How can an Umbrella Company Help with Contracting in Switzerland?
Umbrella Company in Switzerland
Independent contracting in Switzerland isn’t always straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.
Before you consider taking a contract in Switzerland, you should be aware of what you’re getting into – and how you can make it simpler.
Difficulties of Contracting in Switzerland
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Switzerland.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Switzerland, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Switzerland and your home country can seem like full-time work in itself.
How Umbrella Companies Work
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Switzerland. Even better, most are experts in Swiss and expat tax law, meaning they’ll also help you optimise your earnings in Switzerland.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Switzerland.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Switzerland, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Switzerland and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Switzerland
One of the most consistently challenging aspects of contracting in Switzerland is complying with the country’s tax system. As well as paying tax in Switzerland, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Switzerland
If you’re working in Switzerland under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Switzerland for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Switzerland, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Switzerland through PAYE is left with the prospect doing everything themselves.
Do you know much about Swiss Tax Law? Does Switzerland have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Switzerland can range from 0.77 to 11.5 percent (not including cantonal taxes), and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Switzerland
| When Do You Need to Lodge Your Tax Return? | 15 or 31 March (depending on canton of residence) |
| Tax Filing Deadline | 15 or 31 March (depending on canton of residence); with extensions of up to November |
| Can you file it online? | Yes |
How to File Taxes in Switzerland as a Contractor
The cantonal tax administrations deal with tax returns. Federal tax is assessed and collected by the cantons on behalf of the Confederation. Enter your municipality under ‘completing your tax return online’ here(link is external) to be redirected to a website where you can complete your tax return online.
If you are a resident foreign national and your gross employment income exceeds CHF120,000 (CHF500,000 in Geneva) per year, you are required to file an ordinary tax return. Otherwise, in most cantons, resident foreign nationals are taxed through the wage withholding system. Your employer will usually levy the wage withholding tax on a monthly basis.
Non-resident individuals generally pay their taxes via wage withholding and are not required to file a tax return for their employment income. They may claim a correction of the withheld wage taxes to claim additional deductions.
Tax Figures in Switzerland
| Currency | Swiss franc (CHF) | ||||||||||||||||||||||||
| Tax-free Threshold in Switzerland | CHF14,500 | ||||||||||||||||||||||||
| Income Tax Rates |
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| Notes |
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Tax Residency in Switzerland
When do you become a tax resident in Switzerland
You become a tax resident in Switzerland when:
You become a tax resident in Switzerland if you:
- Intend to establish Switzerland as your main abode and are registered with the municipal authorities; or
- Stay in Switzerland with the intention to work for a period exceeding 30 days (ignoring short absences); or
- Stay in Switzerland with no intention to work for 90 consecutive days (ignoring short absences).
Does the 183 day rule apply in Switzerland
No
Am I taxed on my global income in Switzerland
Yes, if you are a resident, except on income from real estate located abroad, and income from either a fixed place of business or a permanent establishment located abroad.
Non-residents are only taxed on Swiss-source income.
Can you set up your own Limited Company in Switzerland?
| How long does it take to set up | 6-10 days |
| How much does it cost | Minimum CHF1,320 |
| Is it easy? | Starting a Business Rank: 73/190 (Source: World Bank) |
Tax Calculator in Switzerland
If you are a contractor and want a calculation on your tax and net retention in Switzerland, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Switzerland
Contractors in Switzerland are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Swiss umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Swiss taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Swiss tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Switzerland
We work with numerous umbrella companies in Switzerland, many of whom are experts in tax and immigration laws. If you have any questions about tax in Switzerland, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Swiss work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Switzerland but without the overhead of directly dealing with the Swiss tax authorities. Get in touch with us today for some reliable advice on tax in Switzerland!
A Contractor’s Guide to Work Permits in Switzerland
Immigration is one of the primary concerns for any contractor hoping to start working in Switzerland. Permanent employees will find it easy to get their Swiss work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Swiss work permit, known more commonly as the L permit or B permit, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Switzerland is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
Work Permit Processing Time
This varies between cantons, and is dependent on your nationality, work permit type, dependents, and various other factors.
Can Work Permit be Processed in Country?
The application is processed in Switzerland. However, some supporting documentation may need to be provided in your home country, depending on your nationality.
Work Permit Application Process
Is a work permit required?
Work permits are required for all EU/EFTA (EEA) nationals wishing to work in Switzerland though a Swiss umbrella company for more than 90 days.
For assignments of up to 90 days, no work permit is required as we make an online authorisation 8 days prior to the commencement of the employment contract commencement.
Note: Labour leasing companies are not able to secure work permits for 3rd country nationals.
What permits are available?
L permit: EU/EFTA nationals are entitled to an L permit provided they are working under an employment contract valid for 3-12 months.
B permit: This residence permit is granted to persons who have an unlimited employment relationship or one lasting for at least 12 months. It is valid for 5 years.
C permit: EU/EFTA nationals are entitled to a C permit. It is valid for an indefinite period of time, usually after a regular and uninterrupted stay of 5 years in Switzerland.
G permit: This permit is granted to EU/EFTA cross-border commuters. These are nationals of EU/EFTA member states who reside in an EU/EFTA member state and work in Switzerland (either in an employed or self-employed capacity). All cross-border commuters must return to their main place of residence abroad at least once a week.
Step 1: Prepare the Following Documents
- A fully signed copy of your Employment Contract
- Your passport
- 2 passport-sized photos
- Your apartment lease agreement or confirmation of your hotel reservation
- Your work address in Switzerland
Step 2: Register at Your Local Municipality
Within 14 days of arrival, register and apply for a work permit at your local municipality.
Note: De-registration is obligatory. If you are leaving Switzerland, you must de-register at your local Commune and send us a copy of your leaving Attestation.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Switzerland (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Switzerland. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Switzerland and match contractors with the right company for them. If you’ve already secured a contract in Switzerland, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
