Payroll, social security and withholding tax for assignees: what changes

Expat payroll in Switzerland is not a copy of the home-country payslip with a new currency. Three systems act on the same salary: social insurance, occupational pension and tax at source. Each has its own rules, its own authority and its own reporting rhythm.

For the HR or mobility manager, the question is practical. Which deductions appear on the payslip of your transferee, who calculates them, and what stays with the home entity? This page sets out the structure. A review of your specific policy belongs with a payroll specialist, reached through the request at the bottom of the page.

The Swiss payroll picture in one view

A Swiss payslip is built from the gross salary. From it come employee contributions to social insurance, the pension fund contribution and, for most foreign employees, tax at source. The employer adds its own share of the contributions and pays the amounts over to the relevant bodies.

The key difference for assignees is that Swiss payroll does not wait for a tax return. Deductions are taken every month. The employer is the collection point for both social contributions and, in the case of tax at source, the cantonal tax.

Social security: the first pillar

Switzerland organises retirement provision in three pillars. The first is state insurance, the second is the occupational pension (LPP/BVG) and the third is private savings. Payroll touches the first two directly.

For 2026, the combined employee and employer contribution to old-age and survivors' insurance (AHV), disability insurance (AI/IV) and income compensation (APG) is 10.60% of gross salary, split equally between employer and employee. The components are AHV 8.70%, AI 1.40% and APG 0.50% (Federal Social Insurance Office, FSIO). These rates are confirmed against the official AHV/IV information centre before any payroll configuration.

In practice this means your employee sees half of that combined rate deducted, and the employer carries the other half on top of the salary cost. Budget the employer share as a real cost of the assignment, not as an item that disappears with a home-country arrangement.

Home-country coverage and certificates

Some assignees remain covered by home-country social security for a period. Whether this applies depends on the bilateral or multilateral agreement between the two states and on the nature of the posting. A certificate of coverage from the home authority is the usual proof. Without it, Swiss contributions are the default.

Prepare this document before departure. Requests made after the first Swiss payroll run are slower to resolve and can leave the payslip wrong for several cycles. The page on posted workers and business travel explains where the line between a short mission and an assignment tends to fall.

The second pillar: occupational pension

The pension fund contribution is separate from the first pillar. For 2026, the entry threshold is CHF 23,040 per year in salary (Federal Social Insurance Office, FSIO). Below that level, an employee is not normally enrolled in the occupational scheme. Above it, enrolment is compulsory and contributions are shared between employer and employee under the fund's rules.

Plan rules differ from one fund to another. Ask the employer's pension provider for the regulations and the contribution table early. A transferee from the United Kingdom, the United States or India often expects a defined-contribution model with portability. Swiss funds work differently, and the explanation belongs in the pre-departure briefing. See the three pillars for a fuller description.

Leaving Switzerland raises its own questions about the pension capital. These are covered under end of assignment and departure and repatriation.

Tax at source for assignees

Foreign nationals who do not hold a settlement permit (permit C) are taxed at source. The employer deducts the tax from each payslip and pays it monthly to the canton (Federal Tax Administration, FTA, estv.admin.ch). The employee does not receive an assessment for the same income in the normal case.

For holders of a B or L permit earning below CHF 120,000, tax at source is in principle final. An ordinary assessment can be requested later. From CHF 120,000, a later ordinary assessment is compulsory (Federal Tax Administration, FTA). The threshold is a decision point for your tax adviser and payroll provider, because it changes the filing obligations of your transferee.

Rates and tariff codes depend on the canton, marital status, children and church membership. The canton's guidance, such as the Schwyz guide with worked examples, shows how a calculation runs. For the full picture read withholding tax at source for foreign employees and tax returns in Switzerland.

Tax equalisation and gross-up

Many assignment policies promise that the assignee pays no more tax than at home. This is a policy choice, not a Swiss rule. Under tax equalisation, the employer pays the Swiss tax and withholds a hypothetical home-country tax. Under a gross-up, the employer adds the tax cost to the salary.

Both approaches change the payroll. The employer shoulders the Swiss tax, and the tax paid on the benefit may itself be taxable. Define the approach in writing in the assignment letter and align it with the relocation policy.

Who does what: a responsibility checklist

Use this list to assign ownership before the first payslip.

• Confirm the employing entity: Swiss payroll, home payroll or shadow payroll.
• Request the certificate of coverage from the home authority, where an agreement applies.
• Register the employee with the compensation fund for social insurance.
• Obtain the pension fund regulations and the contribution table.
• Collect the data needed for the tariff code: marital status, children, spouse's income, church membership.
• Define tax equalisation or gross-up in the assignment letter.
• Agree who files the ordinary assessment where one applies.
• Set up the monthly remittance calendar for tax at source and social contributions.
• Record how benefits in kind, such as corporate housing, are valued on the payslip.
• Plan the deregistration and final payroll at the end of the assignment.

Typical pitfalls for HR

The most frequent errors are administrative, not technical. Four stand out.

First, the permit status is wrong or outdated. The tax at source regime depends on it, and a permit change alters the treatment. Use the permit finder to confirm the likely route, then check with the authority.

Second, family data is missing. The tariff code reflects the household. A spouse who joins later, covered by family reunification, changes the code and the deduction.

Third, a move within Switzerland is not reported. A change of canton changes the competent tax authority and can alter the rates.

Fourth, benefits in kind are overlooked. Housing, school fees and relocation allowances can affect the taxable salary depending on how they are paid. A lump sum or managed approach has different payroll effects, so decide the payroll treatment before choosing the model.

How the pieces fit with the wider assignment

Payroll is one workstream among several. The permit has to be in place for the entity to employ the person. The household needs a home, and a home search service shortens that step. The first weeks run more smoothly with settling-in support. Immigration steps are covered under immigration support.

A payroll error is rarely visible on day one. It appears at the first tax statement, the first year-end or the first audit. Setting the structure before departure costs little. Repairing it afterwards costs both money and goodwill, which is why failed assignments so often trace back to unresolved administration. Use the relocation calendar to line up payroll tasks with the permit and arrival dates.

Frequently asked questions

What is expat payroll in Switzerland?

It is the processing of salary for a foreign employee who works in Switzerland. It includes social insurance contributions, pension fund contributions and, for many foreigners, tax at source.

Does Swiss payroll apply to every assignee?

Not automatically. If the employee stays on home payroll, a Swiss entity may still have duties. The answer depends on the contract, the employing entity and the coverage rules.

Who pays social insurance contributions?

Employer and employee share them equally. The employer deducts the employee share and pays both shares over to the compensation fund.

What is the combined social insurance rate in 2026?

It is 10.60% of gross salary for AHV, AI and APG together, split equally (Federal Social Insurance Office, FSIO). The individual rates are 8.70%, 1.40% and 0.50%.

What is the AHV?

It is the old-age and survivors' insurance, the first pillar of Swiss retirement provision. It is state-run and funded by contributions on salary.

What is the second pillar?

It is the occupational pension (LPP/BVG). The employer enrols eligible staff in a pension fund, and both sides contribute under the fund's regulations.

What is the pension entry threshold for 2026?

It is CHF 23,040 per year in salary (Federal Social Insurance Office, FSIO). Below it, enrolment in the occupational scheme is not normally required.

Can an assignee stay in a home-country social security system?

Sometimes. It depends on an agreement between the two countries and the type of posting. A certificate from the home authority is the usual proof.

Who is taxed at source?

Foreign nationals without a settlement permit (permit C). The employer deducts the tax and pays it monthly to the canton (Federal Tax Administration, FTA).

Is tax at source final?

For B or L permit holders earning below CHF 120,000, it is in principle final, with an ordinary assessment available on request (Federal Tax Administration, FTA). From CHF 120,000, a later ordinary assessment is compulsory.

What happens when the permit changes to a settlement permit?

Tax at source ends and ordinary assessment starts. The employer and the employee need to coordinate the switch with the canton.

Does tax at source depend on the canton?

Yes. Tariffs are set per canton and reflect marital status, children and church membership. A change of residence can change the tariff.

Who calculates the tariff code?

The employer applies the code based on the employee's declared household data. The canton publishes the tariffs and guidance.

Is a Swiss tax return still needed under tax at source?

Often not, but it depends on income and status. Above the CHF 120,000 threshold, a later ordinary assessment is compulsory (Federal Tax Administration, FTA).

What is tax equalisation?

It is a policy approach where the employer covers the Swiss tax and withholds a hypothetical home-country tax. It is a company decision, not a Swiss legal requirement.

What is a gross-up?

The employer adds the extra tax cost to the salary so the employee keeps the intended net amount. The added amount can itself be taxable.

Are benefits in kind taxed?

They can be, depending on the benefit and how it is paid. Housing, school fees and allowances need a documented payroll treatment.

How does a lump sum affect payroll?

A lump sum paid to the employee is typically part of the taxable pay. A managed service paid directly to providers can be treated differently. Check the treatment before choosing.

What documents does payroll need before the first run?

The permit, the contract or assignment letter, the household data, any certificate of coverage and the pension fund details. The personalised checklist helps collect them.

What if the employee leaves Switzerland?

Final payroll, deregistration and the pension capital need handling. Plan these steps at the start of the assignment, not at the end.

Does this page give advice on my own payroll?

No. It explains the general rules. A specialist reviews your case through the relocation support request.

Sources

• Federal Social Insurance Office (FSIO), AHV/IV information centre
• Federal Social Insurance Office (FSIO)
• Federal Tax Administration (FTA)
• Canton of Schwyz, guide to withholding tax with worked examples