Did you know that, in the eyes of the law, it's your AHV contribution that makes your self-employed status official? Come on! I contribute, therefore I am.

In this article, we'll look at the differences between salaried and self-employed workers in terms of AVS, the reasons why it's not always necessary to become self-employed, and when you become self-employed. You'll also learn how to draw up an invoice as a private individual in Switzerland without necessarily owning a business.

Employee/Freelance: What's the difference?

On a payslip, you'll find social security contributions divided into 3 pillars:

1st pillar (AVS, AI, APG): State pension
2nd pillar (LPP): Occupational pension
3rd pillar: Private pension (not shown on payslip)

For salaried employees, contributions are deducted by the employer with each salary payment. For the self-employed, contributions are paid directly to the compensation fund on the basis of income subject to direct federal tax. The AVS rates in force in 2023 for income of CHF 58,800 or more per year are 10%.

When can I submit an invoice as a private individual without being self-employed?

If you earn irregular income below a certain amount, you don't need to become self-employed. For example:

Occasional babysitter
Freelancer with a single client
Musician with a few concerts a year and a low income
Beekeeper selling less than 10kg of honey

In these cases, you are considered “dependent” and can invoice without a company. A private individual can therefore invoice without necessarily having self-employed status.

When do I become self-employed in Switzerland?

The income threshold for self-employed status is currently CHF 2,300. Below this amount, the income must be declared with your other income as a “dependent” person.

Other criteria are also taken into account when determining self-employed status:

Having a company name and advertising material in your own name
Assuming economic risk (investments, premises costs, etc.)
Working independently (hours, organization, subcontracting)
Having several customers/contracts
Employing staff

Not all of these criteria have to be met; compensation funds assess each case individually. This means that a person can be self-employed in one activity and employed in another.

A self-employed person's salary in Switzerland will therefore depend on his or her turnover.

How do you become self-employed?

You need to define your activity and target clientele, choose a suitable legal form, take out insurance and contact the compensation fund to pay AVS contributions and obtain your status. VAT registration is mandatory for annual revenues over CHF 100,000.

However, it's possible to voluntarily register for VAT even if your revenue is below this threshold by applying to the Federal Tax Administration (AFC).

The hourly rate for a self-employed person in Switzerland will be higher, as they have to cover all their expenses. An auto-entrepreneur can invoice in Switzerland, but beware of conditions and obligations that vary from canton to canton.

To sum up, you need to earn more than CHF 2,300 a year and have several customers to become self-employed. If you earn less, you can invoice without necessarily owning a business. It's essential to assess your situation with your compensation fund, so that you can work in accordance with the rules.

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