Switzerland and your paycheck: what do you need to know?

Switzerland is still known as Europe's tax haven. And to be honest, if you live here, you quickly understand why. You pay significantly less tax and other payments on your paycheck than in many other countries. That means: a considerably higher net salary! When you receive your first Swiss paycheck, you will probably be positively surprised. But you might also be wondering: “What do all these abbreviations stand for? What am I actually wearing?” Don't worry, we'll explain it clearly and simply for you below.

What does AHV Beitrag mean?

The AHV (in German: Alters- and hinterlasseninsurance) is the most important pillar of retirement and survivor provision in Switzerland. It helps cover living costs when you retire or when a partner dies. Everyone in Switzerland must have this national insurance. Think of it as the Swiss version of the Dutch state pension.

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What does ALV Beitrag mean?

The ALV (Occupational disability insurance) is unemployment insurance that is mandatory for everyone in employment. Are you losing your job? Then you will receive a temporary benefit of 70% of your insured income via the ALV. It also covers loss of income in the event of weather conditions, bankruptcy of your employer or certain reintegration measures. Compare it with unemployment benefits in the Netherlands.

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What does NBU (-V) Beitrag mean?

This abbreviation stands for the Non-professional accident insurance. Do you work more than 8 hours a week with a Swiss employer? Then you are automatically insured against accidents in your spare time. Nice to know that your skiing or hiking adventures are also protected!

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What does KTG (-V) Abzug mean?

The KG stands for additional health insurance that employers can take out. It is not mandatory, but employers who arrange this are insured against the risk of paying wages if an employee becomes ill for a long time.

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What does BVG Abzug mean?

The BVG is the company pension scheme, or the second pillar pension. You build this up in addition to your AHV and provides an extra buffer when you retire. It also offers protection in the event of disability or death. Employees start with the BVG from the age of 17 when they work in Switzerland.

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What is Quellensteuer?

Do you work in Switzerland with a temporary residence permit or without a tax residence? Then you pay Quellensteuer (withholding tax). This means that your employer withholds and pays your income tax every month. So it's a bit like how taxes are regulated in the Netherlands.

Tip: You can often request a refund for your Quellensteuer via your canton (for example, for work-related costs such as courses or travel costs). This is possible every year around February or March.

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What is Kirchensteuer?

Are you a member of a church recognized by the canton? Then you pay in Switzerland Kirchensteuer (church tax). This money is used to finance the church's activities and costs.

With this overview, you will soon understand exactly what those abbreviations on your Swiss paycheck mean. Switzerland not only makes your adventure more exciting, but also financially more attractive! 🚀

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