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Martin Huber

Compensation paid by Swiss companies to foreign directors


This video provides information on the possible tax and social security implications of a board of directors resident in an EU country in the case of a Swiss company limited by shares if the board of directors is also self-employed in its country of residence.

Quick Read

In Switzerland, directors' fees are subject to a withholding tax which the employer must retain and submit to the cantonal tax administration in his canton of domicile. This procedure is also in line with Art. 16 OECD Model Tax Convention, whereby the State of residence of the Board of Directors may use this income to take account of progression (progression proviso).

From the point of view of social security law, it must be decided in the relationship between Switzerland and the EU to which social security system the board of directors is to be subject (the one in Switzerland or its country of residence in the EU). Since the activity of the Board of Directors qualifies as employment (gainful employment) from the point of view of social security law and, in this constellation, is decisive for the responsibility of the social security system, the Board of Directors is to be treated as if all income was earned in Switzerland. All income is therefore subject to the Swiss social security system. The company in Switzerland, which pays the Board of Directors' remuneration, is only required to collect and pay social security contributions on this amount.

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