How to set up as an independent contractor in Switzerland

If you’ve decided to give up the 9-to-5 grind and go it alone, then why not do it in a country that’s done its own thing for centuries: Switzerland.

With a high standard of living and some of the most beautiful natural scenery in the world, this landlocked, multilingual republic offers the perfect bridge between business and lifestyle. The chocolate is pretty good, too.

Before you can get started, though, you’ll need to know how to:

• Register your business in Switzerland

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this article, we’ll cover all these things with the tender care and precision of a Swiss watchmaker. We’ll help you navigate your tax responsibilities as a self-employed worker, and discuss some of the other risks and liabilities you should be aware of.

So let’s begin.

First, it’s important to clarify how Switzerland defines independent contractors.

What is an independent contractor according to Swiss law?

Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to employees, and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

See also: Why businesses hire contractors vs. international employees

In Switzerland, there is no specific law or code that covers independent contractors. However, the Swiss Code of Obligations (the contract law segment of the Swiss Civil Code) clearly lays out the legal definition of an employer-employee relationship. Based on these guidelines, you can generally be considered a contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into one specific company and its operations (i.e. you don’t have an internal email address)

• Are able to delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines, and to ensure that you are paying the right taxes.

Business registration in Switzerland

Before you can begin working as an independent contractor in Switzerland, you’ll first need to choose a formal structure for your business.

The most popular model for sole owners is the sole proprietorship structure, as it’s quick and easy to set up and maintain. In this structure, you have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.

If you want more legal protection, you anticipate generating a large amount of revenue, or you’re working with additional partners (natural or legal), you can also incorporate a formal company, or enter into a partnership. If you’re unsure which structure is most suitable for your business, it’s a good idea to speak with a registered solicitor or accountant.

If you do opt for the sole proprietor model, you don’t need to take any formal company registration steps. However, if your annual income exceeds CHf 100,000 (around $112,000), you must register your business in your canton’s trade register.

If your business activity is regulated (i.e. you practice a protected profession such as medicine or law, or you’re handling food), you’ll also need to acquire the relevant business permits or licenses.

How do I get paid as an independent contractor in Switzerland?

As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Switzerland, the payment collection process can be even more complicated. 

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in Swiss francs — and with no hidden fees. Learn more about how our platform can help.

Independent contractor taxes in Switzerland

As an independent contractor, you’re responsible for filing and paying your own taxes and social contributions.

The good news is that, as a sole trader, you pay personal income tax on your business profits (using your personal tax number). This means that the process is simplified, and you do not have to pay additional corporate taxes.

In Switzerland, income is taxed at the federal, cantonal, and municipal levels. Federal tax rates are progressive (ranging from excesses of 0% to 11.5%), and vary depending on whether or not you are married (or have small children). Cantonal and municipal taxes are usually aligned, and are either progressive or flat rates, depending on where you are based.

You must also make social insurance contributions to what is known as the “1st pillar” of the Swiss pension system. As a self-employed person, you must cover both the employer and employee portions of this payment, which is around 10.6% of your income. You are not required to make contributions to the “2nd pillar,” although it is generally recommended to do so if you plan to retire in Switzerland.

In most cantons, you must file your tax return by March 31 each year. Your federal taxes must be paid by this date, while your cantonal and municipal taxes must be paid throughout the year.

On the flipside, you can apply for tax deductions on accruals and business assets, and claim back various business expenses, such as:

• Travel costs

• Insurance premiums

• Food

• Tools, equipment, and uniforms

• Education

VAT information for independent contractors in Switzerland

If your annual income exceeds CHf 100,000, you must register for — and charge your clients — VAT. This can be done online. 

In Switzerland, the standard VAT rate is 7.7%, although some goods and services are charged at the lower rate of 2.5% (both of these rates will increase slightly in 2024).

Liability considerations for independent contractors in Switzerland

As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Swiss and international clients.

Accounting requirements for independent contractors in Switzerland

As a sole proprietor, you do not need to publish financial statements or accounts unless your annual turnover exceeds CHf 500,000 (around $560,000).

However, you must still keep organized, accurate records of all your income and expenditure (including client invoices, purchase orders, bank statements, and receipts). This will help you correctly file your taxes, give you a stronger picture of your financial situation, and generally make life easier if you are audited by the tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool, or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Switzerland

As we’ve mentioned, independent contractors are classified differently to employees in Switzerland. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

Download

How do I ask the company I’m working with to convert me to an employee in Switzerland?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Swiss law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Swiss francs (or other currencies), without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Swiss laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Setting up as an independent contractor in Switzerland

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Swiss and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.