Precautionary measures for freelance work
Workshop by Peter Lang and Simon Heim on the occasion of the ISIS) seminar on 09 November 2021 entitled "Freelance work: tax, social security and pension law aspects".
Case 1: Insurance and connection options to the 2nd pillar - admission SE
Ms X works as a self-employed lawyer (USE) for a law firm in Zurich. She decides to set up her own business as a self-employed consultant in Zurich. In agreement with her employer, she reduces her employment to 40% (60% SE) as of 1 January 2019 and starts acquiring clients at the same time. During this phase of her life, she will earn most of her living from her salary from employment.
Ms X wants to withdraw her retirement assets from the second pillar as a cash payment to finance her living expenses as of 1 July 2019. What general conditions must be observed?
Ms X draws her retirement assets from the second pillar as a cash payment on 1 July 2019.
On 30 November 2019, she transfers her business operations to a new limited company she has founded. As a result, Ms X is employed by this company on a 100% basis from 1 December 2019. Her SE ends with the transfer of the business.
How is the situation to be assessed from an income tax perspective?
Ms X is successful as a legal advisor and gives up her dependent employment entirely in the course of 2020. Ms X now employs a staff member to support her, which forces Ms X to ensure a connection to the second pillar for the staff member.
As part of this work, Mrs X decides to look into re-joining the 2nd pillar for herself in order to strengthen her own pension provision.
Ms X's goal is to join a pension scheme on 1 December 2020.
For this purpose, Ms X enquires with you,
- (a) what connection options are available to it; and
- (b) what to look out for.
Ms X subsequently joins the pension scheme of her staff together with her employee as of 1 January 2020. Due to her financial success, Ms X decides to make a purchase into the second pillar in November 2021.
How do you assess the situation from an income tax point of view?
Case 2: Plan design, separate cadre or 1e pension plan
Paul Müller (age 55, income subject to AHV contributions CHF 480 000) is a cardiologist with his own practice (sole proprietorship). In addition to a female doctor (age 42, AHV-liable salary CHF 150 000), who also works as a cardiologist on a part-time basis, he employs two medical practice assistants (age 25 and 27, AHV-liable salary CHF 50 000 and CHF 52 000).
Mr Müller's staff are currently insured with a collective foundation managed by an insurance company. The corresponding pension plan is limited to the statutory minimum benefits according to the BVG.
On the advice of his pension advisor, Mr Müller would also like to be insured under the second pillar in the future. The idea is to significantly expand the existing pension solution for staff.
What principles of pension law specifically need to be observed in the present context?
For the plan design, the pension advisor suggests defining the savings process as follows:
How should the pension advisor's proposal be assessed from a pension law perspective?
The proposal provides for the contributions to be financed equally by the employer and the employees.
What would be the consequences under tax and AHV contribution law of so-called supra-parity financing, in which the employer would assume more than 50 per cent of the contributions owed?
- for the employees?
- for Dr Müller?
At a medical congress, Dr Paul Müller meets a colleague who enthusiastically tells him about so-called 1e plans. According to this plan, it should be possible to decide for oneself on the investment of individual pension assets in a salary or income range starting at around 130,000 Swiss francs.
Dr. Müller asks his pension advisor about the possibility of a 1e pension plan. Is this option available in the present constellation?if so, is it possible to provide for a corresponding solution for Dr. Müller only?
Case 3: Monetary benefits, employee shareholders
Lorenz Kaufmann runs a trust office in the legal form of a public limited company. He is the founder and sole shareholder. The company employs a total of seven people.
The company has a BVG affiliation with a registered collective foundation. In addition to a basic plan - in which the compulsory minimum benefits according to the BVG are insured - there is a management plan. This is carried out at a non-registered pension fund.
Persons who earn a salary of over 250,000 and have at least ten years of service are included in the management plan. The savings contributions are independent of age and amount to 25 per cent of the insured salary, which is coordinated with the basic pension (basic plan) (so-called salary split). The cadre plan is purely employer-financed, i.e. employees do not pay any contributions.
Currently, only Mr Kaufmann meets the criteria for inclusion in the cadre plan.
Does the cadre plan fulfil the pension law principle of collectivity?
Assuming that the cadre plan would not be objectionable under pension law. What question(s) might arise regarding the tax treatment of the contributions?
What question(s) could possibly arise in connection with AHV contribution law?