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How to side hustle legally in Switzerland?

Baptiste Wicht | Updated: |

(Disclosure: Some of the links below may be affiliate links)

Having a side hustle is a great thing to increase your income. But you need to be careful about doing it legally. If your side hustle is getting serious, you need to make sure you are respecting the law.

If you are just selling a few things you do not need anymore, you probably will not have any problem. But if you have a side hustle generating a more serious amount of money, you need to do it right.

Here, a serious amount of money is 2300 CHF per year. From that point, you will need to start thinking seriously about it. 2300 CHF per year is the amount from which you will need to pay social contributions.

In this article, we see exactly what you need to do if you want to be serious about your side hustles. You need to pay taxes, pay social contributions, and maybe declare your company.

Now, please keep in mind that I am not a lawyer! This article is only the result of my research. This information is not legal advice! If you are unsure about something, consult a lawyer or a government official.

That being said, I hope this will be useful as an introduction! I wish this information had been available when I started my research!

Can I side hustle?

Can you legally side hustle in Switzerland?

In general, you can legally side hustle in Switzerland, but there are some rules.

First, you cannot compete with your employer! This rule is fundamental. Starting a side hustle doing the same thing as your employer could be very dangerous.

Second, you need to ensure your work does not suffer from the side hustle. If you are too tired to work at your primary job because of your side hustle, your boss could force you to give it up.

Some contracts may prohibit you from having a serious side hustle business. So, you need to read it properly before you start hustling. If your contract is linked to a collective agreement, you also need to pay attention to the collective agreement terms. There could be something about side hustle in that.

So, in general, people can side hustle in Switzerland, but not to the detriment of their primary job.

Side hustle and taxes

First, you need to know that you must pay taxes on your side hustle income.

If you do not have a dedicated company for it, you will pay taxes directly as an individual. It means your side hustle income will be added to your normal income. If you already have a large income, this could mean a large portion of your extra income will go to taxes.

If you create a dedicated company for this, then you will have to file two tax declarations: one for you as an individual and one for your company.

In any case, you can also declare the expenses of your side hustle. Declaring them is important because it will bring down the income from your side and hence your taxes.

Now, you must obviously be careful about that and only declare expenses related to your business. Do not start declaring all your dinners as your company if they are entirely unrelated! Doing so could bring down a lot of questions for you. And you never want the tax office to be curious about yourself!

For instance, if you are running a website as a side hustle, here are some expenses you could deduct:

  • The cost of hosting
  • All the digital products you are using
  • Digital courses you are taking for training
  • Lunch with a client
  • And so on

You must declare them because reducing your net income is very important for your taxes.

Side hustle and social contributions

Something that really few people know is that if you have a significant side hustle, you will have to pay social contributions to the first pillar. With your salary this is already removed from your it directly before you receive it.

But for a company, they cannot do that. So, you must pay some percentage of your side hustle income to the first pillar.

The amount you will pay will depend on the revenue you generate and the canton you live in. Each canton has different minimums and rates for self-employed.

Now, you only need to start paying social contributions if your income is more than 2300 CHF per year. Below that amount, you are exempted from these social contributions. So, 2300 CHF per year is where we will consider it a serious side hustle.

To pay these social contributions, you have two choices:

  1. You simply wait until the end of the year, fill out your taxes, and the information should be passed over to the first pillar office. Then, you should receive a bill related to that.
  2. You register as a side self-employed person in advance to the AVS office (AHV in German). With this, you will give an estimate of your revenue. You will then receive a bill for what you owe them.

If you are serious about your side hustle, I strongly encourage you to choose the second option. It has several advantages. You will pay in advance, in several installments, and not in one go. You will not get a big surprise when you file your taxes. And finally, you can already deduct what you pay from your income. So your taxed net income for the first year will be lower than the second. This is a more standard way to deal with things, but this is only my opinion.

To register, you need to contact your local AVS office. You can find a list of all these offices online. I cannot give you all the instructions since they will depend on each canton.

Do we have to create a company?

Well, it depends!

In most cantons, you must register at least a sole proprietorship company (raison individuelle in French). The good news is that there is no paperwork for this kind of company when you start!

For me, a sole proprietorship is the entity type that makes the most sense for a side hustle. It is the easiest company to create and does not require any capital. Another advantage is that you can directly file the taxes for your side hustle in your tax declaration. There is no need to file it separately.

Not filing taxes for the company also means that you can avoid double taxation. With another company, you will pay taxes on the company revenue and on the salary that you are giving yourself from the company. Only a sole proprietorship can help you with that.

But sole proprietorship has some disadvantages. The bigger one is that you can only have one owner. And the second is that you are financially responsible for your company. If you are starting a serious business with some partners, it is probably not the best company type. But then, this is probably not a side hustle anyway.

You are free to create another kind of company for your side hustle. You could create a Limited Liability Company (LLC). But you will have to provide a starting capital of 20’000 CHF. So unless you are starting a full-time business, it may be much. Also, remember that with such a company, you will have to file taxes twice!

There may be some cases when you do not have to create a company. But you should talk to your local tax or AVS office about that. And remember that creating a sole proprietorship is almost effortless.

So, in general, you will have to create a sole proprietorship for your side hustle. But this does not involve any paperwork.

Do we have to register the company?

Again, it depends.

If you create any company other than a sole proprietorship, you will be automatically registered in the Registry of Commerce when you create the company with the Notary.

If you created a sole proprietorship, registration to the Registry of Commerce is optional. If you reach 100’000 CHF in revenue in a single year, you must register it.

So, in most cases, you will not have to register a company in the Register of Commerce for your side hustle.

Do we have to pay VAT?

In Switzerland, when you buy something, a part of what you pay goes to the government. This tax is the Value Added Tax (VAT).

If you are starting with your side business, you will not have to pay VAT. For most commercial companies, you will only need to pay VAT once you reach 100’000 CHF in yearly revenue.

Once you register your company for VAT, the amount you will pay depends on the services or products you are providing. VAT ranges from 2.5% to 7.7%.

So, unless your side business is thriving, you will not have to pay VAT on your revenue.

Do we have to do accounting?

Most likely, you will not need full accounting.

With a small side hustle, you do not have to hold a full accounting of your business. If you are registered in the registry of commerce and generate more than 500’000 CHF in revenue, professional accounting will be required.

Now, you are still obligated to keep track of your expenses and revenue. And this could be asked from you by the tax office or by the registry of commerce. But honestly, it only makes sense to track all your expenses and earnings for your side hustle. Tracking your expenses and earnings is the only way you will know if it is profitable or not. And this is also the only way to know how much revenue you must declare for your taxes.

So, in general, you will not have to keep a full accounting of your business. But you should still track earnings and expenses.

Can I contribute to the second pillar?

No. Since it is only a side hustle, you already have a second pillar with your primary job. It means you are already affiliated with a pension plan.

Now, you can use your side hustle income to contribute to your current second pillar. It all depends on your plans for the future and your overall asset allocation.

If you grow your side hustle into your main job, you can contribute up to 25% of your income to a second pillar. But in this article, we stay focused on side hustles.

Can I contribute to the third pillar?

Nothing prevents you from contributing to the third pillar. But having a side hustle will not increase your maximum contribution (7056 CHF in 2023).

Since you should already be maxing out your third pillar, a side hustle should not change anything. But if you could not max out your third pillar before, you should use your side hustle income.

Conclusion

As you can see, starting a serious side hustle in Switzerland may be a bit more complicated than in some other countries.

And if you are just selling a few things you do not need on the internet, there is nothing. You should still declare that income in your tax declaration.

When your side hustle generates more than 2300 CHF annually, you must consider these issues.

But now, here is good news: Most of these steps are optional if you are not generating 100’000 CHF in yearly revenue. Below that, you do not have to register your company, you do not have to have a full account, and you do not have to pay VAT!

If you are only generating a little money, the only thing you need to do is register yourself for social contributions and file your taxes. You will not need any other things than a sole proprietorship for that.

So, in the end, in most cases, a side hustle legally in Switzerland is pretty straightforward. And when you start to generate a high income, you will have to do more for your company. But this will probably not be a side hustle at this time.

To get extra income, read about several ways to increase your income.

Do you have any tips on starting a serious side hustle in Switzerland?

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Baptiste Wicht started thepoorswiss.com in 2017. He realized that he was falling into the trap of lifestyle inflation. He decided to cut his expenses and increase his income. This blog is relating his story and findings. Since 2019, he has been saving more than 50% of his income. He made it a goal to reach Financial Independence. You can send Mr. The Poor Swiss a message here.

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72 thoughts on “How to side hustle legally in Switzerland?”

  1. Hi Baptiste,
    Thank you very much for this nice article.
    My question is that if I am going to earn only one time expected around 8000 CHF this year from my second job other than my primary job. Do I still have to register as sole proprietorship company? Can it be not like I just pay the income tax at the end and also go to AVS office and pay whatever extra contribution I had with this side income?
    I am not very sure that next year will be the same situation, since this is unique for this year why would it be required to create a company only for this year?

    1. Hi John

      Registering as a sole proprietorship is actually extremely easy, nothing like an LLC.
      In your case, you can simply contact the AVS office and they will send you the necessary paperwork. It’s easy and it’s free and you will be registered properly. Then, the AVS office will send you a bill for your contribution.

      1. Thank you very much for you quick response, I have one more concern if you have any idea about the same. Suppose if I registered my sole proprietorship company, tomorrow God forbids it happens that I loose my primary job, then is it like I cannot claim unemployment benefit because I have a company in my name even though I have been paying into the unemployment fund past 10 years?
        Also, in above things if there is a problem then how about lets say if I open a company in the name of my wife and I work as her employee, is it going to complicate things?

      2. Hi John,

        Good question.
        Normally, the unemployment office will look at the last four years. You need at least one year on salaried work in the last four years. If it’s one-off side hustle, I do not think you would be in trouble. If you are unsure, you can contact the unemployment benefits.

        In the future, this would be a great question for the forum, which is working better for longer discussion.

      3. I thought of that also.

        She would have to have a Sarl or SA to employ you and put 20000 depsit to open the company. Then she would have to pay insurance for you. Plus when you send invoices you need to put your name on them. Before you know it you going to wind be tangled up in problems. The easiest was is to open a sole trader account. and then if nothing comes in the next year just close it.

    2. Hi there,

      I was in the same situation and I have gone through this whole process. Simple answer is NO if its above 2400-2500 there is no other option you have to register.

      I was doing some work on the side without paying avs. I was still declaring it at the end of the year but not to avs at that time I didn’t even know you had to deduct avs. So in the end what happened was one company asked me for my company number and I didn’t have one. It’s Not legal to work an additional job if you don’t register as a sole trader and the company hiring you is legally obliged to check if you have company number if you don’t they have to deduct the avs and pay it into your AVS account. In the end I registered and had to pay for 3 years of contributions plus penalty interest of 5 % per year.

      1. So at the end you had to register as well or it was just about paying the AVS plus extra penalty?
        My concern is I dont see any more work coming in future as I am not exploring much, this work which I am going to do is like consultancy for my previous company who needs my little help.

  2. Hello Baptiste,
    I have a question. I work full time 100% and i want to start a side hustle/freelance. All of this side hustle is done from my home office/ computer. So i am not working for anyone or any company. There is nothing written about side hustles in my work contract. Also i have asked my boss about that. So nothing is preventing me from doing this.
    But my question is do i have to consult with my local avs office before i start my side hustle? Or just start my side hustle and then report to the office? The thing is that i do not know if my side hustle will generate any money, so i do not want to do all the paperwork and consulting for nothing.
    Thanks in advance

    1. Hi Vincent

      You don’t have to consult before. Once you reach the 2300 threshold in a year, you will need to declare to the local AVS office and will have to start paying for it.

  3. Hi,

    I am wondering if the CHF 100,000 revenue cap is separate to your full-time job income. For example, if I am making CHF 105,000 a year on my salary and my side job is making CHF 10,000 a year, do I need to register my side job?

    1. Hi danny

      It’s separate. Even with a sole proprietorship, you will need to do some accounting and give that to the tax office. So the accounting for the sole proprietorship will be separate from your own even though in the end your taxes are joint.

  4. Hello Baptiste,
    first of all, thanks a lot for this post, it clears out some questions and gives a good starting point for creating some side hustles.
    I am not very clear about the VAT question though. I understand you do not have to charge/pay VAT under 100k of revenue a year, but is there a way to not pay VAT on the materials you buy from other suppliers? I am assuming no, as at small size you would not be registered as company..

  5. hello
    i just have a question, if i have a hobby / side hustle can i have a instagram account and do a little bit sharing, marketing basically.
    is that permitted ?

    1. Hi Pedro,

      Any side hustle is permitted, but you have to declare it. And if you go higher than 2300 CHF per year, you will need to declare a company (sole proprietorship is enough, and easy) and pay social contributions on it.

  6. Hi Baptiste and thanks for the great article, it was exactly what I was looking for.
    I have a question: I live in Italy and I’m currently in talks for a job in Zürich that would pay around 100K. I also have a freelance thing here that pays around €22K (20K CHF). Here in Italy it’s taxed separately from my main income.

    I would like to avoid (if possible) to have these 20K added to my normal income in Switzerland, because I would end up paying a lot on it. How would I get it taxed separately?
    Thanks in advance!

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