B(EU) to C permit automatic, disadvantages?

Visas, Permits, Passports and Naturalization
1
I'm an EU citizen with a 5 year B permit and the expiry date keeps getting closer.

I've been told that quellensteuer/source tax stops after 5 years.

- do all EU citizens receive a C permit automatically after 5 years?

- is there a choice to keep a B permit or have a C permit and it is still a B permit, does the quellensteuer stop?

- do EU citizens have to go through all the hassle of getting police checks, credit checks, interviews, etc or is that only for non-EU citizens changing from a B to C permit?

- for married couples - do both automatically get the C permit at the same time? What happens if one is EU and the other spouse is non-EU, does it impact the process for either or both or will the non-EU spouse bypass things like the language test just like the EU spouse?

- are there C permit disadvantages? E.g. I've heard that C permit holders, like Swiss citizens, must pay tax on worldwide income while B permit holders only pay taxes on income received from assets/employment within the borders of Switzerland.

2
As I recall, you have to send off for it, but otherwise, yes.

No idea.

I didn't

If you both meet the criteria of a C permit, then you get one. If one of you doesn't, then that person stays with a B permit.

The outcome can be that. The point is that B permit holders (under 120K) don't fill in a tax return, so don't declare such income/asssets. If you earn over 120K, there is (little or) no change to your tax.

3
Hello, I'll try to answer according to my personal experience as EU citizen.

As far as I know you must have been in CH for 5 years and must have been working without interruption; that was my case at least and my B was changed into C automatically. I was not asked whether or not I want to keep a B permit.

The "upgrade" did not involve any checks / interviews.

Family members get a permit individually.

You pay taxes on worldwide income but only after passing a limit of 100k (not sure about this, maybe someone else can confirm or update).

Hope this helps.

4
I think you can keep a B permit. When I (EU) applied for the extension I had to ask specifically (Kanton Zurich) for the C and give extra documents (Betreibungsauskunft (no debt), letter from my employer that I still have my job, letter from social security that I had not received any support). I ́d assume if I just had filed the normal extension document I would have received another B permit.

As to taxes, if you earn more than 120k, you always will have to file your worldwide income, regardless if you have a B or a C.

Only difference I can notice between the 2 is that no longer taxes are deducted at source, so I get my salary without the tax at source deduction.

5
As to taxes, if you earn more than 120k, you always will have to file your worldwide income, regardless if you have a B or a C.

Only difference I can notice between the 2 is that no longer taxes are deducted at source, so I get my salary without the tax at source deduction.

Could you please explain this better? if I earn more than 120K and I have a C permit they will not deduct taxation at source but I need to declare them separately? however I will pay the same amount of taxes I pay now at source right?

6
Just to touch on some of the OP's questions, from my own personal experience.

All EU citizens may apply for a C permit automatically after 5 years. While the process for B or C permit application may seem automatic for EU citizens, you can actually be turned down if you fail on one of the criteria.

However, there is one caveat about all EU citizens ; certainly this is the case for old (Western) EU citizens, but especially since the initiative last year it may not be as automatic for some (I think there was something about this affecting Croatians).

The Quellensteuer in theory stops after five years regardless of what permit you're on, AFAIK. However, moving onto a C permit means that the Steueramt will be informed of you and you'll formally appear on their radar. So you'll get mail from them shortly after you get your C permit.

No. At least I didn't have to bother with interviews or police checks. All I was asked to get was a letter stating there are no financial judgement against me in X time period, another letter from the social welfare saying I have gotten nothing from them in X time period and my work contract.

Of course I have dual nationality and so registered as an Italian when I first came here; had I registered as Irish I would also have been asked to supply an A2 German language certificate too. Some countries, such as Italy, Germany and France are exempt from this.

I'd double check on that non-Swiss income tax exception if I were you - I'd be skeptical that any country would be so generous.

As for advantages of a C, I believe there are some, such as being able to buy Swiss property or voting rights in some cantons, but in my experience the advantages are only really social and political.

Political in the sense that if they do tighten up things following last years initiative, those with C status will be the least effected (as we're too close to becoming full citizens and thus voters the SVP doesn't want to piss off). Social in the sense that I've noticed you get a more friendly, positive response from some Swiss once you're C status - a permanent resident; here to stay, a permanent part of the community and not one of these blow-ins who comes here for a job for a few years and then blows-out again.

7
Most importantly, with a C permit you can get an overdraft from PostFinance. 4 years and 9 months to go!

8
Just been through it so:

You'll get a C if you ask for it, I applied through our current Gemiende an they were just going to apply for a B. If you fit the criteria, so if your EU, have a clear bretiebung register, the certificate from your gemiende to say you have received no socialhilfe, a permie contract, and the certificate for minimum A2 German.... your good to go, no interview was mentioned. They would not give me a C however as I don't have A2 German certificate, even though my wife has a C, so I will get another B.

That said, I'm moving to kanton Zug and the the requirement is A2 written and B1 spoken to get a C.... bummer

As for tax, I'm not sure, as with my wife having a C we weren't on QS anyway. Given the choice, I'd stay on B and on QS, as other than voting and buying an investment property (rather than a home) I don't see any big benefit to a C over a B... unless you just want a C. Depending upon where you live being on a B and paying QS has some real advatanges as it's worked on the kantonal average, so if you live in a lower tax gemeinde, you will normally get a rebate after the completion of your tax return. If you live in a city then you will get a bill, however, this adjustment is manageable as the bulk is covered via QS. Even on a B you will be required to complete a tax return if your income exceeds CHF120K, and Switzerland taxes on worldwide income and assets, so if you have any (and earn less than 120k) you should be completing a tax return for transparency, get the local tax applied, and also if you have mortgaes or expenses that are deductable here.

I can say that I have never noticed my wife being treated any differently, or had any advantages, or a red carpet rolled out for her having a C. Similarly, I have never had any issues, or been made to feel in anyway less integrated for having a B.

9
For me, the benefits of a C permit are security (less chance of changes to residency priveleges -- after all, a C permit is officially styled a Niederlassungsbewilligung, or permanent residency permit), and lower tax (I live in a Gemeinde with a tax rate lower than the cantonal average) -- quite apart from the personal sense of inclusion I feel by having a C permit.

All of which has been said by other posters here.

10
have a look here https://www.bfm.admin.ch/bfm/en/home...c_eu_efta.html

or here http://www.google.ch/url?sa=t&rct=j&...76802529,d.bGQ

11
You don't pay lower tax on a C permit than on QS, the amount you pay is the same, it's just collected differently.

IE. If your actual tax bill for the year is 30K, and you are not on QS you will pay the 30 k as an estimate against your next years income are here you pay your tax in arrears. This amount could be more or less than the actual, and and a bill will be generated for any underpayment and normally payable in 30 days, and overpayment can be credited in the FOLLOWING tax years return, and paid the following tax year (we just got oure for 2011). On QS you would have paid 30 in 12 or 13 installments, so easier to swallow, then when the tax return is submitted and your actual rate applied this can often be adjusted on your next salary if you are in credit, so the rebate is much quicker... thats how it worked for us in ZH kanton for a number of years.

The security thing, any implication would be a long time coming, and I'm not sure even the loony tune SVP would start huge changes to residency for existing holders, and of course it's whether the individual actually wants to progress towards getting Swiss nationality in which case a C should be a pre-requisite.

Inclusion.... sorry but I just don't see why the letter on a bit of paper (or a card) that will rarely ever see the light of day, or be shared with the fella down the road can make you feel more integrated. Integration is a personal thing surely, I've yet so see a sign says Swiss and C permit holders only, or any streaming that would restrict someone with a B permie from integrating?

12
Your tax could be lower on a C permit or it could be higher it depends on whether you live in a low or high taxed commune and whether you have to fill out a tax return each year.

If you have to do a tax return then of course there will be no difference, you just have yo pay the extra or get a rebate depending on your situation.

If you don't fill out a tax return then the QS will be the cantonal average and so you could end up paying more if you happen to live in a low tax commune.

All totally irrelevant for us as in Neuchâtel you don't even have the choice. You get a form to fill in for B permit renewal a few before it expires and a C permit magically appears whether you request it or not. No paperwork, language certificate, debt register extract etc was asked for.

13
Thats what I said

Your tax is no lower due to a permit type, just the method of collection.

WOW... so easy, teach the German part will you... zey haf wayz of making you fill out ze formz

14
I fully understand the points about the benefits of a C permit, people have gone over them many times on this forum. E.g. some people feel they were offered cheaper car insurance quotes when they put C instead of B in the web form.

My real question was about disadvantages (if any) of the C permit.

Quite the opposite - it is very common.

Most countries tax their own citizens on their worldwide income.

They often tax foreigners just on the income earned in the country, although it depends a lot on the length of stay. When Mr Federer wins a tennis tournament in some country, I think he has to give some of his winnings to the local tax man there before leaving.

If double-taxation applies, then usually the home country won't tax what the foreign country taxed. So if Mr Federer wins the Australian Open and pays tax on his prize money in Australia, that money won't be taxed in Switzerland, because there is a double-taxation treaty.

In the UK, non-domiciled people (non-doms) used to enjoy endless tax benefits. They would earn a UK salary and it would be taxed but their foreign rents or dividends or royalties would be parked in Guernsey or Isle of Mann. The banks could then make up sophisticated offshore mortgage schemes to help the non-dom buy property in London and pay the mortgage interest with tax-free offshore cash. It was perfectly legal until about 5 years ago when they closed the loophole and put a 7 year limit on non-dom status in the UK. Wealthy Russians can still have UK non-dom status if they pay an annual levy.

Singapore has it too, the Not Ordinarily Resident (NOR) scheme. Plenty of expats keep an apartment in Singapore and fly around Asia every other week working on projects for their company. They only pay Singapore tax (which is really low anyway) for the weeks they work in Singapore itself.

In Switzerland, it is much more confusing, especially with all the rules differing from one canton to the next. Some of the stories I've heard but haven't verified:

pay a fixed annual levy (based on the value of your home, but with some minimum threshold) and you do not have to file a tax return for foreign income add up all foreign income to decide which tax rate is used, but the tax is only charged against the portion of the income derived in Switzerland. If your Swiss income is 50k CHF and worldwide is 1 million CHF then the tax rate for 1 million is used but it is only calculated against the 50k (e.g. 20% of 50k = 10k CHF tax) have the non-Swiss income paid subject to the laws of a country with a double-taxation treaty and it is not assessable in Switzerland. If that other country has a nil rate of tax for the particular class of income or if the other country allows deductions that Switzerland doesn't permit then this can be very flexible. E.g. some countries have less than 10% tax for royalties and that may be less than your tax rate in Switzerland. The main thing I'm seeking to understand is that if any of these opportunities are available to a B permit holder, do they lose such privileges/opportunities when moving to a C permit?

15
There are a lot of points in your last post which I can't answer, except that my understanding of double taxation treaties is that being taxed by the lower-tax country doesn't necessarily preclude you from paying some tax in the other. For example, if the CH tax rate is 15% and you've already paid tax at 8% in another country, CH will want the remaining 7%. The idea is that you won't have to pay more than the tax payable in your country of residence, but also not less. So being "taxed" at 0% elsewhere won't prevent you from paying Swiss tax.

I'm no CPA, though, I may have it all wrong.

16
That is what happens to Americans - they always have to file a US tax return and they always have to pay the difference if the total amount of tax in the country where they live is less than what they would pay in the US.

As many Americans are so fond of pointing out, there are only two countries that tax their citizens who move abroad, the other one being Eritrea

http://blogs.wsj.com/washwire/2012/0...zens-overseas/

17
ftfy

18
the only downside with a C is that you must pay your tax even when you've spent that money already

19
Sure. I was talking about the "normal" (non-US/Eritrean) situation -- note, I referred to one's country of residence..

Without a double-tax treaty, it would be even worse for Americans living here; they would have to pay full income tax on all of their worldwide income at US rates, plus full taxes on all worldwide income and assets at CH rates.

20
Anyhow, the original question was really about the B permits held by EU citizens, so this stuff about the American mess is out of scope.