How to side hustle legally in Switzerland?
| 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:
- 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.
- 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?
Download this e-book and optimize your finances and save money by using the best financial services available in Switzerland!
Download The FREE e-bookRecommended reading
- More articles about Side Hustles
- More articles about Earn
- How to Sell Things Online in Switzerland in 2024?
- 4 Ways to make money with your vehicle
- Make money online with Kuaishou – Share videos
Great article. There is a lot of information available online but this summarizes it very well. Do you happen to know if VAT would be due on services provided to a company outside of Switzerland (based in a EU country) while the side hustle is being legally performed remotely from Switzerland while yearly revenue is below 100’000 CHF? Thank you!
Hi Pieter,
I am afraid I have no idea.
Normally, a company does not have to charge VAT below 100K, but maybe other rules apply when dealing in other countries.
Thanks a lot for this amazing post!
It is helping me a lot!
I would like to ask you, which are the steps to create a sole proprietorship company (with less than 100k)?
I’m living in Zürich, I guess I just need to register myself as a self-employed to the SVA Zürich. (Sozialversicherungsanstalt des Kantons Zürich).
I guess it should be the following form.
https://svazurich.ch/formulare/2000_ak/2800_vb/2802_vb2_ahv_anmeldung_fuer_selbstaendigerwerbende/hinweise.html
Hi Lorenzo,
This looks correct. That’s similar to what I did in Fribourg with a single form (sent ou by email in my case) to the AVS office.
Hi – great article, very helpful!! Would you have an idea of the 1st pillar contribution ? Are you aware of a calculator or simulator ? This might help assessing whether the effort might be worth it e.g. in case of income at 3000-4000 CHF hence only slightly above the 2300 threshold
Thanks , Alex
Hi Alex,
I do not know about any calculator. This is likely different in each canton. But in my case, it’s about 8% of the income.
Thank you for this great post.
I am thinking about creating an eShop side hustle based on dropshipping here in Switzerland. In the beginning, I don’t expect to earn big money (if I ever manage to make something).
When you create a sole proprietorship, it is not mandatory to register it into the Registry of Commerce. How do you make your sole proprietorship “official” if it is not reported anywhere?
Also, I am worried about your responsibilities regarding the customers’ data protection. How do you manage it as a sole proprietorship?
Thanks in advance
Hi Cesar,
In the very beginning, you can start without a company, below 2300 CHF.
That’s correct, you can register it if you want, but it’s only mandatory starting from 100K income. The sole proprietor is only registered in the AVS (first pillar) system.
Data protection is the same regardless of what company you choose, no? Or are you worried that they attack you and would prefer an LLC?
In my case, I tried to keep as little data as possible from my customers. But to be honest, I did not put much thought into the responsibilities.
Hi, my mom is an Italian retired (65) teacher with a B permit in Switzerland. She gets the taxed pension monthly from italy and she declares it in CH (however they do not tax it). Now she has been asked to do some English lessons hourly and to do some cooking for a few people in home office. They told her that she can invoice the hourly rates, then declare the income as “other” and the expenses and this is it. Do you confirm ? Since she is retired she can go over this 2300 chf limit, can’t she? She does not need to register to SVA, does she ?
Hi Daniela,
On top of 2300 CHF limits, you just have to do a very basic accounting of the earnings and expenses. No need for VAT. I do not know what SVA is.
It should not matter whether she is retired or with a B permit or passport.
Thanks so much for this information. I still am not clear about one thing. Is the 2300 threshold for the side job or for all income? For example, I have a part-time job (I earn around 30,000 per year) and I have started teaching English on the side for a language school that pays me hourly. It goes on my bank account directly but I did no tax paperwork for that. If I earn less than 2300 on this side hustle, do I have to pay the social contribution, because my total income is more than 2300? Or does the 2300 apply to anything outside of my employment? Thanks for your help!
Hi Lory,
2300 is for the side hustle only (anything outside of your main salaried job).
In your case, once you reach 2300 CHF per year on teaching English, you should declare it and start paying first-pillar contributions on it.
Would she still need to open a sole proprietorship to give such English lessons (if staying below 2300 CHF per year)?
Would it change anything if they had a contract?
Hi Fred,
If you stay below that amount, there should be nothing to be done.
And opening a sole proprietorship is very little effort (send one form and it’s done).
Hello!
In regards with competing with my employer. Let’s take this example, my employer sells clothes, I work there photographing and retouching his clothes? If I freelance retouching for other companies, am I competing with my employer?
Thanks,
John
Hi John,
I would think you would be competing with your employer, yes. You would have to check your contract to see the details, but in general, I would think you are not allowed to do that.
Now, I am no lawyer, that’s just my interpretation. If you want to be sure, you need professional of work laws.
Thank you for this great article. I want to ask if someone is working a full time job in Switzerland and have a company in the EU, does he need to declare the income from his own company or no need since it’s outside Switzerland?
Hi Jad,
Thanks for your kind words!
I would think that you need to declare the company and the income, yes. But it depends if the headquarters are in Switzerland or in the EU. But taxes have to be paid somewhere.
I would ask your local tax office about that, it’s a special case.
Thanks for stopping by!
That’s a great post, thanks for sharing it. Do you know how managing invoices for clients needs to be done? there must be strict rules for how to write and issue invoices properly, but I can’t find them. Is it the tax office which controls this?
Hi Michael,
You have to keep accounts for your company, but there is no mandatory way to keep your invoices unless you have more 500’000 CHF in revenue. At this point, you will have to have professional accounting done.
Of course, they can ask for an audit to get your information. So, you will have to keep invoices and bills.
Thanks for stopping by!
Great article thank you!
Thanks, LearningFI :)