals. This decrease is directly reflected in the tax scales for source tax, applied to foreign workers taxed at source.
These updated scales are to be adopted by employers to calculate tax levies on the salaries of relevant employees.
Tax rates for the canton of Vaud in 2024
Amounts shown are in CHF, for a single taxpayer.
Gross annual salary (CHF)
Withholding rate (%)
60'000
8.58%
80'000
12.45%
100'000
14.34%
120'000
16.20%
160'000
19.85%
200'000
22.77%
300'000
27.94%
400'000
31.61%
600'000
35.08%
800'000
36.79%
1'000'000
37.95%
Withholding tax for cross-border workers
Cross-border commuters working in the cantons of Vaud, Valais, Neuchâtel, Jura, Bern, Basel-Stadt, Basel-Landschaft or Solothurn are generally taxed in France.
From January 1, 2024, the new legislation provides for a 3.5% reduction in the base cantonal income tax rate for individuals. This decrease is directly reflected in the tax scales for source tax, applied to foreign workers taxed at source.
Cross-border commuters subject to Swiss WT
Cross-border workers employed in Geneva or other Swiss cantons pay source tax in Switzerland. However, they are still required to complete a declaration with the French tax authorities, even if they pay tax in Switzerland, facing penalties for non-declaration.
Since 2008, cross-border workers employed in certain cantons must also provide a certificate of tax residency (Form 2041-AS) to their employer, duly stamped by the French tax authorities. This document is essential to avoid the automatic withholding of source tax in Switzerland and confirms their tax residency status in France.
Frequently Asked Questions
Withholding tax is a method of tax collection mainly applicable to foreign workers without a residence permit (C permit).
It consists of a direct deduction from the taxpayer's salary by the employer, who then passes it on to the cantonal tax authorities.
The following are subject to withholding tax in the canton of Vaud:
- Foreigners without a residence permit (C permit),
- People temporarily residing in Switzerland for work reasons,
- Cross-border commuters working in Switzerland but living in another country,
- Expatriates and certain foreign residents with special status.
Pour remplir une demande de remboursement d’impôt à la source dans le canton de Vaud :
- Download the request for correction or refund form on the Vaud cantonal tax administration website.
- Fill in the required personal and financial information, including income amounts and specific deduction situations (e.g., alimony, childcare expenses, insurance contributions, etc.).
- Attach supporting documents (contracts, proof of expenses, etc.) for each deduction claimed.
- Send the completed application by post or electronically before the deadline indicated on the form.
Note : The application must be completed by March 31 each year for the previous year's income.
Taxpayers subject to withholding tax may be eligible for several deductions, including:
- Health and life insurance contributions,
- Childcare expenses,
- Alimony payments,
- Professional or training expenses under certain conditions.
The withholding tax rate applied is determined by the Cantonal Tax Administration on the basis of the rate tables published each year.
You can consult the tax scales on the website of the Vaud cantonal tax authorities.
