Resident Tax Information
Switzerland's taxation system is one of the most comprehensive in Europe. This means that all residents and nonresidents are taxed on their wealth as well as worldwide income, which makes it important for employers to ensure they're withholding relevant employee tax from staff paychecks during payroll processing time frames each month or year.
The tax brackets for all income derived in Switzerland for single taxpayers include —
The tax brackets for all income derived in Switzerland for married taxpayers with minor
children include —
Social Security
In Switzerland, social security contributions are a requirement for every worker. That's why employers must outline these payments in the contract they sign with their employees and it can't be changed without consent from both parties.
The benefits provided by the social security include —
- Survivors and disability
- Maternity and military services leave
- Old-age
- Illness and accidents (work and non-work related)
- Health
- Unemployment and family allowances
The contributions toward each of the funds in social security include —
The employer must deduct the social security contributions from the employee’s monthly compensation as a part of the payroll process.
Statutory Benefits
Pillar I – Social Security
Social security provides a wide range of benefits that include
The employer must contribute to social security for their employees at a rate of 10.60%.
Pillar II - Occupational Benefits
Occupational benefits include
- Mandatory pension plan (BVG) and
- Employer-sponsored pension coverage
The contributions include
- The employer must contribute a minimum of 50% of the total contributions made by both parties.
- Savings contributions vary between 7% to 18% depending on the employee's age.
All voluntary benefits provided by the employer are also covered under Pillar II.
Pillar III – Voluntary Benefits Provision
Pillar III covers all voluntary retirement individual contributions.
- Switzerland's working hours are between 40 and 50, but it is important to note that they must be contractually agreed upon.
For any additional hours worked by an employee, the employers must
- pay overtime at 125% of the employee's gross salary or
- Time off in place of payment
Employers must provide all employees in Switzerland with statutory leaves.
Fringe Benefits
Fringe benefits are commonly provided in addition to the employee’s remuneration and statutory benefits. The most common fringe benefits provided by employers in Switzerland include —
- Meals at the workplace or meal vouchers
- Flexible work arrangements
- Additional paid
time off
- Company equipment such as mobile phones and/or laptops
- Expenses for business travel
- Office vehicle to commute to and back from work or commuting budget
- Business trips
Exempt Benefits
There are many benefits that come with employment, but some of them may or may not be taxable.
Such exempt benefits include —
- Social security contributions
- Meals at the workplace (lump sum amount is exempt)
- General business-related expenses
- Costs that relate to further education
Residents, permanent residents, and expats can claim deduction on the exempt benefits
provided by the employer.
Long-term Incentives
There are many different types of incentive plans that companies can offer their employees. One type, the long-term incentive plan (LTIP) has an even longer time horizon than twelve months and provides greater rewards for key workers in order to keep them engaged with your company over this period so it's important not only rethink how you give out bonuses but also when.
Commonly provided long-term incentives in Switzerland include –
- Health insurance covers with additional dental covers
- A few employers provide employee stock options to key employers