Country like Switzerland offers three structured income tax system-Federal, Cantonal and City taxes, where all the income tax rates vary between these three structure home Cantons, Family status and the gross salary of an individual. Swiss Payroll Services for Contractor is relatively complicated as there is no fixed income, fixed hours and one has to bear the costs of overheads and other official expenses by their own self. However, Swiss employment laws and Tax laws of Switzerland provide a number of options for getting efficient payroll management of contractors that are aimed at increasing their net takeaway salaries.

Pensions, Holidays and Payroll

The contribution towards pension is mandatory for all employees who are employed in Swiss companies for three months or more i.e Swiss Payroll Services for Contractor. Pensions can be categorized under two heads, the “Risk element” and “Savings element”. While the “risk element” contributions cannot be recovered, it thereafter covers insurance for death or disability caused during work. On the other hand “Savings element” is all about the savings done that, can be recovered whenever and wherever (i) if the employee lives outside EU, (ii) leaves the Swiss Company or (iii) for he/she is buying a primary residence home.

Holidays

  • All individuals who live in Switzerland and are employed there 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 their pay stubs

Basis Salary

While calculating the “basis salary” of any employee the following parameters are adopted:

  • Calculation of “monthly gross salary” is done and is being multiplied either (I) daily rate by number of days worked or (ii) by hourly rate by number of hours worked
  • Next, the expatriate allowance is deducted against the social security granted by the Canton, in which the employer is based

The Employer Cost and Employee Contribution both provide an overview of necessary withholdings and contributions that are from the basis salary. Therefore the net salary is the result of the total amount after all such deductions.

Categories of Permit

Permits whether Type L, B, C or G are granted on the basis of contract period or also the type; whether open or closed. On the expiration of employment term, the contractor can easily extend his stay for another three months, during which time he can search for suitable employment.

The common type of permits is listed below:

Type Benefits Qualification Disadvantages
L Expenses allowances are allowed Contract specifying termination date Lower scope for car and phone rentals
B Easier to obtain lease/rentals Open ended contract agreement More controls on tax free allowances
C Status equal to what is Swiss citizens enjoy 5 yrs from the date of entry (for EU citizens) and 10 yrs for non EU Does not give the right to vote
G Dependent on personal circumstances Living outside Switzerland under Swiss work contract Tax and social insurances may apply

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