Switzerland: Equity compensation reporting clarified

Switzerland: Equity compensation reporting clarified

Equity compensation reporting requirements are less complicated for Swiss employers beginning 1 January 2021, with updates to Circular No. 37.

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The update to Circular No. 37 provides clarity and consistency concerning:

  • A standard reporting template accepted by all cantonal tax authorities
  • Support for electronic filing for efficient, future-proofed delivery to the tax authorities

All Swiss employers must provide their employees with a salary certificate that 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 the salary certificate. Under the terms of Circular No. 37, the employer must also provide the employees, and the employees’ 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 provide guidance on the information that must be included in the annexes to the Swiss salary certificates. However, no specific template for reporting is included in the regulations. This 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.

Accordingly, Circular No. 37 was updated (with an effective date of 1 January 2021) to clarify how employers can report equity compensation information to the cantonal tax authorities in a consistent format.

Read a March 2021 report prepared by the KPMG member firm in Switzerland

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