Switzerland has one of the highest average salaries in the world. The high wage level often goes hand in hand with a low unemployment rate.
Switzerland is known for its excellent quality of life, which is supported by stable political conditions, good healthcare and a high level of education.
Compared to many other countries, taxes in Switzerland are relatively low, which significantly increases disposable income.
Due to its central location in Europe and the presence of numerous international companies, Switzerland offers a multicultural and multilingual working environment.
Switzerland has one of the most stable economies in the world with a low inflation rate and a strong currency, the Swiss franc.
Employees in Switzerland benefit from fair working conditions, short working hours compared to other countries and generous social benefits, including paid parental leave, sick pay and retirement benefits.
Switzerland offers impressive nature with mountains, lakes and a variety of outdoor activities that provide an ideal balance to work.
The Swiss healthcare system is one of the best in the world and offers excellent medical care.
The first pillar is the state pension scheme and comprises old-age and survivors' insurance (AHV) and disability insurance (IV). This pillar is intended to ensure a livelihood, i.e. a minimum standard of living in old age, in the event of disability or for survivors (widows, orphans).
Old-age and survivors' insurance (AHV):
The AHV pays pensions in old age and survivors' pensions to widows, widowers and orphans. It is financed by a pay-as-you-go system in which current employees finance current pensions through their contributions.
Disability insurance (IV):
The IV supports people who are partially or completely unable to work due to a disability through pensions and integration measures.
Supplementary benefits (EL):
These come into play if the benefits from AHV and IV are not sufficient to ensure a minimum standard of living.
The second pillar is occupational benefits insurance, also known as a pension fund. This pillar supplements the AHV/IV benefits in order to secure the accustomed standard of living in old age, in the event of disability or for survivors.
Compulsory occupational benefit scheme (BVG):
All employees who exceed a certain minimum salary (as at 2024: CHF 22,050 per year) are compulsorily insured through their employer's pension fund. The contributions are paid jointly by the employer and employee.
Non-mandatory pension provision:
Many employers offer their employees further pension benefits in addition to the statutory minimum. This extra-mandatory pension provision is also financed by contributions from the employer and employee.
The third pillar is private, individual pension provision and is used to cover additional financial needs in old age. It is voluntary and divided into two forms:
Pillar 3a (tied pension provision):
This form of pension provision is tax-privileged. Pillar 3a contributions can be deducted annually from taxable income up to a legally defined maximum. However, the capital saved is tied up until you reach retirement age or under certain conditions (e.g. buying your own home).
Pillar 3b (unrestricted pension provision):
This form includes all other savings and pension options such as life insurance, savings plans or real estate investments. There are hardly any tax advantages and the funds are usually available flexibly.
Pillar 1: State pension provision to secure your livelihood (AHV, IV, EL).
Pillar 2: Occupational pension provision to maintain the standard of living (pension fund, BVG).
Pillar 3: Private pension provision for additional needs (pillars 3a and 3b).
The 3-pillar principle thus ensures comprehensive financial security in old age, in the event of disability or death and enables insured persons to largely maintain their standard of living in retirement.
What statutory social insurance schemes are there in Switzerland, and how much on average does an employee in Switzerland have to pay for these social insurance schemes out of their salary?
It is not possible to give a blanket answer to this question, as the pension fund contributions, for example, depend on the age of the person to be insured and whether only the statutory minimum is insured or an extended pension fund solution exists. The share of non-occupational accident insurance can also be paid voluntarily by the employer, and daily sickness benefits insurance can also be taken out voluntarily by the employer and is either paid in full by the employer or half is deducted from the employee's salary. Furthermore, although health insurance is compulsory in Switzerland, it must be taken out privately by each person and paid for separately.
The following overview of contributions is therefore not intended to be exhaustive, but rather to provide a general and average overview of the statutory social insurance contributions payable in Switzerland.
In Switzerland, employees and employers pay social security contributions, which are typically divided into four main areas (as at 2024)
Together, this amounts to around 6.4 % of the gross salary for employees, plus additional contributions for occupational benefits insurance (BVG) and health insurance, which are not considered social security contributions but mandatory insurance.
The pension fund contributions depend on age on the one hand and on any non-compulsory components on the other. However, as this is very individual, we will only refer to the statutory savings contributions (as at 2024):
25-34 years: 7 % of the insured salary, of which 1/2 each for employee and employer.
35-44 years: 10 % of the insured salary, of which 1/2 for the employee and 1/2 for the employer
45-54 years: 15% of the insured salary, of which 1/2 for the employee and 1/2 for the employer.
55-65 years: 18 % of the insured salary, of which 1/2 for the employee and 1/2 for the employer.
In addition to the savings contributions used to accumulate retirement assets, contributions are also made for risks such as disability and death as well as for the administration of the pension funds. These contributions are generally calculated as a percentage of the insured salary.
Risk component:
The contributions for risk cover vary depending on the pension fund, but on average amount to around 2-4% of the insured salary.
Administrative costs:
Administrative costs for running the pension fund are typically 0.5-1.5 % of the insured salary.
For a 40-year-old employee, the average pension fund contributions are therefore as follows: 7 %.
Based on the following calculation:
10 % savings portion + 3 % risk portion + 1 % administration costs = 14 %, of which 1/2.
Accident insurance in Switzerland consists of two main types of insurance:
Occupational accident insurance (BU):
This insurance covers accidents that occur during work or on the way to work. It is compulsory for all employees and the premiums are paid in full by the employer. Occupational accident insurance also covers occupational illnesses caused by work-related activities.
Non-occupational accident insurance (NBU):
This insurance covers accidents that occur outside of working hours, i.e. during leisure time. The premiums for non-occupational accident insurance are usually paid by the employee and deducted directly from their salary. Employees who work less than eight hours a week for the same employer are only insured against occupational accidents and occupational illnesses, but not against non-occupational accidents.
The contribution rate for NBU is on average around 0.7 % to 1.5 % of the insured salary. However, this percentage can vary depending on the employee's job and the corresponding accident risk. In sectors with a higher accident risk, such as the construction industry, the contributions can be higher (up to 3.0 %), while they are lower in less risky professions.
Health insurance is compulsory in Switzerland, but it is offered by private insurance companies, not the state. The premiums for basic insurance (compulsory health insurance, OKP) are independent of income and depend on the place of residence, the chosen insurance model and the amount of the chosen deductible (excess).
The average monthly premium for basic insurance in 2024 was between around CHF 300 and CHF 400 per month, depending on the canton and insurance model. For families or couples, the premiums can multiply accordingly.
To calculate the premium as a proportion of income, let's take the following example
In this case, the health insurance premium would amount to around 5.4% of gross monthly income.
Overall, it can be said that health insurance premiums in Switzerland account for around 5 to 8% of gross income on average, depending on individual circumstances and the exact premium amount.
Industry / Profession | Switzerland (CHF/year) | Germany (EUR/year) | Germany (CHF/year) |
|---|---|---|---|
Computer science | 95'000 – 125'000 | 55'000 – 70'000 | 53'900 – 68'600 |
Finances | 100'000 – 150'000 | 60'000 – 80'000 | 58'800 – 78'400 |
Marketing | 80'000 – 120'000 | 50'000 – 70'000 | 49'000 – 68'600 |
Pharmaceuticals | 120'000 – 150'000 | 65'000 – 85'000 | 63'700 – 83'300 |
Engineers | 95'000 – 120'000 | 55'000 – 75'000 | 53'900 – 73'500 |
Doctors | 150'000 – 200'000 | 70'000 – 100'000 | 68'600 – 98'000 |
Real estate agents | 80'000 – 110'000 | 50'000 – 70'000 | 49'000 – 68'600 |
Policemen | 70'000 – 95'000 | 45'000 – 60'000 | 44'100 – 58'800 |
These average values provide a guide, but vary greatly depending on individual factors such as education, professional experience, marital status or place of residence.
Employees: Switzerland (as at 2024) | Employees: Germany(as of 2024) | |
|---|---|---|
Income tax | Confederation: 0% to 11.5% Cantons/municipalities: 5% to 32% | Federal: 14% to 42% + solidarity surcharge of 5.5% of the income tax No additional tax due to redistribution by the federal government |
Property tax | 0.1% to 1% of net assets (cantons/municipalities only) | None |
Church tax | ptional, depending on the canton approx. 0.5% to 2% of income | 8% to 9% of income tax |
Social security contributions | AHV/IV/EO: 10.6% of gross salary (employer/employee 5.3% each) Unemployment insurance (ALV): 2.2% of gross salary (employer/employee 1.1% each) Occupational pension scheme (2nd pillar): 14% to 20% of the insured salary (employer/employee share) | Pension insurance: 18.6% of gross salary (employer/employee 9.3% each) Statutory health insurance: approx. 16.3% of gross salary (employer/employee 8.15% each) Long-term care insurance: approx. 3.05% of gross salary (employer/employee 1.525% each) Unemployment insurance: 2.5% of gross salary (employer/employee 1.25% each) |
Further oblig. Insurances | Private health insurance: 2% to 12% As this is a fixed monthly contribution of between CHF 300 and CHF 400, the higher your income, the less significant it is. | |
Average total tax burden (incl. social security contributions) | 20% to 35% of gross income | 35% to 50% of gross income |
Excursus top federal and cantonal tax rate | Varies greatly depending on the canton, on average from an income of CHF 300,000 or between 22.2% (canton ZG) and 43% (canton GE), on average 33% | Top tax rate from income of EUR 66,750 or EUR 133,500 for married couples |
Assumption 1 | Assumption 2 | |
Calculation example for selected cantons in German-speaking Switzerland (incl. direct federal tax) | Gross income: CHF 100'000* Assets: CHF 500'000 Marital status: Single Age: 35 Denomination: None Children: None | Gross income: CHF 150'000* Assets: CHF 750,000 Marital status: Married Age: Both 35 Denomination: None Children: None |
KT Zürich KT Schaffhausen KT Thurgau KT St. Gallen KT Aargau KT Basel City KT Basel Country | Municipality of Zurich: 12.78% Municipality of Schaffhausen: 13.19% Municipality of Frauenfeld: 14.45%** Municipality of St. Gallen: 17.00% Municipality of Aarau: 14.09 Municipality of Basel: 17.04 Municipality of Liestal: 18.44% | Municipality of Zurich: 11.36% Municipality of Schaffhausen: 11.54% Municipality of Frauenfeld: 12.86%** Municipality of St. Gallen: 14.59% Municipality of Aarau: 12.02% Municipality of Basel: 14.83 Municipality of Liestal: 15.6% |
*Taxable income in Switzerland is net income = gross income less corresponding social security contributions. For the two calculations above, a corresponding percentage was therefore taken into account for the social security contributions to be paid in order to be able to determine the approximate taxable net income. These contributions may also vary depending on age and gender, which in turn affects the tax calculation.
** Calculation for the canton of Thurgau is still based on the tax rates for 2023.
Switzerland:
The overall tax burden is lower depending on where you live and your income, as income tax is progressive, generally increases less for high incomes and the income threshold for the top tax rate is a lot higher than in Germany. Social security contributions are also lower, and wealth tax only comes into play for high assets.
Germany:
The overall tax burden is higher, especially for middle and high incomes, as income tax rates and social security contributions are significantly higher. However, there is no wealth tax.
This comparison represents average values and may vary depending on specific circumstances and place of residence.
The average tax burden in Switzerland varies greatly depending on the canton, municipality, income, marital status and religion, as the tax system in Switzerland is organized on a decentralized basis. The tax burden is made up of income tax (at federal, cantonal and municipal level), wealth tax (only at cantonal and municipal level), social security contributions and other taxes.
The income tax burden can vary greatly, but here are some general guidelines to illustrate this:
Federal tax:
Direct federal tax is progressive and ranges from 0% to a maximum of 11.5% for high incomes.
Cantonal and municipal taxes:
Cantonal tax rates vary greatly, but are generally between 5% and 25% of taxable income. In municipalities with low tax rates (e.g. Zug), the tax burden can be significantly lower, while it is higher in cantons such as Geneva or Vaud.
To give you a concrete idea:
Income CHF 50'000
(single, no children):
Tax burden: approx. 5-10% of income.
Income CHF 100'000
(single, no children):
Tax burden: approx. 10-20% of income.
Income CHF 200,000
(single, no children):
Tax burden: approx. 20-30% of income.
The wealth tax also varies depending on the canton and municipality, but is generally between 0.1% and 1% of net assets per year. It only has a significant impact on higher assets.
The total tax burden (including all taxes and social security contributions) is between 20% and 35% of gross income for most people, depending on their place of residence and income level. In low-tax cantons, the total tax burden can even be less than 20%, while in high-tax cantons it can be up to 40% for higher incomes.
