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Deciding to relocate abroad for professional reasons can undoubtedly broaden a person’s horizons and serve as a major career-booster. In today’s global business environment, many companies employ talented people across the world. And with this spirit in mind, many decided to move to Switzerland or are planning to do so.
Now, there are certainly plenty of questions that will arise, such as the following: What documents do I need to submit to the local town hall in order to register as a resident? What does the Swiss social security system cover? Will I be required to file a Swiss tax return?
However, arguably the most important question to ask is whether you will genuinely be ready to take this momentous step. In this blog, People Advisory Services assists readers in navigating a variety of different topics designed to enable them to gain a solid understanding of the basics of working and living in Switzerland:
We would be delighted to assist you. Connect with us by reaching out to your case manager or by submitting the contact form.
We wish you the best of success in your personal and professional endeavors in Switzerland!
This blog has been prepared for general information purposes in order to offer general insight into working and living in Switzerland. Please note that the information contained therein does not constitute legal advice.
Facts about Switzerland
Experience Switzerland from a different perspective. You can consider yourself a genuine Switzerland expert if you’re already aware of the information presented here.
Centrally located and well connected
Encompassing a geographical area of 41,285 km2 with a resident population of approximately 8.4 million, Switzerland is a relatively small country situated at the very heart of Europe featuring a picturesque mountain landscape and 1,500 lakes.
Multilingualism as a cornerstone of Switzerland’s identity
Switzerland features four language regions: Romansh in the southeast, Italian in the south, French in the west, and German in the remainder of the country. The most widely spoken language is Swiss German, which is a catch‑all term for the wide range of dialects spoken throughout Switzerland’s German‑speaking region. Swiss German is considerably different from the German spoken in Germany or Austria.
The Confoederatio Helvetica (CH)
Switzerland is also known as Confoederatio Helvetica, which is often abbreviated as CH. The Swiss Confederation, which is divided into 26 cantons, was founded on 1 August 1291 and is celebrated annually on 1 August. Switzerland’s capital is Bern.
One of the highest proportions of foreign residents among European countries
At 25% Switzerland has one of the highest proportions of foreigners in Europe, the presence of whom has contributed greatly to the country’s rich cultural diversity. According to international rankings, Switzerland and especially the greater Zurich area top the list of the world’s most attractive locations for talented professionals.
The world’s second-highest life expectancy
Switzerland consistently places extremely high in international rankings of health and wellbeing, and it is no surprise that the Swiss have one of the highest life expectancies in the world. Life expectancy at birth is 81.5 years for Swiss men and 85.3 years for Swiss women.
Swiss citizens have a direct say in political matters
Swiss citizens are afforded exceptional democratic rights and privileges allowing them to partake in the political decision‑making process and to exert a direct impact on government policy by launching initiatives and referendums. For example, the Swiss people voted in September 2020 to pass a law allowing fathers to take 10 days of paid paternity leave.
No city has a richer tradition of international cultural understanding and diplomacy than does Geneva. Geneva is home to countless international organizations and non-governmental organizations. This international atmosphere is evident throughout Geneva, a renowned center of excellence on issues concerning world peace, human rights, and health and nutrition.
Living in Switzerland
Everything you need to know about living in Switzerland, including critical information about customs, registering with the municipal authority, and useful tips about what to consider when renting property in Switzerland.
When entering Switzerland, personal items, travel provisions and fuel in vehicle gas tanks are both tax-free and duty-free. For other goods, VAT and duties will be levied depending on their total value (over CHF 300) and the quantity. However, duties will only be levied on foodstuffs, tobacco, alcohol and fuel. Please note that imports of certain goods (e.g., certain plants, animals and weapons) are either prohibited or restricted.
However, there are no restrictions placed on the import or export of Swiss and foreign liquid funds (e.g., cash, foreign currency and securities). Furthermore, the funds do not need to be declared.
You must proactively declare your vehicle (e.g., car, boat) at customs at the Swiss border:
If you need more detailed information, the website of the Swiss customs is very useful.
If you are staying in Switzerland for less than a year, you may drive with your foreign driver’s license. After a year of residing in Switzerland, foreign nationals must apply for a Swiss driver’s license. Depending on the country of issuance, either your foreign license will be converted automatically or you will have to pass a practical exam. For further information, we recommend contacting the cantonal department for motor vehicles.
Registration with the municipal authority
Once you arrive in Switzerland, you are required to register with the local municipal authority within 14 days and prior to your first day at work. Please make sure that you have obtained the following documents beforehand and that you take them with you to the local municipal authority:
- Valid and original passport or identity card
- Evidence of compulsory health insurance (does not have to be provided immediately, however you need to provide proof of compulsory health insurance within three months of registration at the latest)
- Copy of your Swiss lease agreement
- Passport photo (may not be necessary if your municipal office already uses biometrics)
- If registering together with a family, documents showing your family status (marriage certificate, birth certificate of children, etc.)
- Registration fee (usually approx. CHF 60 to CHF 100 per person)
Depending on your permit type and registering municipality, you may be asked for your availability to have your biometrics recorded after the registration. As the registration process varies from one canton to another, we recommend that you contact the local municipal authority to determine whether they require additional documents for the registration process. This step is not necessary if your application is being handled by a profession immigration consultant.
Most people in Switzerland including expats opt to rent an accommodation rather than to buy one. The market is competitive because the demand is generally greater than the supply. The following information provides a brief overview of the rental situation in Switzerland.
Finding an apartment
There are several online housing portals allowing subscribers to easily sign up to receive frequent updates about the apartment market.
If you are interested in renting an apartment, you generally have to complete an application form declaring some personal information (e.g., marital status, profession, employer, salary, residency status). In addition, the landlord usually requests a debt collection report in order to determine an applicant’s creditworthiness and ability to make payments. The report can be obtained either online or from the debt enforcement office at your local municipality.
Securing a rental contract
Landlords and tenants typically enter into a written rental agreement. By signing the agreement, both parties agree to fulfill their obligations. It is therefore of the utmost importance to ensure that the contract is fully understood before signing it. Although a rental contract can also be entered into verbally, it is highly recommended to avoid this type of arrangement.
Landlords can request a deposit in an amount that may not exceed three months’ worth of rent. It will be refunded upon moving out unless there are any damages or rental payments that need to be covered.
Termination of the rental agreement
A rental agreement may be terminated by the tenant or the landlord as long as they comply with the legal and/or agreed‑upon notice periods. Tenants wishing to terminate a contract should provide notice to the landlord via registered mail. Please ensure that both spouses sign the letter of notice.
Switzerland is one of the world’s foremost banking and financial centers. Everyday banking services are offered by national and cantonal banks. The currency used in Switzerland is the Swiss franc (CHF), although Swiss banks also offer foreign currency accounts.
Banks are usually open Monday to Friday and are closed Saturdays, Sundays and on public holidays. Opening times can vary from across banks, so please check the local opening hours.
You can obtain more information on the procedure to open a Swiss bank account from the banks directly, as most of them have information available online in English.
Any foreigner seeking to work in Switzerland must possess a valid work permit as of the first day of work. Any activity which normally generates proceeds is considered a gainful activity even if it is performed for free or the remuneration consists only of the coverage or reimbursement of expenses.
Exception 1: 8-day rule
Non-EU/EFTA nationals and EU/EFTA nationals employed by a company located in a non-EU/EFTA country who are on foreign assignment to Switzerland are granted 8 days per calendar year per individual during which they may work in Switzerland without a work permit (depending on the sector, this rule may not apply).
For EU/EFTA nationals and non-EU/EFTA nationals employed by a company located in an EU/EFTA member state (12 months or longer for non-EU/EFTA nationals), the 8 days do not apply per individual but per legal entity. Therefore, each legal entity may send employees to Switzerland for a total of 8 days per calendar year without applying for a work permit for the respective employees (depending on the sector, this rule may not apply).
Exception 2: Business Meetings
In general, business meetings in Switzerland may be attended without a work permit. However, only a very limited number of activities meet the definition of business meetings by the Swiss immigration authorities. According to the guidelines of the Federal Migration Office, the following activities are generally permitted under the term “business meetings”:
Theoretical trainings (excluding internship)
- Attending theoretical and technical courses at a Swiss-based company pertaining to sales, delivery, after-sales services with respect to technical facilities to customers abroad (e.g., training provided by a Swiss manufacturer to employees of a foreign client about the latest products sold)
- Attending theoretical courses
- Attending workshops
- Attending seminars and conferences
Other meeting types
- Representative visits of high-level staff
- Contract negotiations
- Internal meetings
- Pre-assignment visit
Business meetings are by nature of very short duration and should not exceed two weeks. No operational work can be performed in Switzerland and the activity shall not constitute a gainful activity.
EU/EFTA local hires
Switzerland has a dual system for the admission of foreign workers. EU/EFTA nationals benefit from the Agreement on the Free Movement of People if they have signed a local employment contract in Switzerland. Based on this Agreement, EU/EFTA nationals with a Swiss employment contract have the legal right to obtain a work permit for Switzerland. They can begin working the moment they are registered at the local town hall of their place of residence. A job-reporting requirement might be required for the employer, which you can read about here.
EU/EFTA nationals on assignment for over 90 working days and non-EU/EFTA nationals
Non-EU/EFTA nationals and EU/EFTA nationals on assignment for more than 90 working days per calendar year are not covered by the Agreement on the Free Movement of People and therefore a work permit must be obtained in advance. Work permits are only granted to a limited number (more information here) of high executives, specialists, and other highly qualified employees. Furthermore, foreign nationals are only allowed to work in Switzerland if the Swiss common salary and employment conditions customary for the location, profession and sector are satisfied. In addition to the Swiss customary salary, the company must cover the costs for meals, accommodation and transportation. As of 1 April 2020 there is a new legislation that allows the employer to forgo these allowances after one year of assignment (detailed insights are provided here).
The Agreement on the Free Movement of People was extended to Croatia on 1 January 2017. However, special transitional provisions with labor market restrictions and quotas still apply to Croatian nationals.
L Permit up to 4 consecutive months/120 non-consecutive days within 12 months
If the online announcement is not sufficient, this type of work permit allows the foreign individual to work up to four consecutive months or 120 non-consecutive days in Switzerland over a 12-month period. This permit is not subject to quotas or registration.
Short-term L permit (for more than 4 months)
This type of work permit allows the permit holder to work in Switzerland for up to 12 months and can be extended to two years. The L permit is subject to quotas and expires once the employee deregisters from Switzerland or spends more than three months in a year outside of Switzerland.
Dependents can join the employee in Switzerland, but they will not automatically receive a work permit. If dependents holding an L permit wish to work, a separate application needs to be filed by their employer.
Long-term B permit
This type of work permit allows the permit holder to work in Switzerland for up to five years and is generally granted for long-term assignments (at least two years).
For non-EU/EFTA citizens, the permit is usually issued for one year but can be renewed annually for up to five years (generally issued for five years for EU/EFTA nationals).
The B permit is subject to quotas and expires once the employee deregisters from Switzerland or spends more than six months in a year outside of Switzerland.
Family members can join the permit holder in Switzerland and will receive a work permit as part of the family reunion.
Cross-border permit (G permit)
EU/EFTA nationals with a local Swiss employment contract may receive a G permit to work in Switzerland provided that the employee returns to his/her place of residence abroad at least every week.
Non-EU/EFTA nationals are granted a G permit if they hold a permanent residence permit in a neighboring country and have had their regular place of residence in the border zone for at least six months. The workplace must be in the Swiss border zone.
Permanent residence permit (C permit)
The permanent residence permit may be issued after five or ten years of residency in Switzerland depending on the nationality. C permits are granted for an unlimited duration but the permit card must be renewed every five years.
C permit holders may engage in any legal activity in Switzerland. They may change their employment or profession without requesting approval from the Swiss immigration authorities.
The permit expires once the permit holder deregisters from Switzerland or spends more than six months in a year outside of Switzerland. For certain stays abroad (professional assignments etc.), the permit can be suspended for a maximum duration of four years.
The online notification procedure is a simplified process under which any EU/EFTA-based company can assign any EU/EFTA national or non-EU/EFTA national working within the EU/EFTA labor market for at least 12 months to work in Switzerland for a maximum of 90 working days per calendar year. The 90 days are allocated per legal entity, assignee and calendar year.
The online announcement covers the work performed in Switzerland and no further formalities need to be observed (visa requirements may apply depending on the nationality).
The online registration must be completed at least 8 days before the first working day in Switzerland. Swiss customary salary and mandatory assignment allowances apply.
The Swiss government changed the foreigners’ law in January 2020 and now considers the language to be a vital integration requirement. More specifically, the individual must be able to understandably communicate in the official language spoken at his/her place of residence. To prove that the language requirements are met, the applicant must provide a recognized language certificate or a FIDE language passport.
Please find a list of the recognized language certificate providers here: List of recognized certificates
Please find more information onobtaining a FIDE language passport here: FIDE Language Passport
Who needs to provide a recognized language certificate?
The Foreign Nationals and Integration Act established in January 2019 establishes that the mandatory language requirements are applicable to the following categories of foreigners:
The Swiss social security scheme is divided into three pillars, with each pillar featuring its own characteristics and goals, that help when facing various risks one can encounter during the stay in Switzerland. Let us assist you in navigating through the Swiss social security system.
The Swiss social security scheme
The Swiss social security system is organized into three pillars with six different types of insurance coverages:
- Retirement and survivors’ insurance
- Disability insurance
- Unemployment insurance
- Accident insurance
- Health insurance
- Family allowance
- Income compensation allowance insurance (e.g., service or maternity)
These insurances cover the population by means of financial benefits or by taking charge of the medical and integration costs in the event of illness or accident.
First pillar — Old age, disability, survivors and income compensation insurance (OASI)
The first pillar state pension is a mandatory social insurance scheme which guarantees a minimum income after reaching the retirement age or in case of disability or death.
Contributions are due for (exceptions may apply):
- Non-working individuals holding Swiss residency as of 1 January of the year following their 20th birthday (unless they are covered under the contributions of their employed spouse)
- Gainfully employed individuals as of 1 January of the year following their 17th birthday
- People working beyond the ordinary retirement age
- Individuals working abroad on behalf of a Swiss employer
Although Switzerland does not have a cap on OASI contributions, it should be noted that the contributions are moderate compared with other countries.
The contribution rate for gainfully employed individuals is 10.6% with equal contributions by the employer and the employee.
First pillar benefits
People of the retirement age (64 for women and 65 for men) are entitled to receive an old-age pension. Annual old-age pensions are a minimum of CHF 14,340 and can be as much as CHF 28,680 if the individual has fully contributed to the Swiss social security scheme (44 years). There are various additional benefits that can also be claimed from the first pillar.
First pillar — Unemployment insurance
Individuals who have worked for more than 12 months during the last two years in Switzerland before being laid off are eligible to claim unemployment benefits. The contribution rates for unemployment insurance are 2.2% of employment income with a cap of CHF 148,200, and an additional 1% of the remuneration exceeding CHF 148,200. The employer is required to pay the contributions to the Swiss authorities and then deduct 50% of the contributions from the employee’s salary.
The maximum insured salary for unemployment benefits under local law is CHF 148,200. The individual can expect roughly 70%-80% of the original salary (average of the last 12 or 6 months) from unemployment benefits up to the maximum insured salary.
First pillar — Maternity and paternity insurance
For the Geneva canton, there is a specific maternity contribution (AMAT) due on the salary of 0.092% paid in equal contributions by the employer and the employee. Regarding the other cantons, maternity and paternity insurance is financed solely via contributions to the income compensation insurance.
All employed or self-employed women are entitled to 14 weeks of maternity leave (16 weeks for the Geneva canton). During the leave, they receive 80% of their salary (based on the average annual salary) or a maximum of CHF 196 per day.
All working fathers are entitled to two weeks of paternity leave (10 days off work). As in the case of maternity leave, the compensation amounts to 80% of the average earned income before the birth of the child, up to a maximum of CHF 196 per day. For two weeks of leave, 14 daily allowances are paid amounting to a maximum of 2,744 francs.
First pillar — Family allowances
Employees and self-employed persons living in Switzerland who have declared a salary of at least CHF 592 per month to the Swiss first pillar scheme are entitled to receive family allowances. The contributions for family allowances are covered by the employer based on the annual salary of all employees irrespective of whether employees have any children. The contribution rate depends on the canton.
For children up to 16 years old (up to 20 years old for children who are ill or have disabilities and are unable to work), a child allowance of at least CHF 200 a month for each child is paid by the authorities. The exact amount disbursed depends on the respective canton.
For children between 16 and 25 who are students or are undergoing vocational training will receive an education allowance of at least CHF 250 per month.
First pillar — Health insurance
The premiums are fully covered by the individual (no employer contributions) and vary depending on the insurance provider, age, place of residency, etc. However, the basic state health insurance coverage is established by law and is identical across all providers. Individuals may be exempt from the mandatory health insurance obligation upon request if certain requirements are met.
Second pillar — Occupational pension insurance
Employees who earn more than CHF 21,510 per year are automatically insured by a second pillar pension fund. A self-employed individual can join on a voluntary basis. The intent of the second pillar is to allow for a reasonable lifestyle in combination with the first pillar. The maximum insured salary for pension under local law is currently CHF 85,320. The pension contributions vary between 7% and 18% of the insured salary (defined by law, with a cap) depending on the age of the employee, where at least 50% of the contributions must be covered by the employer. The individual has the option of making voluntary contributions to the second pillar and taking advantage of tax benefits involving conditions (buy-backs). Also, the employer may set up a pension fund which allows additional contributions.
Upon reaching retirement age, the savings accumulated by the employee and the employer are converted into an annual pension using a conversion rate. The conversion rate for the mandatory part of the 2nd pillar (contributions paid on the insured salary up to CH 85,320) is set out by law and currently amounts to 6.8%. In some specific circumstances (e.g., investing in real estate or in the event of a permanent departure from Switzerland depending on the new country of residency), a lump-sum capital payout before retirement is possible but restrictions apply.
Second pillar – Accident insurance
All employees working in Switzerland are required by law to maintain accident insurance. Switzerland differentiates between occupational and non-occupational accidents as well as occupational diseases. Employees who work fewer than eight hours a week are only insured against occupational accidents and occupational illnesses by their employer.
Furthermore, Swiss labor law requires employers to continue paying the salary to an employee a for limited duration in the event of an accident. The duration depends on how long the employee has been working at the company.
Contributions for accident insurance vary depending on the company’s risk level and economic sector. The contributions for occupational accident insurance are covered by the employer and for non-occupational accidents by the employee. For unemployed individuals, the accident coverage must be included by means of a health insurance policy.
Third pillar – Voluntary individual additional pension scheme
The third pillar is a voluntary private individual option that can be used to help make up the remainder of an individual’s income not covered by the first two pillars. These schemes typically take the form of a retirement savings account (with tax breaks) or a flexible savings account (with few to no tax breaks).
- Third pillar A: Contributions are limited to a maximum of CHF 6,883 per year for any employed individuals and to CHF 34,416 for individuals not holding a 2nd pillar policy. The third pillar constitutes a savings account and can also cover death and disability risks depending on the policy chosen.
- Third pillar B: It includes any other life insurance policies but usually features fewer restrictions than does the third pillar A and the contributions are not limited. This category of insurance is not tax‑deductible (although some exceptions apply).
Although the Swiss tax system is often characterized as being complex, we will explain that this is incorrect and that it is actually relatively straightforward. Familiarize yourself with the Swiss tax system, estimate your income tax liability, and learn whether you will be considered a Swiss resident or non‑resident taxpayer.
Swiss tax system
Swiss income taxes are levied at three levels: Federal, cantonal and communal. Federal taxes are imposed by the federal government and are uniform across Switzerland. By contrast, cantonal and communal taxes can vary significantly. Tax rates are (usually) progressive at all three levels.
In addition to income taxes, wealth taxes are levied at a cantonal and communal level. The amount of net assets owned as of 31 December of each year is relevant for the calculation of wealth taxes. Wealth tax rates are also typically progressive and vary across Switzerland’s cantons and municipalities. There are several categories of recognized church affiliations for tax purposes in Switzerland and, depending on the canton of residency, church taxes could increase the total tax rate by up to 3%. New residents registering at the municipal office are therefore asked whether they also wish to register any church affiliation.
Residency status in Switzerland
An individual’s tax residency status is relevant for taxation purpose. Domestic law establishes that an individual is a Swiss tax resident if his or her center of vital interest is in Switzerland and/or if the individual is present in Switzerland for a certain amount of time during the tax year.
If an individual qualifies as a tax resident of Switzerland as well as of another country according to the other country’s domestic laws, the double taxation agreement in place (if any) between Switzerland and the other country must be consulted in order to determine which of the two countries is afforded the right to unlimited taxation of the resident. The following flowchart is intended to summarise how the tax residency status in Switzerland is determined.
The duty to pay taxes in Switzerland is fulfilled by submitting a Swiss tax return or by way of taxes deducted at the source.
Swiss residents with a tax return filing obligation
Residents of Switzerland with a tax return filing obligation are subject to taxation on their worldwide income and worldwide wealth. Taxable income includes employment income and any other earnings (such as investment income, pension income, the deemed rental value of owned houses or income from real estate leased to tenants). Capital gains on company shares are generally not considered taxable in Switzerland as long as the taxpayer is not classified as a professional securities dealer. Foreign rental income is exempted with progression from taxation in Switzerland.
In addition to income taxes, all cantons levy a net wealth tax. The applicable tax rates are progressive and vary depending on the canton and commune. The tax rates usually range between 0.1% and 1% of the net wealth. For the determination of taxable wealth, all worldwide assets and debts (e.g., bank accounts, company shares and other securities, vehicles, real estates, mortgages) are taken into consideration. Foreign real estates are exempted from the Swiss taxation. Despite the exemption, the foreign property is declared in the Swiss tax return to determine the (progressive) tax rates.
The following overview provides an estimate of the tax burden in different cities of Switzerland that are applicable to gross income after standard deductions of a married couple with one child, with no church affiliation and with only one spouse engaged in gainful activity (2019 tax rates).
In order to calculate your Swiss tax burden more accurately to your personal situation, please consult the tax calculator of the federal tax administration.
The principle of family taxation states that the worldwide income (except employment income for a minor child) and wealth of a married couple must be declared in a joint tax return. In order to prevent discrimination of joint filers, different progressive tax rates apply for married and single persons. For married couples, higher deductions are typically granted such as personal and family deductions.
The tax year is identical to the calendar year. Individuals who arrive in or depart from Switzerland during the calendar year have a partial-year tax obligation. For Swiss tax residents with a tax return filing obligation, all recurring income will then be annualized in order to determine the applicable tax rate. Tax returns are generally due at the end of March of the following year. However, all cantons allow for deadline extensions.
Normally, the tax authorities issue a provisional tax bill based on figures from the previous year’s tax return. Some cantons require taxpayers to pay the provisional tax bill and will utilize the legal system against noncompliant taxpayers. In order to prevent interest charges from arising after payment due dates, it is recommended paying the provisional tax bills in cantons that do not initiate legal action.
The standard processing time for issuing the tax assessments and bills can take up to five years since submission of the tax return. The authorities issue final invoices showing any refund due to overpayment or any backpayment owed. Outstanding amounts are generally due within 30 days.
Below is an example of a timeline for a Swiss-tax resident with a full year Swiss tax return filing obligation for the 2021 tax year.
Residents subject to withholding tax (tax withheld at the source)
Foreign workers (except for Swiss citizens and C-permit holders) who have their tax residence in Switzerland are subject to taxation withheld at the source. Taxes will be withheld by the employer and are directly deducted from the salary on a monthly basis. Taxes withheld at the source constitute the final tax liability in most cases.
However, there are two scenarios where an individual is obligated to file a Swiss tax return:
- The annual (or annualized) gross salary exceeds CHF 120’000
- Other income (such as investment income) or net wealth exceeds the threshold given by the cantonal tax authorities
For residents who do not fulfil the criteria mandatorily to switch to the tax return filing system, taxes withheld at the source equal the final tax liability. The source tax rate depends on personal circumstances (i.e., salary, marital status, number of dependent children, and church affiliation) and takes into account certain standard deductions (insurance premiums, business expenses, social security, etc.).
From 1 January 2021 onward it is possible to file a subsequent tax return upon request.
- If a tax resident of Switzerland decides to file a subsequent tax return, this decision cannot be reversed and a tax return must also be submitted for all following years.
- A tax non-resident of Switzerland can decide every year if he or she wishes to file a subsequent tax return. An authorized representative in Switzerland is required for this.
- The application must be filed by 31 March of the year following the tax period in question and deadline extensions are not possible. A correctly filed application cannot be withdrawn.
Up to and including the tax year 2020, there is a strict deadline of 31 March of the following year to file a source tax adjustment. Additional deductions not yet considered in the rates of tax withheld at the source (interest paid, voluntary contributions to Swiss pension or pillar 3a, educational costs not covered by employers, etc.) can be claimed. As of the tax year 2021, there is an option to file a source tax adjustment only if the taxes withheld at the source were miscalculated by the employer (or similar reason).
Non-residents may be subject to Swiss taxes on various types of Swiss-sourced incomes. For example:
- Remuneration for an employment activity performed in Switzerland
- Interest or dividends paid by a Swiss entity
- Income from Swiss real estate
- Income from business activities in Switzerland
Generally, non-residents are required to file a tax return only if they own Swiss real estate or perform business activities (permanent establishment) in Switzerland. Otherwise, taxes are directly withheld at the source.
Furthermore, individuals who perform a part of their work outside of Switzerland are permitted to file a source tax adjustment in order to avoid the double taxation of workdays performed abroad.
Labor & Employment Law
Increased globalization and ongoing digital transformation have resulted in increased global workforce mobility and make new ways of working possible. Although Swiss labor & employment law is relatively liberal compared to regulations in other jurisdictions and accommodates specific individual employment agreements, there are nonetheless several mandatory provisions limiting the parties’ contractual freedom that must be taken into account when concluding an employment or assignment contract. The most important requirements and challenges for employees are highlighted in the following sections.
Form of the contract
Generally, Swiss law does not specify a particular form for employment or assignment contracts. Contracts can be concluded in writing, orally or even tacitly. If the employment agreement is concluded orally or tacitly, the employer must inform the employee in writing within the first month of employment about certain important points, including the position, salary, allowances, vacation, additional benefits, weekly working hours and termination conditions.
Exceptions apply for certain employment contracts (such as apprenticeship contracts) or contractual clauses deviating from the statutory provisions, which must be set forth in writing. However, in practice, employment contracts are usually concluded in writing and we highly recommend doing so in order to avoid any later misunderstandings.
Please note that, according to Swiss law, there are in principle up to three different definitions of an employment relationship, depending on whether a labor law perspective, social security perspective or tax perspective is applied. Individuals may be considered as employees or as self-employed individuals and are hence subject to an employment or mandate/freelance agreement. The following provides an overview of the most important criteria, although this list is not exhaustive.
Duty of Care
Under Swiss law, the employer is obliged to take all necessary and feasible measures to safeguard the health, safety and integrity of its employees. This responsibility applies from recruitment and includes different overarching duties, such as a duty of information (e.g. training and briefings, access to expertise), a duty of prevention (e.g. insurances against various risks), a duty of monitoring (e.g. safety and security information and documentation) and a duty of intervention (e.g. crisis and risk management, complaints mechanism, disciplinary procedures).
The payment of the salary is the employer’s main duty. The salary is usually paid at the end of each month, unless shorter periods or other terms have been agreed.
In general, the parties are free to determine the amount as well as the nature of the salary (base salary, bonus payments, provisions, other extra payments, etc.). Thus, no general mandatory minimum salaries must be adhered to. However, some exceptions may apply, i.e., if there is an applicable collective bargaining agreement (CBA) to the work relationship with particular requirements regarding the salary payment conditions, or if the employee is assigned from abroad to Switzerland due to the minimum salary requirements derived from the respective Swiss Assignment Act (EntsG).
If the employee, for reasons inherent to his or her person, such as sickness, accident or compliance with legal obligation, by no fault of his or her own is unable to perform his or her work, the employer must pay the corresponding salary for a limited period. If longer periods have not been fixed by agreement, the employer must pay the salary for three weeks during the first year of employment and for longer periods in following years, depending on the scale used. As an example, according to the scale of the canton of Berne (one of the most common scales in Switzerland) the employer must pay the salary for one month during the second year of employment, two months during the third and fourth year of employment etc.
Employers therefore have a duty to protect employees against the financial consequences of an accident and must provide accident insurance that grants daily benefits to the employee from the third day after the accident, alongside other benefits. Although it is not mandatory, it is also common for employers to provide daily sickness benefits insurance, granting employees daily sickness benefits in case of illness following a specified waiting period, usually 30, 60 or 90 days. These obligatory salary continuance payments also apply for employees who are assigned from their home country outside of Switzerland.
Working time and time recording
Depending on the industry, the maximum weekly working time in Switzerland is set at 45 or 50 hours or is specified in an applicable collective bargaining agreement (CBA). However, parties may agree on a lower number of working hours, normally defined between 40-42 hours per week.
Generally, employees are required to work a reasonable amount of overtime if requested by the employer. Swiss law distinguishes between overtime, i.e., those working hours exceeding the contractual working time (up to the legal maximum of 45 or 50 hours per week) and extra working hours or excess time, i.e., working hours exceeding the legal maximum of 45 or 50 hours per week. Generally, overtime can be compensated by time off in lieu of overtime or by financial compensation. Parties often agree that neither a compensation nor a cash retribution is due.
Extra working hours shall be compensated by equivalent time off with the employee’s consent or paid with a premium of 25%, except that, in principle, for employee’s subject to a maximum legal weekly work time of 45 hours, and if this exception is specified in writing, no compensation nor retribution is due for the first 60 extra working hours per civil year. Extra working hours are normally only to be provided in urgent situations and should be limited to two hours per day.
The general daily rest time amounts to eleven consecutive hours, whereby a reduction to eight consecutive hours once a week is possible if an average of eleven consecutive rest hours is maintained over a period of two weeks. Further exemptions may apply, depending on the business or industry or sector. The following break times must also be observed: (a) 15 minutes of break time when working more than 5.5 hours, (b) 30 minutes of break time when working more than 7 hours and (c) 60 minutes of break time when working more than 9 hours.
In principle, employers are required to record employees’ working hours. The employer usually transfers this responsibility to employees, although the employer remains responsible towards the authorities. Exemptions may apply in certain circumstances and only if all conditions are fulfilled, for example, based on a collective bargaining agreement (CBA) or agreed simplified time recording.
These statutory rules also generally apply for employees assigned to Switzerland. However, working time regulations do not apply to higher executive management employees.
Sunday and night work
Work from Saturday, 11 p.m. until Sunday, 11 p.m. is considered Sunday work and is in principle prohibited. Exceptions require a permit by the competent authority and the employer may not require employees to work on Sundays without their consent. Depending on whether a permit for temporary or permanent/regular Sunday work is requested, certain conditions must apply – for example, an urgent need or technical or economic reason rendering Sunday work necessary. Employees who temporarily perform Sunday work must in principle be granted a salary premium of 50%, in addition to compensation of their working time in accordance with the law.
Work from 11 p.m. to 6 a.m. is considered night work and is also prohibited in principle. Exceptions to the prohibition of night work require a permit by the competent authority. Depending on whether a permit for temporary or permanent/regular night work is requested, certain prerequisites must apply – for example, an urgent need or a technical or economic reason rendering night work necessary. Employees who temporarily perform night work must in principle be granted a 25% salary premium.
Holidays and Paid leave
Employees are entitled to at least four weeks of individual vacation within each year of service in addition to public holidays. Employees under the age of 20 must be granted five weeks of individual vacation within each year of service in addition to public holidays. Employers must pay the full salary during regular vacation. As a general rule, the vacation entitlement must be taken during the corresponding year and must include at least two consecutive weeks of vacation. During the term of the employment, no cash payment in lieu of vacation taken in kind is permitted. However, under certain conditions, payments in cash of outstanding vacation entitlements may be considered (for example, at the end of the employment relationship).
In addition to individual vacation, public holidays such as the federal holiday on 1 August and an additional maximum eight cantonal holidays are granted to employees. Although it is not mandatory, it is common for employers to grant short paid absences based on the principle of proportionality, at least for full time employees (e.g. for weddings or registrations of civil partnerships, in case of death in the family or of close relatives, moving of domicile, childcare, dentist appointments etc.).
Statutory law further obliges the employer to grant paid leave in case of military or civilian service, in case of maternity and in case of paternity. Respective insurance schemes in principle cover the employer’s financial consequences if all conditions are fulfilled. Maternity leave amounts to at least 14 weeks and paternity leave amounts to 2 weeks to be taken within 6 months after childbirth.
Pursuant to article 340 Code of Obligations (OR), the parties may agree (in writing) that the employee commits to refrain from engaging in any activity competing with the employer’s business during and after the termination of the employment relationship, in particular neither to operate a business for his or her own account which competes with the employer’s business, nor to work for, or to participate in such a business, which competes with the employer. Such competition ban is only binding if the employment relationship has given the employee access to client information, or to manufacturing or business secrets, and if the use of such knowledge could significantly damage the employer’s business. The competition ban must be appropriately limited in terms of geographic area, duration and scope such that it does not unfairly compromise the employee’s future economic activities.
Termination of employment
If the employment was agreed for a fixed term, it is terminated without notice upon expiration of such period. An indefinite duration employment contract may be terminated by each party by giving prior notice. The statutory notice periods are as follows: (a) one month for the end of the month during the first
year of service; (b) two months for the end of the month: from the second to the ninth year of service and (c) three months for the end of the month for ten or more years of service. Please note that these periods may be altered by mutual written agreement, but they may not be shorter than one month, except if specified in a CBA and only if they concern the first year of service. The same notice period must be set for both the employer and the employee.
In addition to the ordinary termination conditions, the employment relationship may be terminated with immediate effect at any time with good cause.
Statutory law foresees various compensation and further obligations in case of an abusive dismissal or in case of a dismissal at an inopportune juncture.
Applicability of Swiss employment law
As a rule, the Swiss Federal Act on Private International Law (IPRG) provides the parties with the possibility of choosing the applicable law. However, for employment relationships, the Swiss legislator has set certain limits on the choice of law. Where no choice of law is made, the employment relationship is governed by the law of the state where the employee usually performs the work. However, the parties may choose to subject their employment relationship to either (a) the law of the state in which the employee has his or her usual residence or (b) the law of the state in which the employer has its establishment, its domicile or its usual residence. In case of international employment relationships, both for local employment and assignment agreements, the applicable law should be clearly and explicitly stipulated. However, the parties must be aware of the fact that, when choosing a law which is different from the one applicable at the employee’s habitual place of work (objective connection), the mandatory provisions of a competing legal system (e.g. the mandatory laws of Switzerland) may prevail and apply. Moreover, as a general remark, any choice of law must have some connection with the employment relationship.
This is our Switzerland
Let our professionals inspire you with their favorite spots around their office and in the surrounding area. Discover the most beautiful and interesting places in Switzerland.
There are a lot of hidden tracks and spots in and around the city to discover. For a great view over the city, the lake and the mountain range of the Swiss alps, take the “Rigiblick” funicular (“Seilbahn Rigiblick”) and get off at the last stop. You’ll arrive at thefoot of the Zurichberg, one of the hills surrounding the city. Next to the funicular station there is a spot called “Rigiblick” which is a popular viewpoint. A little further uphill, the Zurichberg is mostly woodland and is a popular recreational area. If you follow the edge of the forest facing the lake you will pass the zoo, as well as various restaurants and resting areas. Continue following the signs towards “Dolder”. There you will find another funicular (the so called “Dolderbahn”) which will take you down into the city again where you can get off at Römerhof, not far from places like “Sechseläutenplatz” in the city center.Stefan Lang, (Assistant Manager, Immigration)
One of the things I love to do in Zurich is taking a walk down the lake promenade to enjoy the breathtaking view. There are plenty of spots to sit along the water and the atmosphere is stunning when the sun sets. My personal favorite is the western shore of the lake. It’s a little less prominent, but just as nice for a stroll. Start at Bürkliplatz – a popular site for events with a dock and a view across Lake Zurich to the Alps – and walk along the lake where you will pass some excellent restaurants. Along the way, you’ll see a remarkable fountain – the Aquaretum fountain at Zurich’s Enge harbor. The shape and size of the water feature are determined by an algorithm that interprets real-time data on earthquakes around the world. With a bit of luck, you might even see smaller scale earthquakes happening in Switzerland. On Wednesday and Friday morning there is a market at the Bürkliplatz which is always worth a visit. The place is packed with regional traders selling herbs, buckets of cut flowers and food, ranging from fruit and vegetables to delicious chocolate buns. Arrive early to enjoy the best selection of flowers.Fjolla Gjaha (Senior Consultant, Tax)
The former industrial quarter of Zurich West is undergoing a unique transformation like no other part of the city. This quarter is full of contrasts and has an unpolished charm. Where once stood an industrial center, there is now the trendy quarter of Escher Wyss, home to design, food, culture shopping and architecture. On the other side of Zurich West reigns the 126m high Prime Tower with the best view of the city. This is definitely one of my favorite places in Zurich to stroll around and explore.Gabriella Loosli (Senior Consultant, Social Security)
To me as a born and raised Basler, this city truly is my hometown. I love the mix of the city – it’s big enough that you can basically find whatever you need, but small enough that it doesn’t feel like a huge city (with less than 200,000 inhabitants, it truly isn’t). Beautiful spots to visit include Münsterplatz on an elevated spot in Basel with the beautiful Basler Münster and the adjacent Pfalz – a scenic spot with a lovely view all over Kleinbasel. Being a father of three myself, Basel is also a great place for children and families. Some of the best playgrounds for children are the Kannenfeldpark and the Johanniterpark. The latter features a huge goose to climb, whose neck is a slide going to the ground. Basel is also well known for its wide variety of museums, be it classic or modern art, museum of natural art, or a museum dedicated to the kinetic art of Jean Tinguely. He created probably the most well-known fountain in Basel – the Fasnachtsbrunnen, which most people just call the Tinguelybrunnen. In the old part of the town, you can also find the smallest museum in Basel – it’s housed in a door and only contains items that fit in a Hoosesagg, a trouser pocket.Patrick Businger (Senior Manager, Tax)
There are many enjoyable aspects of living in Basel, but one of the highlights is the Rhine river and its bank on the Kleinbasel side. No matter what time of the year, it is always worth going for a stroll along the river. For some it serves as a jogging route with a great view all year round and for others it is a place to go and just sit to enjoy the view. For everyone in Basel, however, it is a place that they call home. In the warmer months, you can swim down the Rhine from the Eisenbahnbrücke all the way to the Dreirosenbrücke. All along that path you will find several stands offering food and drinks, as well as the popular swimming bags that help you keep your things dry on your swim. If you keep walking along the riverbank, you will eventually get to the port area that has been transformed into an alternativespace with quirky bars and a free-spirited ambiance. A must for all that enjoy a good time.Edwin Trynes (Consultant, Tax)
Lucerne – the city – the lake – the mountains – all in one. Nowhere else can you find as much Switzerland in one spot, I promise you; be it while enjoying a drink in the city, sunbathing on one of the vessels on the water or taking in the spectacular views atop one of the Alpine peaks like mount Pilatus. Another place to visit is the Chapel Bridge, Lucerne’s most iconic site, especially when it is lit up at night. It’s an old wooden footbridge, the oldest of its kind in Europe, with several decorative paintings all along its interior. And it’s very important to get to know the crazy Lucerne folk. In February, the so-called 5th season, make sure to enjoy the Lucerne carnival, “Guggenmusigen”, and blast out tunes as marchers with wild and wacky masks parade through the streets. The festivities take over almost the entire city for a couple of days and as a resident it’s impossible to ignore.Cinzia Hofstetter (Director, Tax)
There is only one Swiss mountain called “Queen of the Mountains”: The Rigi. She lies in Central Switzerland between Lake Lucerne, Lake Zug and Lake Lauerz and the view is breathtaking. There are several cog railways and aerial ropeways but I personally prefer climbing Mount Rigi by foot. Start in Küssnacht am Rigi (445 masl) and hike in a first step to Seebodenalp (1030 masl) where you can enjoy a beer from the brewery at Seebodenalp at a restaurant of your choice. If you have had a few too many, you can always stay at Seebodenalp and explore it further – as you will have found out by yourself, it also has its charm. Otherwise, start climbing Mount Rigi (1797 masl). There are several hiking trails – I have found my favorite and so will you, but always stay safe. Once you are at the top (Rigi Kulm), congratulate yourself and enjoy the view. Explore Mount Rigi and if you would like to unwind and pamper yourself, extend your stay and enjoy relaxing at one of the numerous spa hotels.Lea Müller (Manager, Tax)
There are many famous places in Geneva that tourists would not want to miss during their visit.The most typical place is of course the “Jet d’eau”, Geneva’s most prominent landmark. This tremendous fountain is in Lake Geneva in the city’s downtown area. Go under the fountain and try to keep your clothes dry. Walking around Geneva, you can also visit the “Flower clock” located over the Pont du Mont Blanc bridge in the English Garden. Then, you can reach the “Cathédrale Saint Pierre” and climb to the top of the tower. This famous cathedral is best known for its historic significance as the church where John Calvin gave his inspiring sermons during the mid-16th century. You can end your visit of the Geneva historical center by eating a sweet. We would recommend going to the most popular and typical chocolate factory and ask to eat a “chocolate bin”. If you still have time and enjoy walking, head to the United Nations district by walking along the Geneva lake, and “climb” up the road close to the botanical garden (which you can also visit) to take a picture of all the famous flags at the United Nations HQ.Aurélie Gudet (Manager, Immigration)
One thing I really appreciate in Geneva is that the city is perfect to practice any kind of outdoor sport (except surfing on the lake, but you can find some spots to do wakesurfing, and it’s almost the same!). There are plenty of walking trails all over the city which are lovely places to go jogging. I especially like to run along the Aïre river where you’ll meet some horses, birds and common cranes during lunchtime before heading back to work. I also love cycling around Geneva’s lake (or “Lac Leman” to avoid any confusion with neighboring Cantons 😊), one of the biggest lakes in Europe surrounded by snow-covered mountains during winter – Absolutely refreshing! The Rhone river during summer is my favorite spot to have a great swim with some friends. Every summer, la “Descente du Rhône” sees hundreds of people gather by the river with their very funny floating buoys with some nice music and some drinks from the city center to the Geneva countryside. A must do! There are also great places to hike in Geneva – for example, at the Salève, an impressive mountain that overhangs the whole city. At the top, you will have the best view of Geneva! Finally, after a day of sport, as a cheese lover, I would recommend having a great fondue on the edge of the water to enjoy the sunset on the lake and the mountains.Sofiane Messili (Senior Consultant, Tax and Social Security)
Lausanne is definitely one of the most beautiful cities in Switzerland – make sure to come down into the city and take a break near the lake – you’ll find plenty of amazing places to sit, drink and enjoy the view after a good day of work (such as Jetée de la Compagnie!!!!). Don’t miss the fantastic restaurants in the city – there are some hidden gems – and don’t hesitate to reach out to our teams for recommendations.Guillaume Schorp (Consultant, Tax)
I would recommend a walk in the Vinyards in the Lavaux region – the view is absolutely incredible. Some would even say it’s the most beautiful view in the world. You can start your walk from Cully or Lutry and head all the way up to Chexbres via the “Chemin des Vignes”. Once you arrive in Chexbres, you can take a break and enjoy some good food and a glass of wine from the region at one of the restaurants in the area.Elsa Gardel (Senior Manager, Tax)