Swiss Payroll Explained Individual Contractors
Switzerland offers three structured income tax system-Federal, Cantonal and City taxes, where the rates vary between the Cantons, Family status and the gross salary of an individual. Payroll administration for Contractors is relatively complicated as there is no fixed income, fixed hours and has to bear the costs of overheads and other official expenses by themselves. However, Swiss employment laws and Tax laws provide a number of options for efficient payroll management of contractors that are aimed at increasing their net takeaway salaries.
Pensions, Holidays and Payroll
Switzerland offers three structured income tax system-Federal, Cantonal and City taxes, where the rates vary between the Cantons, Family status and the gross salary of an individual. Payroll administration for Contractors is relatively complicated as there is no fixed income, fixed hours and has to bear the costs of overheads and other official expenses by themselves. However, Swiss employment laws and Tax laws provide a number of options for efficient payroll management of contractors that are aimed at increasing their net takeaway salaries.
Holidays
- All individuals employed in Switzerland are entitled to 20 days of statutory holidays per annum
- An amount of 8.33% of global salary earnings representing holiday pay is shown on pay stubs
| Contribution | Employer Cost | Employee Contribution |
|---|---|---|
| AHV | Swiss Employer’s Social Security paid at the rate of 5.15% | Swiss Employee’s Social Security paid at the rate of 5.15% |
| Solidarity Fund | 0.5%, if income over 10,500 CHF per month (or 126,000 CHF annually) | |
| ALV | Unemployment insurance payable at 1.1% with upper limit of 10,500 CHF p.m. | Unemployment Insurance payable at a rate of 1.1% with upper limit of CHF 10,500 per month |
| Accident Insurance | Contribution as professional income of 0.652% on income up to 10,500 CHF per month | Contribution of 1.88% “ Non Professional insurance” on income up to 10,500 CHF per month |
| Social Security | Social Security administration is 2% of total security contributions | |
| BVG | Pension contribution (BVG) are made up of both savings and risk (if applicable) | |
| Administration Costs | In case the contractor incurs such costs | |
| Tax | Tax deductible at source |
