The standard payment procedure can always be used. If the requirements for the simplified procedure are met, we recommend that you choose this.
Differences compared to the simplified procedure
Monthly or quarterly invoicing
In contrast to the simplified procedure, the social insurance contributions are not billed annually, but rather on a monthly or quarterly basis.
Social insurance and income are handled separately
Using the simplified payment procedure, the employee's income is taxed at the same time that the social insurance contributions are settled. With the standard procedure, only the social insurance contributions are settled with the compensation fund office. The employee is responsible for the taxation of his or her income.
Issuance of a wage statement
At the end of the year, the employer is required to issue a wage statement in order to enable the employee to declare the wage as income in his or her tax return.
Generally a higher tax rate
With the simplified procedure, the employee benefits from a uniform tax rate of 5% which is in many cases more favourable than ordinary taxation. With the standard procedure, the income is taxed according to the official tax rates and both the direct federal tax and cantonal tax must be settled. The income is also taken into account for tax progression purposes and can have additional negative effects for the employee.