Tax withheld directly from salary by the employer and paid to the tax authority, instead of the employee filing an ordinary tax return.
In Switzerland it applies mainly to foreign workers without a C permit, and to cross-border commuters. The employer is responsible for deducting the right amount, using the scale of the canton concerned, and for paying it over.
Source tax should not be confused with withholding tax (impôt anticipé), which is levied on investment income and is a different tax entirely.
The mandatory contributions funding the Swiss social insurance system, levied on salaries and shared between employer and employee.
They cover the first pillar (AHV, IV, EO), unemployment insurance (ALV), occupational pensions (BVG), accident insurance (UVG) and family allowances. Some are split equally, others fall wholly on the employer.
For the employer they are not simply a deduction but an additional cost: the real cost of an employee is their gross salary plus the employer's share.
The share of social insurance contributions borne by the employer, on top of the gross salary paid to the employee.
For 2026 this includes AHV/IV/EO at 5.3%, ALV at 1.1% up to CHF 148,200, at least half of the BVG contribution, occupational accident insurance in full, and family allowance contributions, which vary by canton.
In total, employer contributions typically add somewhere between 15% and 20% on top of gross salary. That is the gap between what an employee costs and what their contract says.
The share of social insurance contributions deducted from the employee's gross salary.
For 2026 these are AHV/IV/EO at 5.3%, ALV at 1.1% up to CHF 148,200, at most half of the BVG contribution, and, depending on the employer, shares of daily-sickness and non-occupational accident insurance.
The employer withholds these amounts and pays them to the relevant funds together with its own share.
The payslip: the document an employer must give each employee setting out how their pay was calculated.
It shows gross salary and its components, each social contribution deducted with its rate, any source tax, and the resulting net amount. Employer contributions are often shown alongside for transparency, though they are not deducted from the employee.
Swiss law requires employers to provide a written statement of account for each pay period.
The amount actually paid to the employee, after the employee's share of social contributions and any source tax has been deducted from gross salary.
Typical deductions are AHV/IV/EO at 5.3%, ALV at 1.1%, the employee's BVG share, and accident and daily-sickness insurance premiums. Net salary generally lands between 83% and 88% of gross, varying with age and pension plan.
The total remuneration owed to an employee before any deductions: base salary, plus any thirteenth month, bonuses, commissions and allowances subject to social contributions.
Gross salary is the figure stated in the employment contract and the basis on which every social insurance contribution is calculated. It is what appears at the top of the payslip, before employee contributions are subtracted to give net salary.
Occupational pension provision, the second pillar of the Swiss system. It supplements the first pillar so that together they maintain an accustomed standard of living in retirement.
Key figures (2026):
Contribution rates rise with age, from 7% of coordinated salary for younger employees to 18% for the oldest band. The employer must pay at least half.
The coordination deduction weighs disproportionately on part-time and low salaries, since it is subtracted in full regardless of workload.
Unemployment insurance, which provides income support to people who lose their job.
Rate (2026): 2.2% of gross salary, split equally between employer and employee at 1.1% each, on salary up to CHF 148,200 a year.
Unlike AHV, the contribution is capped: no contribution is due on salary above CHF 148,200.
Old-age and survivors' insurance, the first pillar of the Swiss social security system. Despite the English name, it covers old age and survivors; disability (IV/AI) and loss of earnings (EO/APG) are collected alongside it.
Rate (2026): 10.6% of gross salary for AHV, IV and EO combined, split equally between employer and employee at 5.3% each. There is no upper salary ceiling: the contribution applies to the whole salary.
Self-employed people pay their own contributions at a maximum of 10.0%, on a sliding scale for income below CHF 60,500.
Contributions are mandatory from the first franc of salary, and the employer is responsible for declaring and paying both shares to the compensation fund.
