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  • David Oberson, Partner |

Filling out the annual salary certificate is a minefield even in the best of times but COVID-19 has complicated things even further. Completing a form incorrectly may bring with it heavy fines. Here is what to keep in mind.

Content and purpose of the salary certificate

Every employer is required to issue a salary certificate summarizing all the benefits and appreciable benefits in money that it provides to the employee or retiree under or in connection with a present or past employment contract.

Anyone who does not complete the salary certificate or enters false information in it incurs penalties (Articles 127, 174 and 186 Direct Federal Taxation Act (DFTA); Articles 43, 55 and 59 Direct Taxation Harmonization Act (DTHA) and Article 251 Swiss Criminal Code (SCC)) and / or is held responsible (Article 177 DFTA; Article 56 DTHA).

Keep in mind that the salary certificate is intended for the employee. In some cantons (currently the Cantons of Basel-City, Bern, Fribourg, Jura, Neuchâtel, Solothurn, Valais and Vaud) the employer must also send a copy directly to the cantonal tax administration. In the Canton of Lucerne, it is free to send the salary certificate directly to the cantonal tax administration.

Specific points related to COVID-19

Change of workload and salary

  1. The Swiss Tax Conference recommends indicating the employee's workload in section 15 "Remarks" of the salary certificate.
  2. A reduction in workload should be mentioned in section 15 “Remarks”, especially if it brings with it a temporary reduction in salary.
  3. In the event of a reduced workload due to short-time work, this could lead to a reduction of the reimbursed flat-rate costs.

Company car

  1. The health crisis does not call for any particular practice on this point. As usual, a private portion must be allocated each month to staff with a company car in section 2.2 of the salary certificate.
  2. This private share represents the value of the benefit in kind that allows the recipients to use the service car made available for their personal use, i.e. when not traveling between their home and their place of work.
  3. Whether the employees worked at the office or at home, these employees therefore benefited from this appreciable benefit even if their workload was reduced temporarily, if at all, due to short-time work.
  4. If providing a service car, you must also tick box F in their salary certificate.
  5. In section 15, the employer must indicate the percentage of days worked in external service (cf. margin number 9; see also communication-002-D-2016-f of 15 July 2016).

Transport and meals in case of home office

  1. Even if it was not possible for the employee to use the means of transport or meals made available by the employer during the period of home office, boxes F and G should be ticked nonetheless.
  2. If the employer’s cafeteria/company restaurant remained closed for more than 120 days in 2020, box G may not be ticked.
  3. The practice is different from canton to canton when it comes to deducting professional expenses for individuals.

Lump-sum payment to employees for rent and purchase of equipment

Some employers paid their employees allowances related to COVID-19, for example for rent and / or the purchase of equipment, for example furniture, computer equipment, etc. These lump sums are taxable services which must appear in sections 3 "Intermittent payments" or 7 "Other payments" in the salary certificate stating the lump sum paid to employee.

Compensation for short-time work (in German: Kurzarbeit / in French: RHT)

  1. Compensation for short-time work constitutes taxable income for the employees concerned.
  2. The compensation for short-time work should be indicated in the salary certificate under section 7 "Other payments".
  3. The company should mention the period for which short-time work was claimed in section 15, “Remarks”.
  4. If the employer paid the additional 20% difference in the case of short-time work (80%), it is also possible to enter the entire salary (partial unemployment benefit plus difference) as the ordinary salary in section 1 of the certificate of salary.
  5. Treatment may differ depending on the cantons.

Reminder: For the employer, the benefits claimed from the unemployment fund constitute taxable income that will have to be recognized in the income statement.

Payment of salary in case of illness

  1. Employees who fell ill with COVID-19 who were compensated with the daily allowances must be declared in section 1 of the salary certificate if the employer actually paid them and was then reimbursed by its insurance.
  2. Employers receiving insurance benefits paid directly to the employee must report this in section 7 of the salary certificate.

Treatment of employee benefits and reimbursements

  1. Deducting daily allowance insurance in the event of illness and / or additional accident insurance

    These insurance contributions charged to the employee are not deductible; they cannot be deducted from the gross salary in section 9. They can however be declared in section 15.

    The Family Allowances Act (FAA) contributions payable to the employee are not deductible from the gross salary in section 9. They can however be declared in section 15.

  2. If the employer has approved company-internal policies on expense reimbursements, the following should be entered in section 15 of the salary certificate: "expense reimbursement policy approved by Canton X (canton of registration) on (DATE)"
  3. Expatriate fees: if there is a ruling for expatriates approved by the tax authorities, the following text must be entered: "Ruling for expatriates from Canton X (canton of registration) dated (DATE)" in section 15 of the salary certificate.

 

Not all benefits must be reported in the salary certificate

In principle, all benefits that the employer provides to the employee are taxable and must be declared on the salary certificate. But for practical reasons there is no need to declare the following benefits:
 

  1. Providing a free SBB/CFF Half-Fare Travelcard (how to treat a GA, cf. margin number 9);
  2. Reductions provided in the form of REKA checks with a value of less than or equal to CHF 600 per year (only declare reductions if they exceed CHF 600 per year);
  3. Christmas, birthday or other customary gifts of a value less than or equal to CHF 500 depending on the occasion. If the value of the gift is greater than this amount, declare its total value (section 2.3 of the salary certificate);
  4. The private use of work tools (cell phone, computer, etc.) within the usual scope;
  5. Participation in membership fees for clubs or associations less than or equal to CHF 1000 per membership (but not annual gym membership), If the amount of the participation exceeds this limit, declare the total amount (section 15 of the salary certificate);
  6. Participation in membership fees for professional associations: no cap;
  7. The granting of the usual discounts for goods intended for personal consumption (cf. margin number 62);
  8. Tickets to cultural, sporting or social events valued at less than or equal to CHF 500 per event (contributions that exceed CHF 500 per event must be declared);
  9. Payment of travel expenses of the spouse or partner who accompanies, for professional reasons, the employee on a business trip;
  10. Subsidies to nurseries reducing the cost of childcare for employees. Employer contributions paid directly to certain employees or to a nursery must be added to the gross salary in section 1 or declared separately in section 7 of the salary certificate;
  11. Free car parking at the workplace;
  12. Contribution to the costs of medical examinations undertaken at the request of the pension fund or the employer;
  13. Airline miles may only be used in a professional capacity.

As you can see, there are many pitfalls. Should you wish to discuss your employees’ salary certificates, please feel free to contact our Accounting & Payroll team.

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