All Swiss employers must provide their employees with a salary certificate (Lohnausweis/ Certificat de Salaire), which includes all relevant employment income they have received in the applicable tax year. For any employee receiving equity compensation, the total gross equity compensation must be reported on line 5 of this salary certificate. Under the terms of Circular No. 37 “Besteuerung von Mitarbeiterbeteiligungen” (taxation of employee participation), the employer must also provide the employees, and the employee’s Cantonal tax authority, with additional information in an addendum or “annex” to the salary certificate. The annex must include relevant information relating to their equity compensation, such as plan name, grant and vest date, and number of instruments the employee received. This reporting requirement applies to all employees receiving equity compensation relating to their Swiss employment, even if they left Switzerland before the end of the year.
The employee participation plan regulations (Mitarbeiterbeteiligungsverordnung / Ordonnance sur les participations de collaborateur) provide guidance on the information that must be included in the annexes to the Swiss salary certificates (see for example Art. 4 and Art. 5 on the requirements for shares and share option plans). However, no specific template for reporting is included in the regulations. Since their release, the Canton of Vaud is the only Canton to provide a specific template.
The lack of clarity and consistency across Cantons meant that many employers were not sure what format to use to report to the Cantonal tax authorities. Many companies took practical approaches, which may not have been in line with specific requirements for employees living in Vaud.
Employees, their advisors and tax authorities also had to interpret different annex formats from different companies, and ensure appropriate information was included and correctly reported. These differences added complexity to the process of completing and filing of Swiss tax returns.