Thanks again for the replies here. This thread has been very helpful for me and my wife. We’ll contact VZ and Zurich and scrutinise our AXA proposals.
Wow, thanks for the warning here. We did indeed get one of these!
One thing I am still confused about is the mandatory/extra-mandatory BVG terms. Do they refer to employee contribution levels? (e.g. legal minimum is the mandatory part, and additional contributions between this and the BVG maximum are the extra-mandatory part) If so, does the employee elect their levels of contribution? I have not worked here before so this is all new to me.
Possibly related: we have two quotes from AXA for BVG, a cheaper one with a maximum pensionable salary of the BVG maximum (CHF85,320.-) and a more expensive one with a maximum pensionable salary of the UVG maximum (CHF148,200.-?). So, since my wife’s declared salary is 100k does the difference in cost between the two policies reflect the fact that the cheaper one tops out at a maximum pensionable salary of 85k? Is this the mandatory/extra-mandatory stuff at work or am I hopelessly confused?
Yes, for the second pillar you don’t pay contribution for the first c.a. 25’000, then you pay for the mandatory part 25’000-85’000 and then you can voluntarily pay the 85’000-148’000 part. Note, that there is always the employer and employee contribution, with the condition that employer >= employee. And since in your case both are paid by you, it’s best to pay all as employer and nothing as employee, because then you can spare some AHV.
At my company, the policy is to pay the max, all covered by the employer, and it applies to all employees. So I have some 20k per year invested for astounding return of 1%
You have to differentiate here. The cheaper one is the covering the mandatory part (Obligatorium) for BVG. Actually, you don’t pay the 85’320.-, but instead you insure 60’435.- (max. BVG of 85’320.- minus Koordinationsabzug). AXA seems to do that wrong often times (had the same problem with my AXA quote and asked for a correction).
You can decide if you want to only pay the obligatory part (BVG Obligatorium) of your wife’s 100k salary, or if you also want to pay the uberoligatory part. The difference in between those two is that the obligatory minimum interest is guaranteed (Swiss government is adjusting this rate each rate, e.g. for 2019 it’s 1%) and the uber-obligatory part is not guaranteed. Worst case is that the BVG provider only pays back what you paid in.
I decided to only insure the obligatory part for now. In the end you have to know if the tax reductions with pillar 2 (but with low interest) are better than investing money in pillar 3b (no tax reductions, but more flexilibility; most probably higher interest, but also higher risk).
You can go up to 70% employer / 30% employee for the obligatory part. For the uber-obligatory, I don’t know. I think the 100% employer is only working for 1e (Kadervorsorge), which is higher than 148k a year. That’s just a guess though.
Thanks for the clarification. Glad my suspicions that this was the mandatory/extra-mandatory stuff. Re: incorrect quote: one of the quotes mentions the coordination deduction is subtracted from the maximum pensionable salary and the other does not. We’ll chase them up on this.
For us I think it makes more sense to go for the minimum. We have other income and investments so can afford to risk investing the money elsewhere instead of getting a tax-advantaged very low rate of interest.
Can I ask you here Firestarter, or let me know if I should PM you.
I have the same background as you, 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.
I can either do this under my own GMBH and bill the payroll agency or work for a payroll agency as their employee and pay regular taxes for my high salary.
Now I want to understand what is the most profitable for me and what is best for tax optimization?
Been trying to understand what is the most profitable of the two choices but can not reach a conclusion.
I also want to understand how the dividend payout works? How high is the tax percentage of a one time per year dividend payout of lets sat 50 000chf?
Example:
Amount that I can invoice my client and get paid per month: 18000 CHF x 11 months(+ 1 vacation month) = 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 much % tax do I pay on this one time payout amount?
How much money do I get to keep of this dividend payout?
I haven’t been active here for a long time. Not sure if your problem is still current.
First of all: congrats for securing a 2 year contracting job. It’s great to have some stability in terms of planning.
Regarding your questions: it’s a bit more complicated regarding your calculations, and there are a lot of things to consider. For starters: your 13k gross salary per month are not 13k for your GmbH, but more like 20% on top (1.2 * 13k = 15.6k) due to AHV/ALV/EO, employer payments und pillar 2.
So to pay yourself 13k gross per month, you as the GmbH owner have to pay 15.6k. Which amounts to 171.6k per year. Also, a GmbH has other fixed costs as well.
The tax percentage for the dividend is a topic on its own. In general, my advice is to either hire a good tax advisor or pay someone who will explain you the bits and pieces.
How quickly a person who solely owns and is employed by their own GmbH in Switzerland can close the company in order to become eligible for unemployment benefits (ALV)?
From what I understand:
Normally, the liquidation of a GmbH takes at least one year (counted after the third call to creditors)
In an accelerated process, it can be closed in about 3 months, provided that a certified auditor confirms that all obligations are settled.
My questions are:
How is this typically handled in practice by individuals who own and work in their own one-person GmbHs?
What strategies do people use to ensure they’re eligible for ALV if they foresee no new contracts or business activity?
Is there an optimal or recommended way to manage the timing of the closure and transition to unemployment benefits?
If I remember correctly, there will be no unemployment benefits for the work you employed yourself. But there was a judgement (a couple of years ago?) that stated eligibility for also working part time for someone else.
"Self-employed workers going into bankruptcy with their project only receive unemployment benefits if they have paid, as an employee, contributions to ALV for the two years prior to their unemployment for at least 12 months.
Co-owner employees of limited companies or limited liability companies have employee status and therefore enjoy a better position. But they still need to satisfy two prior conditions:
Their salary must actually have been paid.
The contributions must have been paid to the social insurance agencies.
Whilst operation is not liquidated, and the entrepreneur still has management responsibility (as a member of the board of directors, an indefinitely liable shareholder or a majority shareholder), entitlement to unemployment insurance is excluded."
If I read that correctly you need to not have any managerial or shareholder duties and you need to have proof to actually received a salary and paid the AHV/IV/ALV contributions.
In theory, the fastest way would be to sell the GmbH to someone else as that would release you from ownership and managerial duties. No idea if that is accepted in practice though.
Depends how fast you need income. If yes, close/sell it as soon and as fast as possible, or what other “strategy” would there be?
Yes, I’m aware of this option. However, the issue is that it’s not fully within my control: you still need to find a buyer, which can be difficult. Also, according to this source:
“A person working in a company where his or her spouse occupies a position comparable to that of an employer is not entitled to unemployment benefits.”
So I’m not sure whether selling the GmbH to a family member (e.g., a spouse) would actually work in practice.
Exactly, that’s why I’m asking. If there’s no new contract coming in and income stops, the goal would be to access ALV as quickly as possible. I’m curious to know how GmbH owners practically manage this type of situations: how they time the closure or transfer of the company to ensure eligibility without unnecessary delays. Is there a known or “optimal” strategy in such cases?
I don’t understand the logic. My goal would be to find another source of income, which could be ALV but might as well be salaried employment (for the time needed to rebounce or more permanently if I find out I enjoy it more). I’m probably biased by the fact that the field I’m in is currently starved for qualified professionals but I’d think the skillset developped managing one’s own company would be appreciated in a broad array of potential jobs?
If the purpose is to keep ALV, one option would be to diversify income and keep some form of employment on the side, that would qualify for ALV and on 70% of which I could live if push came to shove (80% under some circumstances). Another option would be to work as employed on 12 months out of 24 in order to keep access to it.
I mean if you want uninterrupted income you need to have a contract for at least as long as the minimum closing time of the GmbH (either three or twelve months according to your information). If not you need to apply for jobs or close the GmbH immediately.
Definitely no. Can’t be a relative (unless the person really wants to keep the company up and running with new contracts etc.) and the selling price can’t be some imaginary sum like 1 CHF.
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