What freelancers in Switzerland need to know about paying tax

Around one in four people in Switzerland are freelancers or self-employed. Here's what you need to know about tax for freelancers in Switzerland.

Freelancers in Switzerland are not subject to any specific tax rates. Photo by Canva Studio from Pexels
Photo by Canva Studio from Pexels

According to consultancy firm Deloitte, approximately 25 percent of people in Switzerland work as a freelancer. 

Here’s what you need to know about tax for freelancers in Switzerland.

Is self-employment subject to a specific taxation scheme? 

No. Self-employment income is included in overall taxable income. 

Are revenues of independents subject to the compulsory old-age (AVS) contribution?  

Yes. Self-employed individuals must make social security contributions at a maximum rate of  9.7% of their income. They can contract voluntarily a pension plan (so-called second pillar) with an insurance company. 

Can independent persons set-off depreciation and amortisation costs? 

Yes. Self-employed individuals can set-off depreciation expenses related to their business assets.  This specific tax treatment can certainly not be claimed for the depreciation expenses related to private assets. 

READ MORE: How much do freelancers earn in Switzerland?

Are interests paid for business debts deductible for tax purposes? 

Interest paid by a self-employed person to a third party can be deducted from business revenues.  

As a self employed person, if my expenses are higher than my revenues, can I carry forward my  loss? 

Yes. Expenses related to a business activity can be offset from revenues as long as they are necessary and linked to the business.

Losses deriving from a business activity can be carried forward for seven years. 

Can a self-employed person offset charitable contributions? 

Charitable contributions representing up to 20 percent of the net business revenues are deductible from  income tax, provided that specific conditions are met.

In particular, the contribution is made in favour of a Swiss legal entity which is exempt from taxation as it has only charitable objectives.

This advice was prepared by Pascal de Lucia of Guggenheim & Associés SA

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Third generation fast-track naturalisation in Switzerland: What you need to know

Many people in Switzerland are eligible for third generation fast-track naturalisation but are unaware. Here's what you need to know.

Third generation fast-track naturalisation in Switzerland: What you need to know

According to a report published by the Federal Commission of Migration on April 8th, one quarter of the Swiss resident population do not vote because they do not have the nationality.

Almost 350,000 people are foreigners born in Switzerland and approximately 35,000 belong to third generation families established in Switzerland.

Walter Leimgruber, President of the Federal Commission of Migration, hopes that many young people will take advantage of this transitional period.

He believes it would be a benefit for Switzerland to have more people, well integrated into Swiss society, participating actively in debates and political decisions.

EXPLAINED: How to fast track permanent residency in Switzerland

Swiss naturalisation

Swiss naturalisation procedure is either ordinary i.e. takes 1-2 years – or is fast-track / facilitated – which takes a maximum of one year. (Covid delays within cantonal immigration offices need to be taken into consideration).

As a general rule – fast-track naturalisation is for those who are “entitled” to naturalisation subject to all material conditions being fulfilled (absence of criminal record, residence in Switzerland etc.) whereas as ordinary naturalisation is for those whose naturalisation depends on the discretion of the authorities.

Due to the complexity of the conditions, this article will not explain all the formal and material conditions for naturalisation.

Fast-track naturalisation

There are several options for fast-track naturalisation under the Swiss federal law on nationality. This article only concerns one of the options – third generation naturalisation – available for certain people till 18th February 2023.

The conditions for third generation fast-track naturalisation are provided by article 24a of the Swiss federal law on nationality:

Since February 2018, foreigners under the age of 25, whose grandparents were already established in Switzerland, can request fast-track naturalisation. (Articles 24a LN and 15a OLN).

A child of foreign parents may, on application, be granted facilitated naturalisation 

if the following conditions are met 

  1. at least one of the grandparents was born in Switzerland or it can be plausibly established that the grandparent had a B, C, L or A permit or a carte de Legitimation in Switzerland. 
  2. at least one of the parents had a C permit, had lived in Switzerland for at least 10 years and had completed at least five years of compulsory schooling (i.e. primary and middle school) in Switzerland; 
  3. He was born in Switzerland; 
  4. He has a C permit and has completed at least five years of compulsory schooling (i.e. primary and middle school) in Switzerland. 

2 The application must be submitted before the age of 25. 

3 A naturalised child acquires the citizenship of the commune of residence and the canton of residence that is his at the time of naturalisation.

The transitional provision – article 51a LN, provides that:

Third-generation foreigners who, on 15 February 2018, had reached the age of 25 but had not yet celebrated their 35th birthday; and

Who fulfil the conditions of article 24a LN ( and other material conditions of the Swiss federal law on nationality), can therefore apply for fast-track naturalisation until 15 February 2023 at the latest, provided they have not yet reached the age of 40 at the time of the application.

To recap

Did your grandparents live in Switzerland?

Did your parents live in Switzerland?

Are you under 40 and living in Switzerland?

If yes, you may be eligible for third generation fast-track naturalisation.

The information in this article was prepared by Renuka Cavadini of Page & Partners.