Understanding tax residency and social security for expats in Switzerland

Switzerland offers a high standard of living, excellent infrastructure, and a strong economy, making it a popular destination for international professionals and remote workers. But relocating or working from Switzerland comes with more than just lifestyle perks. Expats must know that tax residency and social security compliance are key areas to avoid legal pitfalls and ensure access to services like healthcare, pensions, and tax deductions.

Whether you’re employed by a foreign company, working remotely, or planning to move to Switzerland soon, it’s crucial to understand how your tax obligations and social security contributions will be determined.

This article will break down the rules around tax residency, withholding tax, double taxation treaties, and mandatory contributions. It also explores how a Swiss Employer of Record (EOR) can help ensure you’re fully compliant without establishing your own business entity.

Why tax and social security compliance matters in Switzerland

Switzerland has a decentralised tax system and a unique social security structure, which can be complicated even for locals, let alone for foreigners with international income or remote work setups. Failing to understand how your tax residency is classified, or neglecting mandatory contributions can lead to fines, denied benefits, or double taxation.

This guide is designed specifically for:

• Expats working remotely for foreign employers,
• International professionals relocating to Switzerland,
• HR and mobility specialists supporting global teams.

Let’s start with how tax residency is defined.

What determines tax residency in Switzerland?

Tax residency in Switzerland is determined by your physical presence and intent to reside. If you move to Switzerland and establish a home, even temporarily, you could become a resident for tax purposes under one of the following conditions:

• 30-day rule: You are considered a tax resident if you stay in Switzerland for at least 30 consecutive days with gainful employment.
• 90-day rule: If you’re in Switzerland for 90 days or more without gainful employment, you’re also considered a resident.

Even if you travel frequently or keep a residence abroad, Switzerland may classify you as a tax resident if it’s your habitual residence. You spend the most time in this place or conduct essential life activities.

Once you’re a resident, you’re liable for taxation on your worldwide income, unless an applicable double taxation agreement provides relief. Tax residency is linked to your type of permit (e.g. B-permit, L-permit), which also defines your length of stay and work rights.

How withholding tax works for expats

Switzerland applies a withholding tax system known as Quellensteuer, which is particularly relevant for expats. If you’re employed in Switzerland and don’t yet have a C-permit (permanent residence), your employer is legally required to withhold income tax at source.

This tax:

• It is deducted directly from your gross salary,
• Varies by canton, income level, marital status, and number of children,
• It is reported and paid monthly to the cantonal tax authorities.

Even if your taxes are deducted automatically, you may still be required (or benefit from) filing a tax return, especially if your annual income exceeds a certain threshold (e.g. CHF 120,000 in many cantons). Filing allows you to claim deductions or apply for a refund if you’ve overpaid.

Double taxation agreements: avoiding tax on the same income twice

Switzerland has signed double taxation agreements (DTAs) with more than 100 countries, including Germany, France, the US, and the UK. These treaties are essential for expats who maintain financial ties in multiple countries.

DTAs help determine:

• Which country has taxing rights over your income,
• How foreign tax credits are applied,
• Whether pension income or investment returns are taxed locally or abroad.

To benefit from a DTA, you need to:

• Prove your tax residency with the appropriate documentation,
• File with both countries if required,
• Submit a Certificate of Residence from your home country if you’re claiming treaty benefits in Switzerland.

Failure to follow the proper process may result in double taxation or loss of deductions.

Many professionals choose to live in neighbouring countries like France, Germany, or Italy while working in Switzerland, using a G permit that allows cross-border commuting with specific tax, social security, and residency rules that employers and employees must carefully follow.

Social security contributions for expats

All employees in Switzerland must contribute to the national social security system, known as AHV/AVS (Old Age and Survivors’ Insurance). This system, jointly funded by employers and employees, provides essential protections including retirement pensions, disability benefits, unemployment support, family allowances, and accident insurance, which may be managed through SUVA or private insurers.

The process is straightforward for those employed under a Swiss contract—your employer will register you with the relevant authorities and handle all deductions directly through payroll. However, if you’re working remotely for a foreign company that doesn’t have a legal presence in Switzerland, your situation becomes more complicated.

Registering for Social Security can be difficult without a recognized local employer, and failure to contribute properly may affect your access to healthcare, pensions, or other public benefits.

Swiss vs. foreign employer: who’s responsible?

If your employer does not have a legal entity in Switzerland, they generally cannot register you for Swiss social security. In that case, you’re responsible for:

• Registering as a self-employed individual (which can be difficult for employees),
• Making voluntary contributions, if eligible,
• Or working through an Employer of Record, which can assume the role of legal employer.

Without proper contributions, you may lose access to public healthcare subsidies, pension accrual, or unemployment benefits.

Besides, in Switzerland, employees are entitled to a minimum of four weeks of paid annual leave, and public holidays vary by canton, making it essential for employers to understand local entitlements and include them accurately in employment contracts.

Voluntary contributions and EU agreements

If you’re from an EU or EFTA country, and working in Switzerland for a short time, EU Regulation 883/2004 may allow you to remain in your home country’s social security scheme, provided you apply for an A1 certificate.

For others (e.g. Americans, Australians), voluntary social security contributions may be possible under bilateral agreements or on a case-by-case basis. However, these are often limited and require advance planning.

How a Swiss Employer of Record can support expats and remote professionals

A Swiss Employer of Record (EOR) can bridge the gap if your foreign employer cannot legally register you in Switzerland. An EOR becomes your official employer in Switzerland, ensuring full compliance with local labour laws, payroll taxes, and social security contributions, while your foreign employer continues managing your role and responsibilities.

Here’s how it works:

• The EOR provides a locally compliant employment contract, recognised by Swiss authorities.
• It registers you with the AHV/AVS, accident insurance, and pension funds.
• The EOR manages monthly payroll, deducts Quellensteuer, and files with cantonal tax offices.
• They can support applications for residence permits, tax registration, and even Beitragsnachweis (proof of contribution) documents.

For example, a Canadian professional relocated with his wife to Zurich to work remotely for a US startup without a Swiss entity. Without a local contract, she couldn’t register for tax residency or social security.

By using a Swiss Employer of Record, the company provided her with a compliant contract, ensured tax withholding, and handled AHV/AVS contributions. This allowed her to work legally, access public benefits, and stay fully compliant, without the startup needing to open a Swiss branch.

This model is ideal for:

• Expats working remotely for foreign companies,
• Professionals on temporary assignments in Switzerland,
• Companies without a Swiss legal presence who still want to employ staff there legally.

By using an EOR, both you and your employer benefit from risk reduction, labour law compliance, and access to local entitlements.

Hire cross-border workers

Hiring cross-border workers in Switzerland offers access to top-tier talent from neighbouring countries, but it also involves careful management of work permits, taxes, and social security. The G permit is central to this process, requiring workers to return to their country of residence weekly and employers to stay compliant with both Swiss and EU regulations.

For companies without a legal entity in Switzerland, partnering with a Swiss Employer of Record is the most efficient and compliant way to employ cross-border talent. The EOR handles everything from permit processing to payroll, allowing your business to focus on growth, not paperwork.

Looking to hire cross-border workers in Switzerland without the legal hassle? Contact us to find out how our Swiss Employer of Record service can help you hire, pay, and manage employees, compliantly and efficiently.