Tax Alert – Switzerland: Key Changes from 2025/2026

• A few changes in social security rates
• Gradual increase in retirement age for women and introduction of the 13th AHV pension from 2026
• New legal requirements for minimum wages, CO₂ levy, work permits and EU Pay Transparency Directive
• Important updates for employers regarding forms, certificates and digital processes

Executive summary

Significant tax and social security changes will take effect in Switzerland and the EU from 2025/2026. Employers must prepare for new minimum wage regulations, digital processes, reporting obligations and additional compliance requirements. Key topics include AHV reforms, work permits, CO₂ levy redistribution, teleworking, short-term employment certificates and the EU Pay Transparency Directive. Companies should review and adapt their internal processes and compliance strategies early.

Contributions Updates 

Starting 1 January 2026, employers and employees will see slight but important updates to several social contribution rates:

• Family Allowances (AF), canton of Geneva: The contribution remains solely the responsibility of the employer. In 2026, the rate will be slightly adjusted from 2.25% to 2.22%.
• Maternity Insurance (AMat), canton of Geneva: In 2026, the rate for both parties will slightly decrease from 0.032% to 0.029%.
• Family PC (PCFam), canton of Vaud : in 2026 the rate for both parties will slightly increase from 0.06% to 0.09%

All other contribution rates remain unchanged. Make sure your payroll processes reflect these updates to ensure compliance and accuracy in 2026.

AHV/AVS Reform – Enacted in 2024

As part of the AVS reform enacted in 2024, the statutory retirement age for women will gradually increase. Starting in 2026, women will retire six months later than before, at 64 years and 6 months, before reaching the unified retirement age of 65 in 2028.

Moreover, 2026 marks the introduction of a 13th pension payment for retirees in Switzerland, linked to the AVS reform. While this measure has no direct impact on your employees, it reflects the continuous evolution of the Swiss social security system.

APG for Service Members – Starting 2026 (LCA):

From 2026, individuals serving in the army, civil protection or civil service, as well as those attending Youth and Sport instructor courses, will be able to apply for their loss of earnings allowances (APG) online.

Employers are encouraged to inform their staff in advance and update their internal processes to ensure a smooth transition once the online system becomes available.

New Unemployment Benefit Forms – Starting October 2025 (LCA)

From October 2025, the new forms “Employer’s Certificate” (10006f) and “Interim Earnings Certificate” (100018f) will be introduced for unemployment benefits (IC). The current forms will no longer be accepted as of January 2026. Read more.

New Flexibility for your Pillar 3a Savings

Starting in 2026, it will be possible to make retroactive payments into your Pillar 3a for missed contributions from 2025 onwards. This new measure opens the door to smarter tax optimization and gives you a unique chance to catch up on your retirement savings.

Don’t wait too long to review your strategy, now is the time to plan and make the most of this new opportunity.

CO₂ Tax Redistribution – Impact for Employers

Starting in 2025, the redistribution of the CO₂ levy to companies will be based on the payroll subject to unemployment insurance contributions (AC1). This applies to employers not exempted or partially exempted from the levy.

Due to this legislative change, the redistribution to companies for the year 2025 will be postponed to 2026. Consequently, the distributions for 2025 and 2026 will be made simultaneously in 2026.

New Cantonal Minimum Wages to Monitor

Beginning in 2025, several cantons, including Geneva, Neuchâtel, Jura, Ticino and Basel-Stadt, have implemented revised or newly established minimum wage regulations. The applicable rates vary by canton and industry, ranging from approximately CHF 19.00 to CHF 24.50 per hour. Although Switzerland does not have a national minimum wage, these cantonal provisions are mandatory for employers within the respective regions. Employers are advised to review their compensation structures to remain compliant with local legislation and prepare for potential changes in 2026.

Extension of AHV Contribution Obligation for Minor Salaries (Art. 34d AHV)

For salaries that do not exceed CHF 2’500 per year and per employer, AHV contributions generally do not need to be settled. Contributions are only calculated upon the explicit request of the insured person. However, in certain industries where multiple short-term work arrangements with different employers are common (e.g., domestic help, cultural sector), this exemption does not apply. This ensures that individuals with frequently changing employers and work arrangements are adequately covered.

As of January 1, 2026, the list of industries excluded from this exemption will be expanded to include companies in the fields of design, museums, electronic media, print media, as well as choirs.

Employment Authorizations

From 23 October 2025, individuals under temporary protection (permit S) will be allowed to start working upon submission of a simplified electronic notification. No formal decision applies: employment may begin immediately after submission, simplifying access to the Swiss labor market. This aligns with the process already in place for EU/EFTA nationals (permits B and G). However, please note that for non-EU nationals and posted EU workers, cantonal immigration and labor approvals must still be obtained before employment begins.

Transmission of Teleworking for Cross-border Workers

Until 31 December 2025, employers must be able to attest the telework rate granted to employees based on contractual documents (e.g., telework agreement or employment contract related to teleworking).

As of 1 January 2026, employer obligations will evolve due to the implementation of the automatic exchange of information.

ELM Swissdec version 5.3 will allow for the direct transmission of telework data for cross-border employees to the AFC. The first transmission will occur in 2027 and will contain the data from 2026.

Without migrating to version 5.3, you will need to use:

• the ISeL service via an e-portal account in Canton of Geneva, or
• official paper forms provided by the AFC.

Good news for EY payroll clients in Switzerland: The update will be carried out by EY Switzerland; you will not need to take any action.

Leaver Certificate for Short-term Employment of Employees Residing in France (Art. 5a OIS)

A new certificate for employment contracts under one year is available from 1 January 2025, as required by Article 127(3) LIFD and Article 5a OIS. Employees can request it starting on this date, ensuring clear reporting of short-term work and tax compliance.
The certificate is completed by the employer or the HR/payroll department. The company must ensure that all information is accurate so that the document is valid for tax authorities.

To complete the certificate, the employer must indicate:

• The exact start and end dates of the contract
• The average employment rate and work schedule
• The number of telework days or assignments abroad
• Any specific work periods in Switzerland or other countries

What is the purpose of this document?

Employees use this certificate for tax filings in France, documenting short-term work periods, employment rate and days worked. It is required for their tax declaration.

Basel-Stadt – Grand Council Considers Voluntary Payroll Tax Deduction

The Basel-Stadt Grand Council has approved a motion to allow voluntary direct tax deductions from employees’ wages, similar to the withholding tax system applied to foreign employees. Under this system, employers would directly deduct taxes from wages upon employee request. At this stage, the measure remains voluntary and is in its early phase. The Canton is reportedly seeking large companies (over 50 employees) to pilot the implementation. Further guidance from the Basel tax office will be required before companies can apply the system in practice.

Extension until 31.12.2027 of the Mutual Agreement between Switzerland and Germany Relative to Executive Employees

On 6 April 2023, Swiss and German authorities established a consultation agreement regarding Article 15, paragraph 4 of their double tax treaty (DTT CH-DE), allowing taxation of “executive employees” not listed in the commercial register under certain conditions.

This provision enables the respective authorities to tax the income of executive employees (board members, directors, managing directors or authorized signatories) in the country where the company resides, regardless of where the work is performed.

This amendment expands the scope of Article 15, prompting individuals in executive roles to reassess their tax situations, as taxation rights may shift to the corporation’s residence state.

This agreement was limited in time until 31 December 2025 and has just been extended until 31 December 2027.

EU Pay Transparency Directive

In 2023, the European Union adopted the Pay Transparency Directive, promoting equal pay and addressing the gender pay gap. This directive establishes new obligations for employers around pay transparency for both employees and job applicants, alongside mandatory reporting on gender pay disparities. EU Member States are required to incorporate this directive into their national legislation by 7 June 2026.

Compliance Requirements

The pay transparency obligations are applicable to all companies operating within EU Member States, including Swiss companies with operations in the EU.

Gender pay gap reporting is mandated for employers with 100 or more employees. The frequency of reporting and the year when reporting begins will vary based on the number of employees. Companies with 150 or more employees will commence their first reporting in June 2027 (based on 2026 data).

The EY Rewards Team is dedicated to helping organizations understand and effectively prepare for the requirements of the Pay Transparency Directive. Our experts are available to provide guidance, resources and tailored strategies to ensure compliance and promote equitable pay practices.