How does withholding tax work in Switzerland for Hungarian employees in 2026?
Withholding tax (Quellensteuer) for Hungarians in Switzerland: who is required to pay, tax rates, the CHF 120,000 threshold, the NOV deadline and the double taxation agreement in 2026.
Table of contents
- Who is required to pay withholding tax in Switzerland, and who may become subject to ordinary taxation?
- How is the monthly deduction calculated, and why does the canton of residence matter?
- What tariff categories exist (A, B, C, H), and what is included in the tax rate?
- What does the magic CHF 120,000 threshold mean, and when is filing a tax return mandatory?
- Is it worth voluntarily requesting an ordinary tax assessment (NOV), and what is the deadline?
- Why does the standard Grenzgänger concession not apply to commuters resident in Hungary?
- How does the Swiss-Hungarian double taxation agreement affect people working in Switzerland and pension payments?
- Sources
Who is required to pay withholding tax in Switzerland, and who may become subject to ordinary taxation?
A person subject to withholding tax (quellensteuerpflichtige Person, qsP) is any foreign employee who lives and works in Switzerland but does not hold a C settlement permit.
In practice, this affects most Hungarian nationals during their first years after moving to Switzerland. As a Hungarian national, you are an EU citizen and may enter the Swiss labour market under the Agreement on the Free Movement of Persons (FZA, 1999) — but this does not exempt you from withholding tax.
Typical persons affected include:
Employees holding a B permit (residence permit, Aufenthaltsbewilligung, Ausweis B).
Employees holding an L permit (short-term residence permit, Kurzaufenthaltsbewilligung, Ausweis L).
Withholding tax is not deducted in two main cases, and the person concerned is required to file an ordinary tax return:
If you obtain a C settlement permit.
If you are married to or in a registered partnership with a Swiss citizen or a person holding a C permit.
The deduction is made by the employer. Swiss law refers to the employer as the debtor of the taxable benefit (Schuldner der steuerbaren Leistung, SSL): the employer calculates, deducts and remits the amount.
How is the monthly deduction calculated, and why does the canton of residence matter?
The employer deducts withholding tax each month from gross salary, based on the tariff table of the canton of residence. The rate varies considerably between cantons because it is based on the average tax rates of the canton and municipalities.
The following cantonal difference is the most important point to remember: there is no uniform Swiss withholding tax rate. The same gross salary can result in a different net amount in Zürich (ZH), Bern (BE), Luzern (LU), or Genève (GE).
This is why this article intentionally does not provide a specific percentage. To calculate the exact deduction, it is advisable to use the official tariff files and online calculators of the cantons. These are updated annually and take many factors into account, from religious affiliation to marital status.
Some factors that affect the basis for the deduction:
The gross monthly salary and any fluctuations in it.
Marital status (this determines the tariff code).
Whether church tax is paid or not.
The number of children.
As the amount is deducted automatically by the employer, the net salary is already received after tax. Most employees subject to withholding tax do not need to file a separate annual tax return — unless the thresholds discussed below or the NOV rules apply to them.
What tariff categories exist (A, B, C, H), and what is included in the tax rate?
The tariff code reflects the family and income situation. The Swiss system uses letter codes to indicate the main categories:
Tariff | Who it applies to |
|---|---|
A | Single individuals (unmarried, divorced, widowed) |
B | Married couples where only one spouse is employed |
C | Married couples where both spouses are employed (dual-income tariff) |
H | Single parents raising children |
Alongside the letter code, the religious affiliation also changes the actual code. For example, “A0Y” includes church tax, while “A0N” does not. The number in the middle of the code generally indicates the number of children.
Determining the tariff code is important because it directly affects the amount withheld. If the personal situation changes (marriage, divorce, birth of a child, the partner starting work), this must be reported to the employer or tax office, as the tariff will also change.
What does the magic CHF 120,000 threshold mean, and when is filing a tax return mandatory?
If an employee subject to withholding tax has an annual gross income of 120 000 CHF, a subsequent ordinary tax assessment (NOV).
This means that the employer continues to deduct monthly withholding tax, but the person concerned must also submit a full ordinary tax return. In this case, withholding tax acts as an advance payment, while the final tax liability is determined by the ordinary assessment.
An important detail for married couples: when determining the CHF 120,000 threshold, incomes are not added together. Each spouse must reach this amount individually in order to become subject to NOV in their own right.
If ordinary taxation results in a higher tax burden than withholding tax, the difference must be paid. NOV is therefore not automatically advantageous—the outcome depends on the individual circumstances.
Is it worth voluntarily requesting an ordinary tax assessment (NOV), and what is the deadline?
Those with an income below CHF 120,000 may also voluntarily request an ordinary tax assessment. This may be advantageous if deductions can be claimed that are not taken into account by the withholding tax tariff.
Through a voluntary NOV, the following can generally be claimed:
Pension contributions to pillar 3 (Säule 3a).
Commuting expenses.
The costs of education and further training.
However, the deadline is strict, and it is crucial to understand this: the application for voluntary NOV must be submitted no later than 31 March of the year following the tax year. This is a forfeiture deadline and cannot be extended. If it is missed, the opportunity for that year is lost.
Another lasting consequence that should be considered carefully: an NOV application, once submitted, is irrevocable. Anyone who submits one will automatically be required to file an ordinary tax return for the remainder of their stay in Switzerland. This is not a one-off decision; it creates an ongoing obligation for every subsequent year.
For this reason, voluntary NOV is not something to try out experimentally. Before submitting an application, it is advisable to calculate whether the expected deductions genuinely outweigh the burden and administration of the ongoing filing requirement. In more complex cases, involving a tax advisor may be appropriate.
Why does the standard Grenzgänger concession not apply to commuters resident in Hungary?
The preferential withholding tax rate of 4.5% in certain cases for Swiss-German and Swiss-French cross-border commuters (Grenzgänger) is not geographically applicable to people resident in Hungary.
The reason is simple: this concession applies to residents of countries neighbouring Switzerland (such as Germany and France) who return home daily. Hungary does not border Switzerland, so the standard Grenzgänger rate cannot be applied to Hungarian residents.
This is a common source of misunderstanding. The “4.5% commuter tax” circulating online and on forums therefore does not apply to a Hungarian national who maintains their permanent address in Hungary and commutes to Switzerland weekly.
Weekly commuters working in Switzerland but holding a permanent address in Hungary are subject to Swiss domestic withholding tax rules and cantonal rates. The actual situation (tax residency, place of work, duration of stay) may require an individual assessment, so generalisations can be misleading.
How does the Swiss-Hungarian double taxation agreement affect people working in Switzerland and pension payments?
The double taxation agreement between Switzerland and Hungary, signed in 2013 and in force since 2014 (Doppelbesteuerungsabkommen, DBA) is in force. Its purpose is to ensure that the same income is not taxed twice by both countries.
The agreement determines which state has the right to tax each type of income. In the case of employment income, this is generally the state where the work is performed — meaning Switzerland for most Hungarians working in Switzerland — although the specific situation depends on tax residency.
Pension payments require particular attention. Payments from Swiss occupational pension funds, i.e. 2nd and 3rd pillar payments, are subject to withholding tax in Switzerland for residents of Hungary. However, under the double taxation agreement, they may in certain cases be reclaimed or credited.
This area is complex and requires an individual assessment. The conditions for reclaiming tax, the documents to be submitted and the Hungarian tax treatment vary from case to case. Tax planning for 2nd and 3rd pillar payments, as well as reclaiming tax under the double taxation agreement, are matters in which an incorrect step can have serious financial consequences.
For this reason, it is strongly recommended to involve an expert — a tax advisor familiar with both Hungarian and Swiss taxation — before initiating any payment or tax reclaim. This article provides general information and does not replace personalised tax advice.
Sources
ch.ch — https://www.ch.ch/de/auslander-in-der-schweiz/in-der-schweiz-leben/quellensteuer/
comparis.ch — https://www.comparis.ch/neu-in-der-schweiz/finanzen/quellensteuer
sg.ch — https://www.sg.ch/steuern-finanzen/steuern/steuerarten/quellensteuer.html
zh.ch — https://www.zh.ch/de/steuern-finanzen/steuern/quellensteuer.html
ethz.ch — https://ethz.ch/de/die-eth-zuerich/arbeiten-lehren-forschen/welcome-center/steuern/quellensteuer.html
lu.ch — https://steuern.lu.ch/natuerlichepersonen/Steuerarten/quellensteuer/quellensteuer_tarife
admin.ch (ESTV – Swiss Federal Tax Administration) —
bdo.ch — https://www.bdo.ch/de-ch/publikationen/stolperfalle-bei-der-quellensteuer-obligatorische-nachtragliche-ordentliche-veranlagung
zh.ch (NOV) —
so.ch — https://so.ch/services/nachtraegliche-ordentliche-veranlagung-beantragen/
be.ch (taxinfo, NOV) —
be.ch (taxinfo, cross-border commuters) —
be.ch (pension payments, fact sheet) —
vs.ch (NOV) —
zh.ch (cross-border commuters) —
steuerinformationen.ch (Double Taxation Agreement Hungary) —
tg.ch (tax practice) —
fr.ch — https://www.fr.ch/de/steuern/quellensteuer
winterthur.ch — https://stadt.winterthur.ch/themen/leben-in-winterthur/arbeit-steuern/steuern/quellensteuer/auslaendische-arbeitnehmer
obt.ch — https://www.obt.ch/de/infoboard/quellensteuer-in-der-schweiz-besteht-eine-abrechnungspflicht
In Brief
In Switzerland, Hungarian employees without a C settlement permit pay withholding tax, which is deducted monthly by the employer according to cantonal rates. Above an annual gross income of CHF 120,000, ordinary tax assessment is mandatory; below this threshold, it can be requested voluntarily by 31 March (NOV), but this creates an irrevocable obligation until the end of the person's stay in Switzerland.
Key Takeaways
- Check the official calculator of your canton of residence to determine the exact withholding tax deduction, as there is no uniform national tax rate.
- Notify your employer immediately of any changes in marital status or church membership, as these directly affect the withholding tax rate code.
- Prepare a detailed tax calculation before requesting a voluntary ordinary tax assessment (NOV), as submitting the application creates an irrevocable obligation until the end of your stay in Switzerland.
- Observe the non-extendable deadline of 31 March in the year following the tax year if you wish to submit a voluntary ordinary tax return to claim deductions.
- Do not expect to qualify for the preferential 4.5% cross-border commuter (Grenzgänger) tax rate if you maintain your permanent residence in Hungary, as this benefit applies exclusively to residents of neighbouring countries.
- Use an expert familiar with both countries' tax systems for tax planning related to Swiss private pension fund payouts (2nd and 3rd pillars) and claims for reimbursement under the double taxation agreement.
Frequently Asked Questions
Who is required to pay withholding tax in Switzerland?
All foreign employees who live and work in Switzerland but do not hold a C settlement permit are subject to withholding tax. This rule affects most Hungarian citizens entering the Swiss labour market during their first years after moving, typically those holding a B or L permit.
In what cases can a Hungarian employee be exempt from withholding tax?
Withholding tax deductions cease in two main cases: when the employee obtains a C settlement permit, or when they marry (or enter into a registered partnership with) a person who is a Swiss citizen or holds a C permit. In these cases, the person concerned moves to the ordinary taxation system.
Why does net pay differ between cantons for the same gross salary?
Switzerland does not have a uniform withholding tax rate. Withholding tax is determined based on the canton of residence and the average tax rates of its municipalities, so the same gross income results in different net payments, for example in Zürich, Bern or Genève.
What do the A, B, C and H rate codes mean?
Rate codes reflect the employee's family and income situation. Code 'A' applies to single persons, 'B' to single-income married couples, 'C' to dual-income married couples, and 'H' to single parents raising children. The codes are also adjusted according to the number of children and church tax liability.
When is it mandatory to submit an ordinary tax return in addition to withholding tax?
Ordinary tax assessment (NOV) becomes mandatory when an employee subject to withholding tax has an annual gross income of at least CHF 120,000. For married couples, this threshold is not combined; each spouse must reach it individually for the obligation to apply.
Is it worth voluntarily requesting an ordinary tax return for income below CHF 120,000?
A voluntary return may be beneficial if you can claim substantial deductions, such as pension contributions to the 3rd pillar, commuting expenses or training costs. The decision should be considered carefully, as submitting the application is irrevocable and makes the preparation of an ordinary tax return mandatory every year until the end of your stay in Switzerland.
Can the preferential 4.5% Grenzgänger tax be applied to commuters travelling to Hungary?
No, the preferential 4.5% cross-border commuter rate does not apply to people resident in Hungary. This benefit is available only to residents of countries directly bordering Switzerland (such as Germany or France) who return home daily.
Related guides
- Withholding Tax in Switzerland: When Is a Subsequent Ordinary Tax Assessment Mandatory?