Withholding tax refund despite non-declaration in the tax return - National Council vote

Under current law, the refund of withholding tax is conditional on the income and assets having been declared "in an orderly manner". The legislator has not explicitly regulated what is meant by this. Over the years, the Federal Supreme Court has clarified and tightened the requirement. Since 2014, withholding tax will only be refunded if a subsequent declaration is made spontaneously, i.e. without intervention by the tax authorities.

Now the conditions are to be relaxed. Taxpayers should be given the opportunity to declare negligently undeclared income either spontaneously or after an intervention by the tax authorities. Daniela Schneeberger (FDP/BL) had initiated the change in the law with a push. She stated that today's regulation was overly harsh. The Federal Court had introduced an actual "punitive tax". However, she said that many people were overtaxed with their tax returns. They should not be punished for an oversight. The speakers of the SP and the Greens were critical. Regula Rytz (Greens/EFA) said that the current regulation was intended to combat tax evasion. The financial consequences of a change were unclear. "Who do you want to serve with this?" she asked. Ada Marra (SP/VD), on behalf of the SP Group, said that the latter would reject the proposal if the Council followed the proposals of its Commission.

Finance Minister Ueli Maurer also called for the Federal Council version to be retained. If the Federal Council has its way, the subsequent declaration would only be possible until the end of the period for objection against the assessment. The National Council, however, followed its commission with 131 votes to 54 and has come out in favour of a longer deadline. A subsequent declaration should also be possible in assessment or post-assessment proceedings that have not yet been legally concluded. This was the only way to effectively prevent a double burden of income and withholding tax, the supporters argued. Maurer said that this was going too far. In the view of the Bundesrat, those who do not fulfill their duties even when the assessment is being reviewed are accepting an incomplete assessment. Thus, the non-declaration is no longer negligent, but eventual intentional, the Federal Council writes in the dispatch to parliament.

Furthermore, the National Council has decided on retroactive effect, by 129 votes to 52. The new regulation is to apply to claims that have arisen since 1 January 2014. Maurer spoke out against it in vain. "Actually, the Federal Constitution does not allow this", said the Finance Minister. He said it was fundamentally dangerous if laws were to be retroactively enacted. This would damage the rule of law and credibility. Commission spokesman Leo Müller (CVP/LU) conceded that it was open whether the retroactive effect would also apply to proceedings that had been finally concluded or only to pending ones. Nevertheless, he called for the Commission to be followed. He said that the Council of States, which is now making its move, could clarify open questions. In the overall vote, the National Council approved the proposal by 134 votes to 48 with one abstention. It is clear that the change in the law will lead to lower revenues for withholding tax. According to the Federal Council, it is not possible to estimate how high this will be.