Switzerland is known for its beautiful scenery and strong trade relationships with countries across Europe, making it an ideal location for companies looking to expand. However, the nation’s laws and customs are complex and vary widely by region.

When setting up a Switzerland payroll, keep these rules in mind to stay compliant.

Taxation rules in Switzerland

Switzerland has a federal corporate income tax (CIT) rate of 8.5% on profit after tax. Additional expenses are applied at the cantonal and communal level, so your CIT can range from 11.9% to 21.6%. The country also has a complex income tax rate for employees, which varies depending on how much money a worker earns.

A 13th-month salary is only required when stated in an employment contract, collective bargaining agreement, or binding employer practice. However, employees can request that the 13th-month salary be disbursed monthly as part of the basic salary without additional compensation.

Employees and employers each contribute 5.3% towards social insurances. These include old age and survivor's insurance (AVS/AHV), disability insurance (AI/IV), and loss of earnings compensation (APG/EO). 

Switzerland payroll options for companies

Companies have a few Switzerland payroll options to choose from:

  • Internal: Larger companies with in-country subsidiaries and a long-term commitment to Switzerland may run their own internal payroll. However, this option can be more expensive since the company will have to hire the necessary HR team members.
  • Switzerland payroll processing company: Companies can also outsource payroll to a local Switzerland payroll processing company. However, you will still be held liable for any of the local company’s mistakes.
  • G-P: The easiest way to run payroll in Switzerland and stay compliant is partnering with an Employer of Record like G-P. With us, you can rest assured that all employees will be paid on time, freeing you to focus on other important aspects of your business.

How to establish a payroll in Switzerland

To set up payroll in Switzerland, you will first need to establish a subsidiary by registering with the Commercial Register. Companies must submit notarized bylaws and founding documents as well as an application. Additionally, you’ll also need to open a Switzerland bank account. However, companies can bypass entity setup by partnering with an EOR like G-P.

Entitlement/termination terms

The first step to hire new employees is by writing an employment contract that outlines the terms of the relationship. You should include entitlement and termination clauses in this contract to avoid any issues in the future.

The probationary period is one month by default but a written agreement or employment contract can set up to three months. Qualifying interruptions sometimes extend the period further. The statutory notice period is seven days during the probationary period. Notice periods to terminate the employment relationship after the probationary period depend on how long the employee has worked for the company, but both parties can agree to immediately terminate the contract.

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