EXPLAINED: How to understand your Swiss payslip
If you are working in Switzerland, you should know how to read the payslip you get each month from your employer so you can understand the deductions and surcharges it contains.
Most Swiss salaries that you see advertised on job sites list gross wages. And your employment contract will most likely mention the gross amount as well.
If you are a newcomer to Switzerland’s labour market, you may be surprised (and not in a good way) to discover, when you receive your first monthly payslip, that the net sum you are actually getting is lower than the figure mentioned in your contract.
But deductions from your salary are normal and if you previously worked in another country, you were probably subjected to the same system as well, though the deductions themselves were likely different.
Mysteries of Swiss payslips revealed
The first thing you need to know is that while your salary is being automatically deposited into your bank account each month on the same date, your employer must also provide you with a payslip that includes detailed information such as gross and net salary, as well as all deductions and surcharges.
One reason the payslip may be difficult to understand, at least initially, is that it contains only abbreviations.
These are the acronyms listed on the payslip and what they mean.
AHV in German, AVS in French and Italian
This is your contribution to the mandatory first pillar pension scheme. It amounts to 8.7 percent on your gross salary, but it is split evenly between you and the employer, with your part amounting to 4.35 percent. However, the company’s contribution is typically not listed on your payslip.
BVG in German, LPP in French and Italian
This is the second pillar of Switzerland’s pension scheme, the occupational pension, which includes everything in the first pillar and is compulsory for employees who earn more than 21,300 francs per year — that is, everyone who works full-time.
The goal of this pension is to allow retirees to retain their previous lifestyle in old age.
The percentage which is deducted from your wages depends on how much you earn and how old you are — in other words, how close to retirement age you are.
However, this contribution is also split 50 – 50 between you and the employer.
READ MORE : EXPLAINED: How does the Swiss pension system work - and how much will I receive?
IV in German, AI in French and Italian
Like the two previous examples, the disability insurance — which covers both workplace and out of work accidents — is also compulsory in Switzerland.
The former type, work-related accidents, are fully funded by your employer, so you will not find this deduction on your payslip. The latter ones, however, which can vary between 1 and 3 percent of your salary (depending on which insurance company your employer contracted) are the employee’s responsibility.
ALV in German, AC in French, AD in Italian
Mandatory contributions to the unemployment insurance are 1.1 percent, with your employer matching the same amount.
In return, in case you lose your job, you can expect to receive 70 to 80 percent of your previous salary for up to a maximum of 24 months, depending on how long you have been paying into the system.
READ MORE: An essential guide to being unemployed in Switzerland
These are the deductions listed on your payslip. Additional information included therein — other than your name — is your bank information and the account into which the salary is being paid.
Taxes in Switzerland are not always directly deducted from your monthly pay. Instead, in many cases, Swiss taxes are filed and paid annually.
READ MORE: Cross-border workers: How much tax does Switzerland pay to home countries?
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Most Swiss salaries that you see advertised on job sites list gross wages. And your employment contract will most likely mention the gross amount as well.
If you are a newcomer to Switzerland’s labour market, you may be surprised (and not in a good way) to discover, when you receive your first monthly payslip, that the net sum you are actually getting is lower than the figure mentioned in your contract.
But deductions from your salary are normal and if you previously worked in another country, you were probably subjected to the same system as well, though the deductions themselves were likely different.
Mysteries of Swiss payslips revealed
The first thing you need to know is that while your salary is being automatically deposited into your bank account each month on the same date, your employer must also provide you with a payslip that includes detailed information such as gross and net salary, as well as all deductions and surcharges.
One reason the payslip may be difficult to understand, at least initially, is that it contains only abbreviations.
These are the acronyms listed on the payslip and what they mean.
AHV in German, AVS in French and Italian
This is your contribution to the mandatory first pillar pension scheme. It amounts to 8.7 percent on your gross salary, but it is split evenly between you and the employer, with your part amounting to 4.35 percent. However, the company’s contribution is typically not listed on your payslip.
BVG in German, LPP in French and Italian
This is the second pillar of Switzerland’s pension scheme, the occupational pension, which includes everything in the first pillar and is compulsory for employees who earn more than 21,300 francs per year — that is, everyone who works full-time.
The goal of this pension is to allow retirees to retain their previous lifestyle in old age.
The percentage which is deducted from your wages depends on how much you earn and how old you are — in other words, how close to retirement age you are.
However, this contribution is also split 50 – 50 between you and the employer.
READ MORE : EXPLAINED: How does the Swiss pension system work - and how much will I receive?
IV in German, AI in French and Italian
Like the two previous examples, the disability insurance — which covers both workplace and out of work accidents — is also compulsory in Switzerland.
The former type, work-related accidents, are fully funded by your employer, so you will not find this deduction on your payslip. The latter ones, however, which can vary between 1 and 3 percent of your salary (depending on which insurance company your employer contracted) are the employee’s responsibility.
ALV in German, AC in French, AD in Italian
Mandatory contributions to the unemployment insurance are 1.1 percent, with your employer matching the same amount.
In return, in case you lose your job, you can expect to receive 70 to 80 percent of your previous salary for up to a maximum of 24 months, depending on how long you have been paying into the system.
READ MORE: An essential guide to being unemployed in Switzerland
These are the deductions listed on your payslip. Additional information included therein — other than your name — is your bank information and the account into which the salary is being paid.
Taxes in Switzerland are not always directly deducted from your monthly pay. Instead, in many cases, Swiss taxes are filed and paid annually.
READ MORE: Cross-border workers: How much tax does Switzerland pay to home countries?
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