Understand the Swiss
system in 5 minutes

The 3 pillars of pension planning

The Swiss system is based on three complementary levels:

• 1st pillar (AHV/IV), the state pension, compulsory for all, guarantees the subsistence minimum.
• 2nd pillar (occupational pension), employment-linked pension planning, financed with the employer.
• 3rd pillar (3a/3b), optional private savings, with tax advantages for pillar 3a.

Withholding tax

If you are a foreign employee without a C permit, your tax is deducted directly from your salary by your employer, according to a flat-rate scale.

This scale does not always account for your actual situation (pillar 3a, actual expenses, children...), hence the value of checking your eligibility for ordinary assessment.

Subsequent Ordinary Assessment (TOU)

It becomes compulsory if:

• your annual gross income exceeds CHF 120,000
• you own real estate (in Switzerland or abroad)
• you receive other income not subject to withholding tax (pension, annuity, wealth...)

It also lets you deduct your actual expenses and pillar 3a contributions. Application to be filed before 31 March.

The health insurance system

Basic health insurance is compulsory for every resident in Switzerland, from 3 months of stay.

Benefits are identical everywhere, but premiums vary freely depending on the provider, canton, age, deductible and chosen model, hence the value of comparing every year.

Cross-border workers & quasi-residents

Cross-border workers are, in principle, taxed at source in Switzerland.

If they earn at least 90% of their worldwide income in Switzerland, they can apply for quasi-resident status and benefit from the same deductions as a Swiss resident.

Legally optimising your taxes

Several levers allow you to reduce your tax burden entirely legally:

• Pillar 3a contributions
• Occupational pension buy-ins
• Deduction of actual professional expenses
• Choice of municipality of residence