A triangular relationship :
Helvetic Payroll | The contractor | The client company
The umbrella structure is a form of working relationship that emerged in 1985 in Europe and more recently in Switzerland.
It facilitates interaction between executives/contractors seeking employment and companies looking for expertise, audit, advice or training. The status of independent contractor is complex and does not offer any guaranteed income. Opting to use an umbrella structure can address these flaws.
During his/her mission, the consultant using the umbrella structure becomes an “employee” of Helvetic Payroll which then manages all social security contributions, taxes and administrative procedures on his/her behalf.
A fast and simple solution for companies.
A fast and simple solution for independent contractors
The umbrella structure may relate to transactions within Switzerland and within any European Union country.
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The relationship between Helvetic Payroll and the client company is governed by a service contract.
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The relationship between Helvetic Payroll and the contractor employee is governed by an employment agreement.
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The relationship between the contractor employee and the client is defined by the specifications of the contract.
For the contractor :
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Financial optimisation: we provide you with our experience which will enable you to earn the best possible salary quickly
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Comprehensive administrative management: we take charge of all your administrative obligations, whether contractual, financial, tax-related or even legal
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All the security of employee status (sickness, pension, accident cover etc.) with the freedom of an independent contractor
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Full compliance with local applicable legislation (work permits, licenses etc.)
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A transparent and customised service
The umbrella structure frees the independent contractor from all administrative and legal constraints while affording him/her all the benefits and security associated with employee status. The contractor is therefore free to concentrate fully on the quality of the service he/she is providing and on developing his/her business activities.
An umbrella structure means the benefits of an employee without the drawbacks of being an independent contractor.
For the client :
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Comprehensive administrative management: a single administrative point of contact for invoicing and contract management
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Flexibility: we invoice you for services provided
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Full compliance with local applicable legislation (work permits, licenses etc.)
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A transparent and flexible service
The company enjoys quality service from the contractor without the obligations and constraints associated with human resources management as well as salary administration.
Switzerland is a country that offers a unique quality of life, one that few regions in the world can even aspire to.
The beauty and variety of the landscape, low crime rate, an excellent healthcare system, a high standard of education, first-class sporting infrastructures, modern and efficient public services, legendary cleanliness and of course, the precision for which the country is renowned well beyond its borders.
This quality of life is based, among other things, on a well-thought-out administrative and social system.
Social Protection
The Swiss social protection system covers the following areas :
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Health insurance (LAmal) and compensation for loss of earnings (APG) during maternity leave
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Old-age, survivor's and disability insurance schemes made up of 3 “pillars', i.e. the AVS-AI (pillar 1), the occupational pension scheme PP (pillar 2) and optional individual pension and insurance provisions (pillar 3)
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Occupational or non-occupational accident insurance (AA)
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Unemployment insurance (AC)
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Family benefits
Old-age, survivor's and disability insurance
This area is based on three pillars :
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Pillar 1, that of the public authorities, is made up of the AVS and the AI. The annuities from these two types of insurance are intended to cover the basic needs of the parties insured. The first pillar is compulsory for everyone, including independent contractors and those not gainfully employed.
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Pillar 2 (LPP) complements the first pillar with occupational old-age, survivor's and disability insurance. These two pillars guarantee at least 60% of their last salary for insured parties who retire. Only those employed are subject to the second pillar by law.
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Pillar 3, the individual pension and insurance arrangements aimed at covering further needs, is optional but unlike other forms of savings it offers certain tax benefits. The funds can only be paid out in the event of certain incidents (retirement, death or invalidity) or, under certain circumstances, for the purchase of their own place of residence.
Family benefits
Within the Federal scheme, family allowances are managed by the cantonal social security offices and, within the cantonal schemes, by the family allowance funds (recognised professional or interprofessional funds and cantonal funds).
Compulsory health insurance
Compulsory health insurance guarantees access to a range of quality medical care and appropriate medical treatment for everyone living in Switzerland within their canton of residence.
Health insurance for medical expenses is required under Swiss law. This private insurance, which must be taken out within 3 months of your arrival in the country, is the responsibility of the employee.
The amount varies depending on the level of cover you require.
Taxes and duties in Switzerland
Taxes and duties in Switzerland are complex as the rules vary depending on your permit type (cross-border or Swiss residence permit), your salary level and your canton of employment.
Taxes in Switzerland are also made more complex by the number of cantons (the applicable taxation differs from one canton to the next).
The method of calculating tax in Switzerland is, however, rather simple compared with other countries.
The legal system
As a foreigner, an employment contract is not in fact sufficient to work in Switzerland, you must also have a Swiss work permit. The Swiss work permit is an official document issued by the population service in your canton which allows you to work in Switzerland.
External publications and links
- General information and explanations about taxation in Switzerland
on the Confederation portal site
- General information and explanations about taxation in Switzerland
- How the tax system in Switzerland works
on the Federal Tax Administration site
- How the tax system in Switzerland works
- The social system
- Work permits
- Switzerland in general
- Tourism in Switzerland
Working in Switzerland: The law
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To legally work in Switzerland, a worker must obtain a Swiss work permit which must be requested from the authorities by a Swiss employer.
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Any temporary worker wishing to work for a company based in Switzerland must therefore work with a Swiss company that is authorised to hire labour within this country.
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Consequently, a temporary worker may not work for a company based in Switzerland and be paid by a company based abroad. Nor may he/she work for a Swiss umbrella company without the necessary licences.
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A Swiss end company may only work with a Swiss company that has all the necessary licences.
Federal and cantonal licences
Private placements and the hiring of labour are strictly controlled in Switzerland by the public institutions.
Helvetic Payroll has all the licences necessary for our activities:
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Cantonal licence granted by the SPE to practice throughout Switzerland
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Federal licence granted by SECO for cross-border
These licences enable us to practice in Switzerland and in European Union countries.
You can consult them directly on the website of the Swiss authorities here.
Helvetic Payroll is in permanent contact with the authorities and insurance companies (SECO, SPE, AFC, AVS) to ensure full compliance of our processes with Swiss legislation.
We know that it is of the utmost importance to ensure that pay slips are drafted for every employee in strict compliance with Swiss and European standards, particularly in terms of the calculation of social security contributions and tax deductions where tax is deducted at source.
A compulsory Swiss work permit
To work as a foreigner in Switzerland, an employment contract alone is not sufficient. You must also have a Swiss work permit. The Swiss work permit is an official document issued by the population service in your canton which allows you to work in Switzerland.
Helvetic Payroll will take care of all of these administrative steps.
What is the legal framework ?
A Swiss employment contract is created between Helvetic Payroll and the umbrella employee.
This employment contract sets out the terms and conditions stipulated by the client and/or the agency with whom you are in contact.
Helvetic Payroll issues a service contract with the end client based in Switzerland for invoicing purposes.
Where an agency is involved in the business process, the agency will invoice Helvetic Payroll for its fees.
How is my salary calculated ?
We convert your invoicing into a salary, in other words, we deduct our commission and all social security contributions (employer and employee) from the invoice.
Thus you have the status of an employee together with all the associated rights and privileges (sickness, insurance, pension, unemployment).
Who finds the contracts ?
Marketing research is carried out by the contractor and not by the umbrella company.
Upon signature of the contract, the umbrella company hereby undertakes not to commercially approach its employees’ clients.
How does the financial process work ?
We invoice your client within two working days of receiving your approved timesheet.
– We calculate your salary and produce a pay slip
– We pay your salary within two working days of receiving your client’s payment, or by the fifth work day of the month following the activity if you have the Cash Box.
How will I benefit ?
It is extremely difficult for non-Europeans to obtain a work permit.
In most cases, only the end company by whom you are directly employed will be able to make this application.
I am not Swiss or a European citizen, how will you manage my work permit ?
It is extremely difficult for non-Europeans to obtain a work permit.
In most cases, only the end company by whom you are directly employed will be able to make this application.
How much tax will I pay ?
The Swiss tax system is first and foremost cantonal. Your tax will therefore depend on your personal circumstances (married, spouse working in Switzerland, children etc.) and on your place of residence.
Based on these criteria, you will be given a comprehensive simulation tailored to your personal situation.
What about my pension ?
The Swiss pension system is based on 3 “pillars” :
Pillar 1 (AVS) is compulsory and is deducted directly at source
Pillar 2 (LPP) is compulsory and is deducted directly at source
The money becomes available upon retirement or upon your departure from Switzerland (outside the EU). You may also release this capital if you are creating a company or purchasing your primary residence.
Additional contributions are tax deductible
Pillar 3 is optional and available from banks or insurance companies. This pillar offers tax benefits.
How does health insurance work ?
Health insurance for medical expenses is required under Swiss law.
This private insurance, which must be taken out within 3 months of your arrival in the country, is the responsibility of the employee.
The amount varies depending on the level of cover you require.
How do I register upon arrival in Switzerland ?
Non-Swiss citizens must register within 8 days following their arrival in Switzerland.
Helvetic Payroll will take care of this and will guide you through this process which can differ from one canton to the next.
How do I pay my tax ?
Tax will be deducted at source.
And my family ?
When you have obtained your work permit, your family may join you in Switzerland. Each member of your family must register and obtain their own residence permit.
I have children, am I entitled to family allowances ?
Employees working in Switzerland are entitled to apply for family allowances.
You must however provide proof that you are not receiving family allowances from your country of origin.