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Swiss Employment withholding tax: are you ready for the changes in 2021?

Swiss Employment withholding tax: are you ready for the changes in 2021?

Swiss Employment withholding tax: are you ready for the changes in 2021?

A reminder of the context:

The federal law of 16 December 2016 established new bases for withholding tax on income from profit-making activities and will be operational from 1 January 2021.

Consequently, the ordinance on withholding tax was published April 2018.

On 12 June 2019, the Federal Tax Administration (AFC) published Circular No. 45 on the taxation of employees’ income from paid employment.

During 2020, the ELM 5.0 standard distributed by Swissdec, provided the guidelines for setting up the payroll administration software.

As an employer and based on these new changes relating to your employees who are subject to withholding tax, you should take these new changes into account which will come into effect on January 1, 2021.

Withholding tax, Swissdec, ELM 5.0 ?

There seems to be quite a lot of confusion on the market as to what exactly is going to change. And SAP’s terminology is not helping either.

To put it simple: the withholding tax reform should be your absolute priority as this needs to be implemented for your January payroll. Especially if your company has employees who are subject to withholding tax and who live in Geneva, as this is where most the most important changes will happen.

The Swissdec ELM 5.0 upgrade is less urgent and will also have less impact.

How to prepare for the Swiss Employment Withholding Tax changes?

To release you from technical and functional constraints, Adessa Group can perform this task for you. You can benefit from our know-how and our best specialists, who will carry out this implementation for you to guarantee a fair salary with the right deductions for your employees. This allows you to focus on the essence of your activity and provides confidence and a good impression to your employees.

If you would like to make use of our services, we advise you to contact us as soon as possible via in order to be ready in time.

What changes will Swiss taxpayers and employers have to face?

  • The calculations are now reducing the inequalities in treatment between persons subject to withholding tax.
  • From now on, the accounts must be sent directly to the cantons concerned.
  • The cantons using the monthly or annual model for calculating withholding tax are defined uniformly, including the scales to be applied.
  • The scale of source tax D (ancillary activity) disappears in favour of a complex method of calculating the income already used when your employee has several part-time jobs (including benefits in kind).
  • The calculation of the 13th salary in the monthly model requires modification of the calculation of withholding tax.
  • Irregular employees paid per hour are subject to the calculation of a decisive monthly income (the rate should always be calculated).
  • The law imposes new withholding tax directives for the de facto employer and for the unauthorised or illegal hiring of services abroad.
  • From January 1, 2021, employers will have to apply the salary scale corresponding to the marital status at the end of the month preceding the payment of the taxable benefit and no longer at the end of the year.
  • The collection commission for employers has been reduced, although ultimately the work for companies remains the same.

Contact us via and take the opportunity to work with the best specialists to ensure that your SAP payroll software is up to date by 1 January 2021.

Post by Wilfrid Dusseaux – SAP SuccessFactors Consultant at Adessa


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