What tax do contractors pay in Switzerland?

The income tax rate for Switzerland looks enticing at 0-12%, but this is only a fraction of the story. There are also communal, church and canton taxes which vary by region but put the upper tax bracket in Zurich, for example, at 40%. Plus there is employee social security which runs another 5.15% uncapped plus a further 1.1% on earnings up to CHF126,000 and 0.5% on earnings between CHF126,000 and CHF 315,000. So at the highest tax bracket you are looking at around 45.65% in taxes and social security. For a contractor being paid on a full Swiss payroll the net retention of 55% is quite poor. A contractor making EUR 500 per day would only expect to get EUR 60,500 after all these deductions.
However using an umbrella company solution can raise net retention dramatically up to 75% (depending on earnings rate and which canton you are based in). In the same EUR 500 per day scenario this provides a take home pay of EUR 82,500. So after all taxes, deductions, social security and management fees you get an additional EUR 22,000 per year!

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