How do I calculate gross amounts for incentives in Switzerland?

Article author
Mika
  • Updated

Starting January 2024, all incentives in Switzerland will be processed as gross. This article will guide you through the process of grossing up employees’ incentives. When you provide a gross amount, employees will receive the net amount after deducting statutory payments. Your billing will align with the gross amount provided.

Our objective is to make sure employees are taxed compliantly and avoid any delays in employees getting reimbursed, all while providing greater clarity when entering incentive information.

How to calculate the grossed-up (pre-tax) incentive amount

The formulas used for gross-up calculations generate accurate estimates, ensuring the employee receives an amount near their desired net pay. While it's not guaranteed they will receive the exact net amount, the calculation aims to provide at least the guaranteed amount, if not slightly more.

There are 4 standardized formulas to calculate gross-up amounts based on sex and tax at source liability.

Sex Calculation Example: How to guarantee a net incentive of 500 CHF
Gross-up incentives for a male employee not taxed at source Net amount / (1-0.053-0.011-0.01168-0.00405)
equal to
Net amount / 0.92027
Customers can submit a gross incentive amount calculated as follows: 500 / (1 - 0.053 - 0.011 - 0.01168 - 0.00405) = 543.3 CHF
Gross-up incentives for a male employee taxed at source Net amount / (1-0.053-0.011-0.01168-0.00405-0.12)
equal to
Net amount / 0.80027
Customers can submit a gross incentive amount calculated as follows: 500 / (1-0.053-0.011-0.01168-0.00405-0.12) = 624.94 CHF
Gross-up incentives for a female employee not taxed at source Net amount / (1-0.053-0.011-0.01168-0.00673)
equal to
Net amount / 0.91759
Customers can submit a gross incentive amount calculated as follows: 500 / (1-0.053-0.011-0.01168-0.00673) = 545.07 CHF
Gross-up incentives for a female employee taxed at source Net amount / (1-0.053-0.011-0.01168-0.00673-0.12)
equal to
Net amount / 0.79759
Customers can submit a gross incentive amount calculated as follows: 500 / (1-0.053-0.011-0.01168-0.00673-0.12) = 626.74 CHF

 

The numbers within the parentheses represent mandatory contributions:

  • 0.053 for Old age and survivors’ insurance (OASI)
  • 0.011 for Unemployment insurance
  • 0.01168 for Invalidity insurance
  • 0.00405 or 0.00673 for Daily Sickness insurance
  • 0.12 for Tax at source

How to confirm if an employee is taxed at source 

Employees who are neither Swiss citizens nor holders of a C permit, nor married to a Swiss citizen or a C permit holder, are subject to tax at source. This tax is deducted directly from their salary.

You can confirm employees’ tax at source status under the Profile section of the employee’s Remote profile:

Screenshot 2024-01-04 at 10.49.45 PM.png

Scroll down to “Administrative details”, and you can see “Is the tax at source?

Screenshot 2024-01-04 at 10.52.29 PM.png

See also: Remote expense policy - what to do to avoid rejection

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