Switzerland Fact-File Part 6:
Individual Business Employment Issues

6.5 Switzerland Business Owner Employment and Invoicing Rules

The Employment by a Business of its Owner

A sole proprietorship has no legal personality in Switzerland; no distinction is made between the business and its founder. A similar situation exists with partnerships, although the latter must be registered in the Commercial Register. A partnership agreement will indicate how much of a stake, and therefore how much remuneration, each partner will have in the business.

Where an incorporated business has been established, the business is a separate legal entity and is therefore the employer of the business director (or directors). The business will be liable for corporation tax and the owner (employee) for personal income tax. In such an instance, the salary paid by the company to the employee must be bona fide and subject to deduction of tax and social security contributions.

The business owner may receive benefits in kind as an employee of his or her own company, but these will attract income tax. Such benefits include a company vehicle, preferential loans, medical insurance and subsidised accommodation.

Invoicing your Business

The services of a payroll company to facilitate payment to independent contractors who undertake work for the business but are not employees (this can, presumably, include the owner of the business, but professional advice should be obtained regarding this). The payroll company will charge a fee for their services and pays the contractors via the normal tax system, deducting income tax and social security and insurance contributions as appropriate. Using such a company may mean that a proprietor doesn't have to establish a limited company.