I would like to leave Switzerland to a non-EU country and there is a possibility of continuing to work for a Swiss company. My spouse is Swiss and I have a C permit. I see a few options.
Do not deregister in Switzerland and continue to be a Swiss tax resident and pay into Swiss social security and health insurance.
We are a family of 3. Can the family deregister while only the employed person continue to be a Swiss tax resident?
And I guess I would need to keep a Swiss address?
Deregister in Switzerland but then I’m not sure how social security and taxes will work out in this case. I have a few years of tax exemption on foreign sourced income in the new country based on the visa type I will be applying for.
Set up a company either in Switzerland or abroad and negotiate for a service contract. Here I guess my tax residency is less relevant. The company’s tax residency determines where taxes will be paid. I also will be exempt from local social security as I will draw funds from the company as a form of dividend.
That won’t fly if you do not stay at least 180d in Switzerland. Otherwise, the real resident country will come knocking at your doors (I had to keep a calendar and tickets as well as entry/exit stamp copies in the passport to proof in which country I was at what time).
Depending on your resident country and which status you have in the resident country/which contracts exists between both countries → check with your destination country (attention : some countries require you to have a local working contract if you are an employee)
Will your employer fly with that ? Could be a possibility. BTW, most countries ask for an employee of a company to get some kind of a regular and for the position acceptable salary, not everything via dividend. Furthermore, there is the issue of “Scheinselbstständigkeit” to be looked at.
Actually, did you already spoke with your employer about that ? Could be that he says forget that, we don’t want to have all the trouble. This kind of arrangements are administrative monsters, especially for small companies. If the company is ok with the plan, you should definitely hire a specialized consultant. A lot of traps to be avoided.
You and your employer would be subject to local employment laws and have to register for and pay social security and payroll taxes
Depending on the case there is the risk of the destination country asking your employer to pay corporation taxes in the destination country (your employer claiming it is swiss is a sham on account of it actually having employees locally)
Employers usually have affiliate entities in each country to ensure legal separateness and to avoid these kind of issues
Option 1 cannot work legally, as taxes are based on your country of residence. On the one hand, there are Swiss rules about how much of your time must be spent in a municipality in order to remain a tax-resident. On the other hand, each country has its own rules governing how long you can stay in the country before you are designated as a tax resident. In most cases, the threshold is 6 months out of 12.
However, it is possible to retain your Swiss social security, occupational pension fund, and health insurance by having your employer send you to the country in question on a temporary basis. You still must meet social security requirements in your country of residence, in addition to your Swiss social security.
Option 2 is the most simple option. In that case, you can voluntarily retain your Swiss OASI and DI coverage, if you choose to, in which case you pay the full contributions. But you cannot retain your Swiss unemployment insurance, occupational pension fund, accident insurance, health insurance, child benefits (a few countries are exceptions), etc. If you choose to voluntarily retain your OASI/DI coverage, you will still be subject to local social security requirements in your country of residence.
Options 3: Your tax residence is not linked to the domicile of your employer. You will personally be taxable in whichever country you live in (personal taxes). The company, on the other hand, would be taxable in Switzerland (corporate taxes). Whether or not you are exempted from local social security requirements in the country you live in depends on local social security laws. Some countries do not require self-employed people to pay social security contributions, but others do.
In my opinion, there are two options which make financial sense:
The risk-averse option: Have your Swiss employer send you abroad on a temporary assignment. This way you keep all your Swiss benefits, so there are not disruptions in contributions and everything remains just as it would be if you lived in Switzerland, insofar as social security, pension fund, child benefits, and health insurance are concerned. Naturally, you continue to pay Swiss contributions, in addition to possible local requirements.
The higher-risk option: Ditch your Swiss social security, with all the costs and benefits, and self-insure (if you are not satisfied with social security in your country of residence). Bear in mind that if you are Swiss, you can return to Switzerland at any time and get immediately covered by Swiss mandatory health insurance. You are also entitled to Swiss unemployment insurance upon moving to Switzerland from a non-EFTA/EU country. You are even entitled to Swiss welfare as a Swiss citizen living abroad. So you still have emergency coverage without having to pay for it.
That won’t fly if you do not stay at least 180d in Switzerland. Otherwise, the real resident country will come knocking at your doors (I had to keep a calendar and tickets as well as entry/exit stamp copies in the passport to proof in which country I was at what time).
From what I’ve read, the 180 day rule is only one but not the sole criteria for determinig tax residency.
Depending on your resident country and which status you have in the resident country/which contracts exists between both countries → check with your destination country (attention : some countries require you to have a local working contract if you are an employee)
I should have elaborated, my destination country will exempt my foreign sourced income for several years so it will be to my advantage, soley tax wise, to not have to pay Swiss taxes. Although I don’t mind if I’d have to.
Will your employer fly with that ? Could be a possibility. BTW, most countries ask for an employee of a company to get some kind of a regular and for the position acceptable salary, not everything via dividend. Furthermore, there is the issue of “Scheinselbstständigkeit” to be looked at.
My company hires contractors from abroad all the time that’s why I saw this as a possibility.
Actually, did you already spoke with your employer about that ? Could be that he says forget that, we don’t want to have all the trouble. This kind of arrangements are administrative monsters, especially for small companies. If the company is ok with the plan, you should definitely hire a specialized consultant. A lot of traps to be avoided.
I’ve mentioned it but since it’s still some time away we haven’t discussed the full details. I wanted to do my own research before entering into this discussion. I will hire someone eventually but I always found the Mustachian Group a good knowledgeable bunch who offers new and nice perspectives.
Thank you so much for taking the time to respond!!
Will your employer fly with that ? Could be a possibility. BTW, most countries ask for an employee of a company to get some kind of a regular and for the position acceptable salary, not everything via dividend. Furthermore, there is the issue of “Scheinselbstständigkeit” to be looked at.
Scheinselbstständigkeit can never be an issue if you’re billing through a corporation, as the corporation is a separate legal entity.
Asking for a “regular and acceptable salary” is a very Swiss thing, most other countries don’t mandate this to the degrees the SVAs do.
Actually, did you already spoke with your employer about that ? Could be that he says forget that, we don’t want to have all the trouble. This kind of arrangements are administrative monsters, especially for small companies. If the company is ok with the plan, you should definitely hire a specialized consultant. A lot of traps to be avoided.
Hiring external suppliers is almost always easier than hiring employees as the external supplier takes the risk of all the salary/pension/goodies part the SME now doesn’t have to deal with AND normally has way lower notice periods - one month being the contractually usual timeframe, vs 3 to 6 months notice period for employees.
No need for specialized consultants but hiring an accountant will be beneficial as soon as you can afford it (… do it sooner …)
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