Instead of filing a tax return and later receiving a tax bill, for withholding-tax-liable persons the tax is levied monthly "at the source", i.e. on the salary. The employer calculates the deduction using the cantonal withholding-tax tariff, retains it from gross salary, and periodically transfers it to the cantonal tax administration.
Who is affected: primarily employees of foreign nationality without a C settlement permit and without a resident spouse holding Swiss citizenship or a C permit, as well as cross-border commuters and certain other situations (e.g. board members abroad, artists and athletes not resident in Switzerland). For people with a C permit, a Swiss passport, or marriage to such a person, withholding tax does not apply, they are assessed by the ordinary procedure.
The process and tariff: the deduction depends on the level of salary, marital status, number of children, and religious affiliation. The tariffs are coded with letters (e.g. A for single people, B for married with one income, C for married with two incomes, H for single parents). The employer receives a collection commission for the effort (usually around 1–2 % by canton). Since the 2021 reform the system has been more strongly harmonised across Switzerland.
What to watch for: anyone taxed at source who earns above a cantonal income threshold (commonly CHF 120,000) is subject to mandatory subsequent ordinary assessment (NOV) and must still file a tax return. Below that, a subsequent ordinary assessment or recalculation can be requested to claim deductions (e.g. pillar 3a, further education, commuting costs, childcare); the deadline is 31 March of the following year.
A fiduciary or tax advisor checks whether a recalculation or ordinary assessment request is worthwhile and handles the declaration. For employers, correct withholding-tax settlement is a fixed part of payroll accounting; errors in the tariff or late remittance lead to back-claims (no guarantee).