18 June 2020

Social insurance obligation of foreign employees


Switzerland has concluded numerous bilateral and multinational agreements with the aim of avoiding double social security obligations for foreigners. These include in particular the agreement for nationals of EU/EFTA states, but Switzerland has also concluded agreements with various third countries on this subject.

Nationals of EU/EFTA countries

For employees who work in Switzerland or in the EU/EFTA area and who are nationals of one of these states, insurance coverage is generally governed by the agreement with the EU/EFTA. However, the agreement with the EU/EFTA is not applicable to some smaller areas (e.g. the English Channel Islands or Monaco). These areas are treated in the same way as non-contracting states. A complete, frequently updated overview can be found in the Federal Social Insurance Office's Guidelines on social security, Annex 15 (only available in German, French or Italian).

If EU/EFTA nationals live and work in Switzerland, they are covered by Swiss social insurance. So far so clear.

But what happens, for example, if he or she is employed not only in Switzerland, but also in one or more EU/EFTA countries? In principle, employees who work in several EU/EFTA countries at the same time are subject to the social security system of their country of residence, provided they are employed there to a significant extent (the so-called 25% rule applies). Otherwise, they are subject to the social security system of the country in which the employer is domiciled (employer principle). If the employee has several employers based in at least two different states and one of them is the state of residence, the person is subject to the legislation of the state which is not the state of residence. Self-employed persons are subject to the social security system of the State in which the center of their activities is located.

Consequently, for example, a German citizen who lives in Zurich, works there two days a week at the domicile of his Swiss employer and three days in France is covered by social insurance in Switzerland. The employer principle applies.

Nationals of other Contracting States

Switzerland has concluded bilateral social security agreements with numerous countries outside the EU/EFTA. These are currently Australia, Bosnia and Herzegovina, Canada/Quebec, China (excluding Hong Kong, Macao and Taiwan), Chile, India, Israel, Japan, Macedonia, Montenegro, the Philippines, Republic of San Marino, Serbia, South Korea, Turkey, Uruguay and the USA.

Here again, if the employee is a national of one of these contracting states and lives and works in Switzerland, he or she is covered by social insurance in Switzerland. If he/she works in two different contracting states, the employee is generally insured in both states with the respective income.

In contrast to an employee from the EU/EFTA, an employee from a contracting state is also unconditionally subject to the Swiss social security system if he or she works in one or more EU/EFTA states in addition to Switzerland (except for income from employment in Germany, Denmark, Ireland, Sweden and Slovakia).

Example: A Japanese citizen who lives in Zurich, works there one day a week for his Swiss employer and works two days each in France and Italy in different branches is insured in Switzerland.

Nationals of Non-Contracting States

Employees who are neither nationals of an EU/EFTA state nor of another contracting state and who work and live in a contracting state are insured under the social security system of that state.

If a national of a non-contracting state takes up employment in Switzerland, his or her insurance coverage will be reviewed. In principle, all employees working in Switzerland are insured in Switzerland.

Exception: Secondment

A secondment occurs when an employee works for a certain time in another country on behalf and for the account of his employer. The employment relationship between the employer and the posted employee continues for the duration of the posting.

All agreements stipulate that employees seconded by a Swiss employer to a contracting state for a certain period of time remain subject to Swiss OASI/DI/EO and ALV regardless of their nationality.

Employers who post employees to a contracting state must obtain a secondment certificate from their compensation fund (so-called Certificate A1 for EU nationals, Certificate E101 for EFTA nationals and Certificate of Coverage for nationals of the contracting states). Conversely, it is advisable for employers to inform their posted employees that they must ensure that they have the relevant documents.

In particular, posted workers to Austria and France are recommended to always carry their A1 certificate with them, as checks are frequent and the absence of a certificate can be punished by fines.

Special case in accounting: ANOBAG

If an employer in Switzerland is not liable to pay contributions because, for example, it has no permanent establishment in Switzerland or its registered office is in a foreign country, the employee becomes a so-called ANOBAG (employee without a contributory employer).

The purpose of this rule is to ensure that the Swiss social security authorities have a contribution debtor in Switzerland. Within the framework of EU/EFTA agreements, the employee must expressly agree to take over the contributions (so-called agreement according to Art. 21 para. 2 of Regulation (EC) No. 9871/09). Outside the EU/EFTA agreements (states with bilateral social security agreements or non-party states), however, the employee is automatically obliged to pay social security contributions without explicit consent. For this purpose, he/she must register with the OASI compensation fund in his/her place of residence or - if he or she is not resident in Switzerland - with the OASI compensation fund at the place of work.

The employment contract must take into account the ANOBAG status. The employer must transfer to the employee not only the net salary, but also the corresponding employer and employee social security contributions.

The countless nationalities, places of residence and work in Switzerland and abroad give rise to numerous individual situations and circumstances. It is therefore important to ensure that every foreign employee, regardless of his or her country of origin, is carefully and individually insured in accordance with social insurance law.

Our immigration team will be happy to assist you if you have any questions.

Categories: Immigration

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