How to become self-employed in Switzerland

Becoming self-employed in Switzerland is rather a tedious task, especially if you are a foreigner (I have Swiss friends and it’s been rather easy for them). I have dual nationality being British/South African and having an EU member passport certainly helps (how long that will be, depends on what happens with Brexit).

Why become self-employed?
You might want to establish a business in Switzerland, but as it costs quite a bit of money to establish a business, self-employment may be a great initial step into this direction. Registering a company involves legal costs, VAT registration and capital costs between 20,000 and 100,000 CHF (depending on the legal entity). In my case I’ve been working as a software developer for a number of years and I want to establish a business doing what I enjoy and grow this into a successful enterprise. But I don’t want to create a fully fledged company before I prove that it is indeed viable.

Alternate option, quit your job and take unemployment insurance
Depending on your marriage circumstances, you could get between 70-80% of your salary and depending on your canton, you could obtain between 14-24 months of unemployment insurance. This might seem like a great strategy to have “income” while you establish your business – but it is not.

For one if you have been living less than 5 years, you are likely to be on a B permit and taking unemployment money will reset your “years” when wanting to move onto obtaining your C permit. In addition, it’s a real pain making job requests, meeting with the authorities to prove that you are “looking” for work. Then there are the cases where you could get sent on courses. Finally if the authorities see that you are not making enough effort, they can cut your “income”. It’s just not worth all the hassle and stress.

Personally, this is not for me as I’ve grown up mainly in a South African culture where unemployment insurance was kind of non-existent and South Africans (IMHO) have a can-do, go-getting attitude. Living in the UK for the other half of my life, going on the dole, does not make sense unless you are really, really, really hard up. My thinking is, why become “comfortable” living off this unemployment income vs face the challenge head on and live with dignity that you did it with your own resources.

What does it take to become self-employed?
Again it depends on your canton, but generally you will need to do the following:

  1. Register as a sole proprietor with your local canton “commercial register”, there is a fee involved and you can expedite the process (for another fee of course). For me altogether it was around CHF 250.00 (took less than 7 days, expedited).
  2. Inform your local commune, this in turn will trigger a nice long form to complete regarding you and your activities. Like it or not if you do not, you will get this form sent to you and you’ll be delaying the process. The Swiss do things differently and thinking that you are a freshly minted sole proprietor after being officially entered into the “commercial register”… think again!
  3. The above form is for AHV/AVS (the very same people who handle unemployment claims) and believe it or not, you still have to pay your unemployment insurance contributions. You’ll need the obvious stuff like your ID, explanation of your desired activities, your permit and… proof of business activities. The last one got me because it does not make sense, if you are starting out – you don’t have customers/clients yet! But again, the Swiss do things differently.

For the #3 AHV/AVS part, to prove your business activities, you will need to bring either an invoice or email communication between yourself and your client. It will surprise you that even if you bring one contact, one is simply not enough and they require 3-4 additional clients. I was lucky because I already had contacts who needed “mini” custom software for their personal/business capacity. But it does not stop there, they will monitor your business activity.

It might seem like you are dealing with the gestapo, interviews/interrogation, having to go and see them on multiple occasions, so why all the fuss? Essentially the Swiss system classifies you depending on whether you are working for one sole client or many clients. Perhaps it’s similar to when you work in the UK as a contractor. HMRC has the right to go after you, if you work on the clients’ premises all the time (you’re technically no different from a regular employee). However, further to proving your business, you will need to also bring receipts of expenses. I was lucky again because I purchased a laptop and other related items before.

Funding your self-employment
You’re still starting out and the millions are not yet rolling in, so you need to have some cash to pay for living expenses, business expenses and unemployment contributions! Obviously you should rely on your savings. But again the Swiss do things differently and you can access your pension money (tax free) but it is limited for 1 year.

Sounds great, you might be thinking, bish bosh, I’ll simply get it done. Think again… the Swiss do things differently. Obtaining your own pension money is rather cumbersome, there are so many hoops to go through. I think it’s because Swiss pension is rather ring-fenced (which is a good thing). You will need to request your pension to be transfered to a “special” pension bank account with your bank. Then you have to get it “unlocked/unfrozen”. To do this, you need your permit, the “commercial register” and finally an AHV/AVS declaration that you are indeed self-employed. Miss the last one and forget about it.

Be warned this can take months and in my case it has taken 2.5 months. If there is one thing I could have done differently, I would have not gone to my local cantonal bank – I would have rather gone to my other larger banking institution (Credit Suisse or UBS).

Hope this helps you, it’s been rather different from my initial thinking when I decided to quite my job. If I had known, I would have done things differently – even waited a couple of months to get all my ducks in a row. If you have other information or experiences, please post or link to your blog in the comments below.

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