Accounting, Payroll & Social Insurance in Switzerland

Running a company in Switzerland requires compliance with a structured set of accounting, payroll, and social insurance obligations. Every AG and GmbH must maintain books under the Code of Obligations, prepare annual financial statements, register as an employer with the AHV compensation office, withhold social insurance contributions from employee salaries, and — depending on size — submit to statutory audit. These are not optional. Failure to comply creates director liability, tax penalties, and operational problems that compound over time.

This page covers the full range of back-office obligations: accounting standards, bookkeeping, audit, payroll mechanics, social insurance, employer registration, stamp duty, and withholding tax. Each section links to a detailed article for readers who need the complete treatment.

The Swiss Back-Office Framework

Swiss corporate back-office obligations fall into several interconnected areas:

1. Accounting: Financial statements under OR/CO, applying Swiss GAAP FER or IFRS for larger entities
2. Bookkeeping: Day-to-day recording of transactions under OR Art. 957-958
3. Audit: Ordinary, limited, or opt-out depending on company size
4. Payroll: Salary calculation, deductions, and payment
5. Social insurance: AHV/IV/EO, ALV, BVG, UVG — contributions split between employer and employee
6. Employer registration: With the cantonal compensation office, pension fund, and accident insurer
7. Taxes on capital: Stamp duty on equity issuance and securities transactions
8. Withholding tax: On salaries of foreign employees without C permit

These obligations begin from the date of incorporation and continue until the company is formally liquidated and deregistered. Even dormant companies with no employees must maintain accounts and file tax returns.

Accounting Standards and Legal Requirements

Swiss accounting requirements are set out in the Code of Obligations (Art. 957-963b). The level of complexity depends on the company’s size:

All companies must:

• Maintain books and records
• Prepare an annual balance sheet and income statement
• Prepare an inventory
• Retain records for 10 years

Companies exceeding CHF 500’000 revenue must apply full double-entry bookkeeping with a chart of accounts, proper accrual accounting, and notes to the financial statements.

Larger companies that exceed two of three thresholds (CHF 20 million assets, CHF 40 million revenue, 250 FTEs) in two consecutive years must apply a recognised accounting standard — Swiss GAAP FER, IFRS, or US GAAP.

Listed companies must use IFRS or US GAAP.

The relationship between accounting and tax in Switzerland is direct: taxable profit is derived from the statutory financial statements. Unlike some jurisdictions where tax accounts differ from commercial accounts, Swiss tax law uses the commercial balance sheet as the starting point (Massgeblichkeitsprinzip). This makes the quality of accounting directly relevant to the tax position.

Bookkeeping Rules

Bookkeeping in Switzerland must follow the principles set out in OR Art. 957a:

• Completeness: All transactions must be recorded
• Accuracy: Entries must reflect the economic substance of transactions
• Timeliness: Transactions must be recorded promptly (daily or weekly in practice)
• Verifiability: Every entry must be supported by a voucher (invoice, receipt, contract)
• Systematic order: A chart of accounts must organise entries logically

The standard chart of accounts used in Switzerland is the “Kontenrahmen KMU” published by the Swiss accounting association (veb.ch). It provides a standardised structure that aligns with OR requirements and is used by most Swiss SMEs and accounting software.

Records must be kept in one of Switzerland’s official languages (German, French, Italian) or in English. The Swiss franc is the reporting currency — foreign currency transactions must be translated at the exchange rate on the transaction date or at average rates.

Electronic bookkeeping is standard practice. Cloud-based accounting software — including Abacus, Bexio, and Run my Accounts — is widely used. Physical vouchers may be scanned and stored electronically, provided the digital copies are complete and unalterable.

Statutory Audit Requirements

Swiss law distinguishes three audit regimes, and the rules are covered in detail in our guide to statutory audit in Switzerland:

Ordinary audit (ordentliche Revision): Required if the company exceeds two of three thresholds in two consecutive years:

• Total assets of CHF 20 million
• Revenue of CHF 40 million
• 250 full-time equivalent employees

The ordinary audit is performed by a licensed audit firm under Swiss Standards on Auditing. It includes a full opinion on whether the financial statements give a true and fair view.

Limited audit (eingeschränkte Revision): The default for companies below the ordinary audit thresholds. The auditor performs a review — primarily analytical procedures and enquiries — and issues a report confirming no matters have come to attention suggesting the accounts are materially misstated.

Opting out: Companies with fewer than 10 full-time equivalent employees may waive the limited audit entirely if all shareholders consent in writing. This is the “opting out” provision and is used by the majority of Swiss SMEs. Opting out does not remove the obligation to prepare proper financial statements — it only removes the external review.

Payroll in Switzerland

Payroll in Switzerland involves several mandatory deductions from gross salary:

Salary components: Swiss employment law distinguishes between base salary, 13th month salary (standard but not legally required), bonuses, expense allowances, and benefits in kind. Each component has different social insurance treatment.

13th month salary: Most Swiss employment contracts include a 13th month payment — an additional month’s salary paid in December or split across the year. Social insurance contributions apply to this payment.

Expense allowances: Companies may agree a fixed expense allowance (Pauschalspesenvergütung) with the cantonal tax authority. Amounts within the approved allowance are not subject to income tax or social insurance. The standard lump-sum is CHF 6’000-8’400 per year for senior employees.

Payment frequency: Monthly salary payment is standard. Swiss law requires payment by the end of each month unless a different arrangement is agreed in writing.

Social Insurance System

The Swiss social insurance system rests on three pillars:

First pillar — AHV/IV/EO (state pension, disability, income replacement):

• Mandatory for all employed and self-employed persons
• Combined contribution: 10.6% of gross salary (split equally)
• No upper salary cap — contributions apply to the full salary
• Administered by cantonal compensation offices (Ausgleichskassen)

Second pillar — BVG (occupational pension):

• Mandatory for employees earning above the entry threshold (CHF 22’050 in 2026)
• Contributions are age-dependent, ranging from 7% (age 25-34) to 18% (age 55-65) of the insured salary
• Employer must contribute at least 50% of the total BVG premium
• Administered by pension funds (Pensionskassen/Sammelstiftungen)

Third pillar — Private savings:

• Voluntary, tax-deductible contributions up to CHF 7’056 per year (employed persons with BVG)
• Not an employer obligation

UVG (accident insurance):

• Occupational accidents: Employer-funded, mandatory for all employees
• Non-occupational accidents: Employee-funded through salary deduction, mandatory for employees working 8+ hours per week
• Administered by SUVA (for certain industries) or private insurers

KTG (daily sickness allowance):

• Not legally mandatory but standard practice
• Provides 80% salary continuation during illness (typically 720 days within 900)
• Premium split between employer and employee varies by contract

Employer Registration

Every company that employs staff must complete employer registration with multiple bodies:

1. AHV compensation office (Ausgleichskasse): Register before the first salary payment. The company is assigned an employer number and must remit AHV/IV/EO/ALV contributions quarterly or monthly.

2. Occupational pension fund (BVG): Join a pension foundation within three months of employing the first person subject to BVG. Options include industry foundations, collective foundations, or company-specific foundations.

3. Accident insurer (UVG): Register with SUVA (mandatory for certain industries — construction, manufacturing, transport) or a private insurer. Coverage must be in place from the first day of employment.

4. Cantonal tax authority: Register for withholding tax (Quellensteuer) if employing foreign nationals without C permit. The employer is responsible for deducting and remitting the tax.

5. Family allowance fund (FAK/CAF): Register with the cantonal family allowance fund to remit contributions and process family allowance payments for employees with children.

Failure to register — particularly with the AHV compensation office — creates director personal liability. Under Art. 52 AHVG, directors who wilfully or negligently fail to pay social insurance contributions are personally and jointly liable for the shortfall.

Stamp Duty

Swiss stamp duty (Stempelabgabe) consists of three separate taxes:

Issuance stamp (Emissionsabgabe):

• 1% on equity contributions (share capital and capital contribution reserves) exceeding CHF 1 million
• Applies at incorporation and each capital increase
• The first CHF 1 million is exempt
• No stamp duty on debt instruments

Transfer stamp (Umsatzabgabe):

• 0.15% on transactions involving Swiss securities
• 0.30% on transactions involving foreign securities
• Applies when a Swiss securities dealer (broadly defined — includes most companies holding a securities portfolio) is party to the transaction
• Exempt: transactions in own shares, reorganisations, certain fund transactions

Insurance premium stamp:

• 5% on premiums for certain insurance policies (property, liability)
• 2.5% on single-premium life insurance
• Exempt: social insurance, health insurance, reinsurance

For most SMEs, stamp duty is primarily relevant at incorporation (issuance stamp) and when paying insurance premiums. Companies acting as holding entities or managing investment portfolios encounter the transfer stamp more frequently.

Withholding Tax on Employment Income

Withholding tax on employment income (Quellensteuer) applies to employees who:

• Are foreign nationals without a C settlement permit, OR
• Are cross-border commuters (Grenzgänger), OR
• Have neither domicile nor habitual abode in Switzerland but earn Swiss-source employment income

The employer deducts tax at source based on cantonal tariff tables, which factor in marital status, number of children, and church membership. The tax covers federal, cantonal, and communal income tax.

Key rates and thresholds:

• Tariff tables: Published annually by each canton — rates differ by canton
• CHF 120’000 threshold: Employees earning above CHF 120’000 gross per year must file a regular tax return (quasi-resident assessment), with withholding tax credited against the final liability
• Employer obligation: Deduct and remit monthly; annual reconciliation by 31 March
• Liability: The employer is liable for the tax — if it fails to withhold, it bears the cost

Withholding tax errors are among the most common payroll audit findings. Applying the wrong tariff code, failing to update after a change in personal circumstances, or missing the CHF 120’000 filing threshold all create exposure.

Accounting Recovery and Catch-Up

When accounting or payroll obligations fall behind — whether due to a change of fiduciary, management neglect, or operational disruption — the company faces a recovery situation. Missing accounts prevent tax filing. Missing payroll records create AHV liability. Both create director exposure.

Our guide to accounting recovery in Switzerland covers the reconstruction process in detail: how to rebuild accounts from bank statements, file overdue returns, settle accumulated interest, and restore the company to good standing.

The cost of recovery is invariably higher than the cost of compliance. A single year of missing accounts costs CHF 2’500-4’000 to reconstruct — roughly three times the annual maintenance cost. Prevention through consistent, timely bookkeeping and payroll processing is always the better path.

Frequently Asked Questions

The FAQ section above addresses the ten most common questions about Swiss accounting, payroll, and social insurance. For specific advice on your company’s back-office obligations, contact Morgan Hartley Consulting for a confidential discussion.

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