Outsource payroll in Switzerland: payroll administration, social security and withholding tax for SMEs

Payroll administration in Switzerland: what it involves

Behind every salary payment there are deductions and employer contributions that have to be calculated correctly and paid to various bodies. Mistakes often only come to light during an employer audit by the compensation fund or a tax authority audit – and can then be claimed retroactively for several years.

• Gross salary, allowances and expenses
• Deductions for AHV/IV/EO, unemployment insurance, non-occupational accident, daily sickness allowance and pension fund
• Withholding tax for employees taxed at source
• Family allowances
• Payment and bookkeeping entries

Outsourcing payroll: the benefits for SMEs

In small companies, payroll is often done by management or by someone alongside their actual job. That works until someone is absent, a special case arises or the rules change. Outsourcing payroll gives you fixed processes, up-to-date expertise and cover when someone is away.

• No payroll software or updates of your own needed
• Legal changes are taken into account continuously
• Confidential salary data stays outside your team
• Predictable costs instead of hourly billing

Social security reporting: AHV, BVG, UVG and daily sickness allowance

As an employer, you are affiliated with an AHV compensation fund (the body that collects old-age and survivors' insurance contributions, OASI). During the year you pay provisional contributions, and after year end you report the actual salaries per person. Accident and daily sickness allowance insurers also invoice on the basis of the reported total payroll, and the pension fund needs new hires, leavers and salary changes.

With the electronic salary reporting procedure (ELM), many of these reports can be sent from the payroll software in a single step. We set up the processes so that no report is forgotten.

Withholding tax settlement for employers

Foreign employees without a C permit (settlement permit) and cross-border workers are generally taxed at source. As the employer, you determine the rate, deduct the tax from the salary and settle it with the cantonal tax authority. The rate depends on factors including marital status, children, the partner's income and, for cross-border workers, the country of residence.

If any of this information changes, the rate must be adjusted, retroactively if necessary. Additional rules apply to employees working in several cantons or living abroad. The employer is liable for an incorrect deduction.

• Report new employees subject to withholding tax
• Check rates and certificates
• Submit the settlement for each canton on time
• Handle corrections and queries
• Issue withholding tax certificates

New hires and leavers without gaps

A new hire takes more than an employment contract: registration with the pension fund and compensation fund, checking whether withholding tax applies, the permit for foreign employees and, for cross-border workers, the certificates from the country of residence.

When someone leaves, there are deregistrations, the final settlement including holiday and overtime balances, the salary certificate and information for the departing employee about insurance that only continues for a limited time after leaving. We work with checklists so that every report is made at the right time.

The key dates in the payroll year

Many dates recur every year. The exact dates depend on the compensation fund, the canton and the insurers, so we keep track of them individually for each company:

• Monthly: payroll and payment
• Monthly, quarterly or annually depending on the canton: withholding tax settlement
• Ongoing: provisional contributions to the compensation fund
• After year end: salary declaration to the compensation fund and total payroll to the insurers
• At the start of the year: salary certificates for employees

Common mistakes in payroll administration

These mistakes most often lead to back payments:

• Withholding tax rate not adjusted after marriage or birth
• Employees registered with the pension fund too late
• Bonuses or flat-rate expenses processed incorrectly
• Workloads under eight hours a week not taken into account for non-occupational accident insurance
• Leavers not deregistered

How PROFINIO works with you

You report changes such as new hires, salary adjustments or absences via the client portal. We prepare the payslips, submit the reports and send you the documents for approval. This way you stay in control without having to deal with forms and deadlines.

Frequently asked questions