Employed or independent – there is a third alternative


As we have discussed in our previous articles, the employer is liable for withholding social security from the employee’s salary, as well as to withhold income tax if the employer is not a Swiss citizen, or is not married to one, except permit C holders.

For small and medium companies, this administrative burden may indeed be a showstopper to employing non-citizens as they might not have sufficient resources to tackle the associated bureaucracy. Conversely, having an independent status, even being registered in the Commercial Registry, might still be risky for the employer in case such a contract is requalified as an employment agreement. Besides, for part-time projects, legal requirements for dismissal are an impediment.

Fortunately, Swiss law allows a different approach – placement of personnel.

Alternative 1 – Setting up own company

Whether individually or as a group of partners, you can set up a limited liability company in which you shall be directly employed and receive a salary. This company can carry out various short-term or long-term agreements with the clients, who are then released from any administrative burdens related to social security or withholding tax, and this agreement may be terminated at any time by either party.

Furthermore, a portion of turnover may be paid out as a salary, which in turn reduces the company’s taxable profits. In contrast, the remainder may be occasionally paid out as a dividend. Although also taxable, dividends are taxed at a reduced rate of up to 50% depending on the Canton, respectively 70% on the federal level, and dividends are not subject to social security contributions.

Alternative 2 – Placement agencies

There are many different placement agencies in Switzerland, that hire personnel on a full-time basis and assume all the administrative burdens related to taxes, social security, and immigration. Simultaneously, they lend personnel to various clients on a short-term or long-term basis, in which case the agreement with such clients is not subject to employment regulations and liberates the client from any of the above bureaucracy. Such personnel also benefit from the possibility of working for various clients simultaneously, and is eligible for unemployment insurance, unlike independent entrepreneurs.

The above practice is very common for part-time skilled workers performing various specific projects, in particular in the field of training, research and development, engineering, pharmaceutics and chemistry, innovation, or programming.

Either of the above alternatives opens the doors for easier and more flexible employment.


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