Payroll in Switzerland 2026: AHV, BVG and withholding tax

In Switzerland the employer deducts 5.3% for AHV/IV/EO, 1.1% for unemployment insurance (ALV), the employee's share of the occupational pension (BVG) and usually the non-occupational accident premium. It adds its own matching share plus family allowance and accident contributions. Income tax is deducted only for employees taxed at source; Swiss citizens and C-permit holders file a tax return.

Payroll in Switzerland at a glance

Social security contributions in 2026

The employer deducts the employee's half of AHV/IV/EO and ALV from each salary and pays it with its own half to the AHV compensation fund, as leaflet 2.01 of the AHV/IV information centre explains.

Contributions start on 1 January after the 17th birthday. After the reference age (65; 64 years and 6 months for women born in 1962) employees pay no ALV and AHV/IV/EO only above CHF 16,800 a year (CHF 1,400 a month). On salaries up to CHF 2,500 a year per job, contributions are charged only if the employee asks, except for household employees and some cultural and media employers. Compensation funds also charge employers an administration cost contribution.

BVG occupational pension

An employee earning more than CHF 22,680 a year from one employer must be insured in a pension fund: for death and disability from 1 January after the 17th birthday, for retirement savings from 1 January after the 24th. The legal minimum covers the coordinated salary: salary up to CHF 90,720 minus the coordination deduction of CHF 26,460, at least CHF 3,780 and at most CHF 64,260.

Each pension fund sets its contributions and their split, but the employer must pay at least as much as the employees together. From 1 January 2027 the entry threshold rises to CHF 23,040 and the coordination deduction to CHF 26,880 (Federal Council, 2 October 2026).

Accident insurance, family allowances and sickness pay

Every employee must be insured against occupational accidents, with the Suva or another insurer, at the employer's expense. Employees working at least 8 hours a week for the same employer are also covered for non-occupational accidents, a premium normally deducted from their salary. Each insurer sets its own rates per risk class.

Family allowances are paid through a family allowance fund and financed mainly by employers, at rates that vary by canton and fund. The federal minimum is CHF 215 a month per child and CHF 268 for the education allowance.

Daily sickness allowance insurance (KTG) is optional. Without it, the employer must keep paying a sick employee for a limited time: at least three weeks in the first year of service, then longer under the Bern, Zurich or Basel scales. Half of a KTG premium can be charged to employees.

Income tax on salaries: tax return or withholding tax

Income is taxed at federal, cantonal and communal level.

Swiss citizens and C-permit holders, and foreign residents whose spouse is Swiss or holds a C permit, file a tax return and pay the tax themselves; the employer withholds nothing. For 2026 the federal direct tax for a single person is nil on taxable income up to CHF 15,200; marginal rates then rise from 0.77% to 13.2%, and from CHF 794,000 the tax is a flat 11.5% of the whole income. Cantonal and communal taxes come on top.

Withholding tax (Quellensteuer) applies to foreign employees living in Switzerland without a C permit and to people living abroad who work in Switzerland, such as cross-border commuters and weekly residents. The employer deducts it from every monthly salary and pays it to the cantonal tax administration; it covers federal, cantonal and communal income tax, so these employees normally file no return. Rates differ by canton, and the ESTV publishes the 2026 withholding-tax tariffs. The tariff code reflects the household: A for single people, B for married couples with one income, C for two incomes, H for single parents, followed by the number of children (A0 is single without children).

A resident taxed at source with gross employment income of CHF 120,000 or more in a year is assessed afterwards in the ordinary procedure. Others can apply for this subsequent ordinary assessment, for example to claim extra deductions, by 31 March of the following year; the deadline cannot be extended.

Minimum wage, working time and mandatory pay

There is no national minimum wage. Five cantons set one for work usually done there:

Hourly-paid staff receive holiday and public-holiday pay on top. Basel-Stadt and Jura exclude sectors covered by a generally binding collective agreement with its own minimum wages, and Ticino's amended law applies from 1 January 2027.

13th salary. No law requires it. Once the contract or a collective agreement provides it, it is part of the agreed salary, and most collective agreements do. Geneva, Neuchâtel and Basel-Stadt count it towards the minimum wage; in Geneva the base rate must then be at least CHF 22.70 an hour.

Overtime. Hours beyond the contract but within the legal weekly maximum (45 hours in industry, offices and large retailers, 50 hours otherwise) earn a 25% supplement, unless a written agreement provides time off of equal length or a lower supplement. Work beyond the legal maximum carries at least 25%, up to 2 hours a day and 170 or 140 hours a year.

Holidays. At least four weeks of paid holiday a year, five up to age 20. 1 August is the only federal public holiday and is paid to hourly workers too. Attendance and time tracking helps you keep overtime and holidays within these rules.

Monthly payroll calendar and filings

Advances not received 30 days after the period carry 5% interest a year. Many compensation funds accept the wage declaration electronically through Swissdec, and some cantons require employers to send the Lohnausweis to the tax authorities too. Reconcile the contribution accounts with your month-end close checklist.

Worked example: CHF 6,000 a month in 2026

A single Swiss employee aged 40, without children, earns CHF 6,000 gross a month, paid 12 times (CHF 72,000 a year), so no tax is withheld. Two lines are illustrations, not legal rates:

• BVG, illustrative: only the legal minimum age credit at 40, 10% of the coordinated salary of CHF 45,540 (CHF 72,000 − CHF 26,460), or CHF 4,554 a year, split equally. Real plans add risk and cost contributions.
• Accident insurance, assumed premiums: NBU 1.00%, the flat rate the ESTV uses for the 2026 withholding-tax tariffs, and BU 0.20%. Your insurer's rates will differ.

Family allowance contributions add CHF 61.50 (1.025%) to CHF 165.00 (2.75%) a month at the cantonal funds, plus administration costs. The employee pays income tax after filing the return. If taxed at source, the employer would deduct the amount from the canton's tariff A0, which depends on the canton.

Common mistakes

1. 1Charging ALV above CHF 12,350 a month, or after the reference age.
2. 2Withholding tax for a C-permit holder, forgetting it for other foreign employees, or using the wrong tariff code.
3. 3Leaving an employee above CHF 22,680 a year out of the BVG, or paying less than the employees' share.
4. 4Deducting NBU premiums from employees working fewer than 8 hours a week, who are not covered.
5. 5Paying hourly staff exactly the cantonal minimum without separate holiday pay on top.
6. 6Missing 30 January for the wage declaration, or paying advances late at 5% interest.

How Clientlly helps

Clientlly ships a built-in payroll profile for Switzerland, checked against official sources on 1 October 2026: AHV/IV/EO at 5.3% for employee and employer, ALV at 1.1% each up to CHF 12,350 a month, and the federal direct tax tariff as modelled. It calculates gross to net and employer contributions, produces payslips and supports recurring payroll adjustments, a fixed amount or a percentage of salary such as the BVG deduction your pension fund sets. You can import employees and payroll data, and an administrator can adjust the rates in the payroll tax settings.

The profile models one employee in a primary job, single, without dependants, at federal level only: its tax line approximates the federal direct tax and should be checked against the official calculator, and cantonal taxes, withholding-tax tariffs, BVG, accident and family allowance contributions must be checked for your canton, pension fund and insurer.

You can also handle leave requests and approvals with a leave calendar, track attendance and overtime, and keep HR documents. See human resources and payroll in Clientlly.