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Payroll & Tax in Switzerland

Switzerland payroll & taxation

There are specific rules for payroll and taxation in Switzerland, depending upon whether your company employs foreign nationals, EU members or local Swiss employees . The primary concerns for a foreign company that needs to comply with tax laws in Switzerland are: individual income tax for employees, social insurance costs, payroll tax, VAT tax, withholding tax, business tax and permanent establishment concerns.

Your Payroll Options in Switzerland

Remote Payroll

A remote payroll in Switzerland is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Switzerland. One option for a non-resident company is to payroll its employees (local and foreign) in Switzerland is to use a fully outsourced service like a GEO, which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in Switzerland under one of the forms available, (Liaison Office, Branch Office or Subsidiary) but prefer to have another company administer its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. However, the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Switzerland may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Swiss payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Swiss employment laws.

Fully Outsourced Payroll & Employment 

Companies can outsource the employment and payroll of their staff in Switzerland to a GEO, like Shield GEO. This is possible for both foreign workers and Swiss nationals. This is the easiest, fastest and safest way to payroll staff in Switzerland.

Shield GEO manages all aspects of payroll for workers in Switzerland, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Switzerland

Information Explanation
Currency ?

CHF Swiss Franc

Tax Figures

Information Explanation
Corporate Income Tax ?

Federal CIT: 8.5% on profit after tax. There are also CIT’s applied at the cantonal and communal level. Depending on where the company is resident in Switzerland the overall CIT rate can range between about 11.5% to 24.2%.

Income Tax Rate ?
Grossed income Tax Rate (%)
CHF 0-28299 0%
CHF 28300-50899 1%
CHF 50900-58399 2%
CHF 58400-75299 3%
CHF 75300-90299 4%
CHF 90300-103399 5%
CHF 103400-114699 6%
CHF 114700-124199 7%
CHF 124200-131699 8%
CHF 131700-137299 9%
CHF 137300-141199 10%
CHF 141200-143099 11%
CHF 143100-144999 12%
CHF 145000-895800 13%
CHF 895900+ 11.5%

For a taxable income of more than CHF 895,900 a rate of 11.5% will apply to the entire amount.

Payroll Tax ?

N/A

Withholding Tax ?

8%

Employee Social Security (EE SS)

Employees make equal social security contributions to employers.

Employee social security can differ from Canton to Canton but as of May 2015; AHV/IV/EO-Abzug – 5.15% (paid on the full salary) ALV 1 – 1.10% (Paid on the first 10.5k)

ALV 2 – 0.50% (Paid on anything over 10.5k in the month)

NBU – 0.99% (Paid on the full salary)

BVG  2.07%

Employees pension contributions are matched by their employer.

Employer Social Security (ER SS)

Contributions are split equally between employer and employee.

Employer social security can differ from Canton to Canton but as of May 2015; AHV/IV/EO-Abzug – 5.15% (paid on the full salary) ALV 1 – 1.10% (Paid on the first 10.5k)

ALV 2 – 0.50% (Paid on anything over 10.5k in the month)

NBU – 0.99% (Paid on the full salary)

BVG  2.07%

Employers must match employee’s pension contributions.

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