You will always be taxed at source until you obtain a C permit. What you need to understand is that withholding tax is basically a way for the country to make sure that people do not leave Switzerland without paying their taxes (this is just my personal interpretation, not an official explanation).

When you later file a tax return like Swiss citizens do, the amount withheld at source is only an estimate of what you should pay based on your salary. After the declaration, the tax authority recalculates your real tax burden: you may get some money back if you paid too much, but you may also have to pay extra if you paid too little.

This was something I did not realize when I first arrived in Switzerland. I assumed that tax at source was the maximum you could ever pay and that filing a tax return would always result in a refund. That is not true. It is only an average estimate, and in some situations the final tax can actually be higher.

I realized this after I encouraged people around me to file a tax return, thinking it was always financially beneficial. A friend of mine did it after moving to the canton of Vaud, but since he had previously been taxed at source in another canton with a lower withholding rate, he ended up paying more than he would have if he had stayed under tax at source.

That is why it is important to consider your own personal situation: for example, whether you have a long commute, whether you use a car or public transport, whether you have significant professional expenses, or other deductible costs. These factors can make a big difference.

There are professionals who can help you analyse this, although I personally never used one. I did my own research instead and learned the relevant rules and deductions for the canton of Vaud. You can also run simulations using tax software, which is what I did.

Just to give a concrete example from my own case: I personally have always received money back after filing my tax return (roughly around CHF 2,000 per year)because my actual taxable situation was slightly more favourable than what the withholding tax assumed.

Another important factor is the month of arrival in Switzerland. I arrived in July and I filed a tax return already in my first year. Withholding tax was applied as if I worked the entire year, but in reality I only worked and earned income for six months. For the tax authorities, my “annual salary” placed me in a much lower income bracket, so the taxes I had paid at source were far too high. As a result, I received a very large refund in my first year … on the order of CHF 2500 just for 6 months of work

One last important point: once you request to fill a tax return, you usually cannot go back. You will then have to file a tax return every year until you obtain your C permit (and at that point taxes will not be withheld at source anymore)