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Granting equity in 

the 

Switzerland

 

Get to know everything about your taxation and reporting obligations in 

the 

Switzerland

Looking to offer equity to team members in 
Switzerland
?
Try Easop

Introduction

Regular employee

NSO

You can definitely grant non-qualified stock options (NSO) to local residents working as employees of a local subsidiary or branch in Switzerland.

The company will have to comply with local obligations as an employer, which include filing an annex to the yearly salary statement that the company is responsible to submit to the employees on a yearly basis.

The content of the annex can vary depending on the Swiss canton. It will include details regarding outstanding equity incentives granted to the employees: e.g. how many stock options have been granted, exercised, sold by each grantee; what was the exercise price; what was the fair market value (FMV) of the shares at the time of exercise or sale, etc.

Taxation of stock options in Switzerland can be a bit complex, as it depends on the personal status of the grantee and the Swiss canton and municipality where the grantee lives. In addition, the valuation method used at the time of exercise of the stock options has an impact on the taxation at the time of sale of the shares. It’s recommended that the grantees consult with a personal tax advisor at the time of exercise and sale.

Taxation for employees would take place like this:

  • There would be no taxation at the time of grant.  
  • At the time of exercise, the stock options would be taxed as salary income. The company would be responsible for reporting/withholding all or part of the taxes and social security due at the time of exercise
  • At the time of sale, part of the sale gain should probably be taxed as salary, and part of the sale gain should normally be exempt from taxation.

There’s no tax-favored scheme as such in Switzerland. However, the fact that (part of) the gain which could be made by a grantee when selling his/her shares could be tax exempt is already as such an advantage compared to other countries.  

Employee via EoR

NSO

You can definitely grant non-qualified stock options (NSO) to local residents working as employees of an “Employer of Record” (EoR) in Switzerland.

The company doesn't have anything to do itself to comply with local obligations, but will need to communicate a few details to the “Employer of Record” (EoR) and/or the grantee so they can comply with their own legal obligations.  

Taxation of stock options in Switzerland can be complex, as it depends on the personal status of the grantee and the Swiss canton and municipality where the grantee lives. In addition, the valuation method used at the time of exercise of the stock options has an impact on the taxation at the time of sale of the shares.

What makes things even more difficult is that the Swiss legislation was initially designed for situations where an employee receives stock-based compensation from an employer, and not from a third party (such as in an EoR context). Therefore, everything is not crystal clear as to who needs to do what and when in a situation where stock options are granted to an employee working via an EoR.

Consulting a tax advisor at the time of exercise and sale is particularly recommended.

Taxation for employees hired via an EoR is likely to take place like this:

  • There would be no taxation at the time of grant.  
  • At the time of exercise, the stock options would be taxed as salary income. The EoR would be responsible for reporting/withholding all or part of the taxes and social security due at the time of exercise (so inform them asap when the grantee informs the company that he/she wants to exercise)  

  • At the time of sale, part of the sale gain should probably be taxed as salary, and part of the sale gain should normally be exempt from taxation.

There’s no tax-favored scheme as such in Switzerland. However, the fact that (part of) the gain which could be made upon sale of the shares could be tax exempt is already an advantage.  

Contractor

NSO

You can definitely grant non-qualified stock options (NSO) to local residents working as contractors in Switzerland.

Contractors often work via a personal management company. If that’s the case, the stock options should be granted to the company, and not to the natural person.

The company doesn't have anything to do itself to comply with local obligations, as it will be the contractor’s sole responsibility to report and pay the necessary taxes.

Taxation of stock options in Switzerland can be complex, as it depends on the personal status of the grantee and the Swiss canton and municipality where the grantee lives.

What makes things even more difficult is that the Swiss legislation was initially designed for situations where an employee receives stock-based compensation from an employer, and not when a self-employed service provider/freelancer receives stock options from one of their clients.

Consulting a tax advisor at the time of exercise and sale is particularly recommended.

There’s no tax-favored scheme available when granting NSO to contractors in Switzerland.

Want to know more about equity in 

the 

Switzerland

?

Discover everything you need to know about taxation and reporting obligations for you and your team in 

the 

Switzerland

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