For lower wage amounts, it is possible to use the simplified procedure for the payment of social insurance contributions. This procedure is intended to reduce the workload of employers and is voluntary. Small wage amounts can also be settled using the standard procedure.
The following requirements must be met to ensure that the simplified procedure can be applied:
- The gross wage of the employee is no more than CHF 21,600 per year (for a shorter period of employment: no. of months times CHF 1,755).
- If you employ several employees, the total wage amount may not exceed CHF 56,160.
- The wages of all your staff are settled using the simplified procedure.
- The employee is not a cross-border commuter from the Principality of Liechtenstein (due to the double taxation agreement between Switzerland and the Principality of Liechtenstein, the simplified payment procedure cannot be applied in this case)
- There is no employment relationship between an employer domiciled in the canton of Basel-Landschaft, Basel-Stadt, Berne, Neuchâtel, Solothurn, Vaud or Valais and a cross-border commuter resident in France who works in one of the mentioned cantons (due to the double taxation agreement between Switzerland and France, the simplified payment procedure cannot be applied in this case).
Benefits of the simplified payment procedure: you have less work and your employees generally benefit from a more favourable tax rate!
You only pay the social insurance contributions once a year
With the simplified payment procedure, you pay the respective social insurance contributions once a year, while the standard payment procedure requires that you make monthly or quarterly payments on account depending on the wage level.
Payment of social insurance contributions and taxation of income in one
Using the simplified payment procedure, the employee's income is taxed at the same time that the social insurance contributions are settled.
Generally a lower tax rate
The employee benefits from a uniform tax rate of 5% which is in many cases more favourable than ordinary taxation. This rate includes both the direct federal tax and the cantonal tax. As this income is not considered for ordinary taxation, it is also not taken into account for tax progression purposes.
No wage statement
The employer is not required to issue a wage statement and thus has a smaller workload.