Highlights
• Switzerland ranks among the top five easiest places to do business globally, with streamlined company registration taking just 10 days—compared to the European average of 15-20 days.
• With corporate tax rates as low as 12%-14% in some cantons and an R&D investment rate of 3.4% of GDP, the country is a powerhouse for innovation and business growth.
• Navigating Swiss employment laws, payroll compliance, and work permit regulations can be complex, but a trusted Employer of Record can simplify your expansion.
Switzerland is one of the most ideal countries for businesses to start their expansion around the world. Its strong economy, strategic location in Europe, business-friendly approach, and skilled labor force provides significant opportunities.
However, the regulatory environment, labor laws, and payroll obligations can be complicated. In addition to outlining some important aspects of global expansion in Switzerland, this blog will cover how TopSource Worldwide can facilitate the process.
Why Should You Expand Your Business to Switzerland?
Swiss Confederation consistently ranks among the world’s most competitive economies. Here’s why it is an attractive destination for international business expansion
• Stable Economy & Strong Infrastructure: Swiss Confederation has a stable economy with low inflation, a strong financial sector, and a favorable tax regime for business. The country ranks number one in the Global Innovation Index 2024, maintaining an AAA credit rating to reflect economic resilience. The GDP is expected to expand at 1.5% in 2025.
• Skilled Workforce: The nation has a well-educated and multilingual workforce, and more than 85% of the population speaks more than two languages. The labor cost is about CHF 65 an hour, which is among the highest. This cost is justified by high productivity.
• Innovation Hub: Switzerland hosts world leaders in pharmaceuticals (both Novartis and Roche), finance (UBS and Credit Suisse), and technology (Google's European AI Hub). One of the greatest percentages of the country's GDP—nearly 3.4%—is allocated to research and development. Later this year, there could be a significant amount of government-backed investment in the biotechnology and artificial intelligence sectors.
• Favorable Tax Policies: Corporate tax rates differ by canton, but can even go as low as 12% to 14% in some locations, which makes the country an attractive destination for multinational companies. Furthermore, it has incentives for R&D activities resulting in a maximum effective rate of 21.6%.
• Ease of Doing Business: The country ranks among the top 5 in ease of doing business globally, with streamlined company registration and compliance procedures that reduce bureaucratic hurdles. It takes about 10 days to register a business in Switzerland, compared to the European average of 15-20 days.
Employment Laws & Compliance in Switzerland
Switzerland’s labor laws balance strong employee protections with employer flexibility. Key aspects include:
Employment Contracts
• Contract arrangements can be either verbal or written. However, it is preferred to use a written contract to clarify salary, hours, benefits, and termination matters.
• Probation periods typically range from one to three months, providing both employers and employees with an opportunity to evaluate the suitability of the working relationship.
• In Switzerland, employment entails an at-will type relationship; although, termination must be either justified or have reason to fairly challenge any infringement of labor practices.
Working Hours & Overtime
• Standard weekly working hours vary by industry but typically range from 40 to 45 hours.
• Overtime is generally paid at a 25% premium, unless otherwise agreed in a contract, ensuring fair compensation for additional work.
• Swiss employees have an average annual leave of 25 days, higher than many European counterparts.
Paternity, Adoption, and Childcare Leave
• Fathers are entitled to two weeks of paternity leave, funded by social insurance, covering 80% of their salary (up to CHF 196 per day).
• Adoptive parents of a child under four years old receive the same two weeks of paid parental leave.
• Additionally, employees can take up to three days of leave upon notification to support work-life balance when their child is certified ill.
Social Security & Employee Benefits
It has a three-part social security system that provides financial protection for workers:
• State Pension (AHV/IV): This offers benefits for old age, disability, and survivors, helping to ensure long-term financial security.
• Occupational Pension (BVG): Employers are required to contribute towards pension funds for their employees, which helps secure their retirement.
• Private Pension (Pillar 3): This is a voluntary savings option with tax benefits, giving individuals more financial flexibility.
Additional benefits include:
• Unemployment insurance (ALV) provides 70%-80% of an employee's last salary, offering help during job transitions.
• Family allowances (FAK) give CHF 200-300 per child each month, depending on the canton, assisting working parents.
• Health and accident insurance is mandatory for all residents, ensuring they can access healthcare.
• Sickness and maternity benefits require employers to keep paying salaries for at least three weeks during illness, supporting employee well-being.
• Visas and work permits are needed to hire foreign employees.
European Union/ European Free Trade Association Nationals
• One can work in Switzerland without a permit for up to three months.
• A work permit is required for extended employment and is issued upon presentation of a valid contract, helping ensure smooth integration into the workforce.
Non- European Union/ European Free Trade Association Nationals
• You need a job offer before applying for a Swiss work visa to ensure job security before moving.
• Employers must show that there are no qualified candidates from Swiss Confederation or the EU available for the position, highlighting the importance of local talent.
• Work permits are given based on quotas and need approval from federal authorities to control the number of foreign workers coming in.
Challenges of Global Expansion in Switzerland
Despite its business-friendly environment, it presents regulatory and operational challenges:
• Different Cantonal Regulations: Swiss Confederation consists of 26 cantons that operate independently, each with its own laws and rules. Since the cantons have different job laws and tax rates, it's important to have local knowledge when hiring people in those areas.
• Strict Work Permit Rules: In some cases, the Swiss employment law will require you to prove why there is an economic need to hire in the country. This is an additional step that adds complexity to the hiring process for non-EU nationals.
• Payroll Compliance: Navigating payroll taxes and Swiss social security in different currency is complex and requires in-country expertise.
• Local Employment Laws: Employment agreements, terminations, and benefits must be handled in line with strict local laws and can require specialist compliance knowledge.
• High Cost of Living: Geneva and Zurich happen to be among the world's most costly cities. The country’s high cost of living is reflected in their salary expectations, which all overseas assignments must account for.
How TopSource Worldwide Simplifies Global Expansion in Switzerland
To expand into Switzerland, you will need to understand local labor laws, payroll, and compliance. TopSource Worldwide offers an end-to-end solution for businesses expanding into Switzerland:
• Employer of Record Services: With our EOR services, you can have local employees without having to establish a branch office and legal business entity thus, reducing the amount of time spent in administrative processes.
• Payroll Processing and Compliance: Thoroughly follow the legal requirements regarding Swiss payroll and taxes, if you choose to comply with the legal requirements, you will minimize the chances of getting into legal trouble.
• Work Permit and Visa Support: Get assistance in applying for work permits for employees from foreign countries so that you can hire people from different parts of the world with ease.
• HR and Benefits Administration: Attend to employee benefits and allowances where applicable, alongside social security issues, so as to devote time on critical leadership and support issues of your employees.
• Regulatory Guidance: Practical evaluation of intra-cantonal regulation and guidance relating to employment law protects you from legal problems.
Final Thoughts
Swiss Confederation has great business opportunities but dealing with its legal and payroll rules can be tricky. If you want to hire local workers or move employees, working with a reliable global payroll and compliance provider like TopSource Worldwide can help make the process smooth and compliant.
Ready for business expansion in Switzerland? Contact TopSource Worldwide today to explore how we can streamline your Swiss operations, handle payroll, and ensure full compliance with employment laws.