GMBH - How do Dividend payout works? Tax cost

Taxes
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I’m based in Zug and have the chance to start a GMBH here now for a IT contracting position that will be running for 2 years initially in Zurich.

I have two choices. I can either do this under my own GMBH(I will set it up now in that case) and bill the payroll agency for the full hourly rate or work for a payroll agency as their employee and get paid an all inclusive rate, where they take care of my social costs and has a very small minimum cut they take themselves and they I pay regular taxes for my high salary.
Now I want to understand what is the most profitable option for me and what is best for tax optimization?

To help me further in my decision, I want to understand how the dividend payout works in Switzerland?(or any other one time payout of company gains)
If I have my GMBH for example and try to keep my monthly salary a bit lower and save 6000chf each month in my company account. (retained gains)
Then one time per year I want to pay out a large lump sum of money(which I think you call “Dividend” here in Switzerland)
How high is the tax percentage of that one time per year dividend payout of lets sat 50 000chf?
How much of those 50 000chf ends up in my personal account after taxes are paid?

Example:
Amount that I can invoice my client(payroll agency) and get paid per month: 18000 CHF x 11 months(I have 1 vacation month per year) = 198 000 CHF
Salary paid to myself: 13000 CHF x 11 months = 143000 CHF
Retained earnings: 5000CHF x 11 months = 55000 CHF

I choose to do a dividend payout of 50000chf one time per year. How big of a % is the tax on this amount?
How much money of this payout will end up in my personal bank account after taxes are paid?

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not an expert, but there’s a reduced (income) tax (‘teilbesteuerung’) on dividends if you own 10% or more of the company. you pay 70% for federal tax and 50%-80% depending on canton. normal withholding tax also applies, of course.

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Thanks for answering. Yes I have read similar answers and other different answers, but nothing that makes it clear.
I just can’t grasp what the total tax would be in my example of 50 000chf dividend payout.

As far as I have been calculating and I can not see why I would even bother with a GMBH, since it seems to me that the finances would not even be beneficial to me.
It seems to me that I might as well just work directly under the payroll agency.
I hope I’m wrong, because I do like the idea of working under my own GMBH.

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You can use the federal tax calculator for that: https://swisstaxcalculator.estv.admin.ch

Click on “Detailed calculation: add deductions”. There, you can declare “Investment income” and “of which from participations” (which is the case for your own GmbH). The calculator will apply the privileged taxation (50% of normal taxes for canton Zug, 70% for federal taxes) to this amount.

Also note that you first have to pay profit tax on profits. You can also use the calculator for that: Cookie Not accepted
However, you save the AHV & ALV contributions (~12%) for dividends.

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Hi! Did you mange to get some more information on the topic? I am in a similar situation, but in Freienbach (SZ). Thanks!

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Two things to consider which make the GmbH beneficial in ways other than the taxes due on payouts that I don’t see discussed here:

  1. You’ll be able to decide how much to pay out when & how. Paying out the dividend in a year with lower income, for instance, is directly beneficial. As is the ability to join a pension fund with much better terms for you.
  2. You’ll be able to deduct from PnL (thus taxes) expenses related to the production of those services (laptop, phone/internet, costs of meetings with clients, part of the home office, etc) which payroll agencies do not typically accept.
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Hey Valentin, I will try to give back what I can after my experience.

I ended up paying for some help from a local accountant.

My conclusion was to go with payrolling in the end. The reasoning was that since I live in a canton with low income tax, I barely gain anything at all financially by having my own GMBH and it may causes me way more headache if I move away from Switzerland within 5 years which is not an impossible scenario for me.
I’m sure that if I lived in a canton with a higher income tax like Geneva or Lucerne for example, it would make much more sense.

Some more information:
The accountant helped me with a salary simulation, showing what I could earn if I ran a GMBH compared to working directly under the payroll agency. I also considered the starting costs of a GMBH, and the possible liquidations costs if I would have to close it within 5 years of starting it.

It shows just a small financial benefit of having a GMBH when I include the 4-5000chf initial costs(on top of the 20 000chf, since I wanted to use my car as a security). But overall not that big of an improvement and If I on top of that would shutdown my GMBH within 5 years or so it would be even less of a benefit. There are a lot of costs around shutting down the GMBH.

The even more important question for me was if the social security authorities and the tax authorities accepts me to have a let’s say 90’000 salary over the course of a year and a 100’000 dividend per year. The accountant was not entirely sure about that.
For me, there is a high risk that they will challenge it and if they would like to apply a salary of 120’000 on me and a dividend of 70’000 based on the comparing numbers, then the financial benefits of having my GMBH would be even less.

From an insurance perspective, the freelancer-setup is better as well as I’m insured with a higher salary. In the case that I would become unemployed, have an accident or something, I will be insured on a higher salary (CH 16’000 a month instead of CHF 5’000)…

I honestly thought the financial benefit would be much bigger(it is in many other countries) but seeing all of this and the costs for setup and costs for “deletion” of company, my conclusion right now is that I think I want to go for the Payroll/freelancer-contract. I’m still free to change this later, but I have still not been convinced to change my course.

But with all of that said, maybe I’m missing a lot of smart tips and tricks that you know of, and maybe this calculation is not that good.

Hope it helps.

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