Part-Time Self-Employment in Switzerland: The Essential Aspects

The idea of part-time self-employment has gained significant traction in recent years, especially in progressive countries like Switzerland where a flexible and dynamic workforce is valued, and workers are encouraged to explore their entrepreneurial passions. In this article, we delve into the fundamental aspects of part-time self-employment in Switzerland, exploring what it entails, who can become self-employed part-time, its advantages and disadvantages, important legal considerations, and common questions you might have about this interesting mode of work.

What is part-time self-employment?

From a social insurance perspective In Switzerland, you are considered “self-employed” if you work independently in your own name and for your own account and bear the economic risk of said work. Therefore, part-time self-employment (sometimes known as a “sideline”) means you carry out self-employed work activities in addition to your full-time employment or other primary activities (e.g., studies).  For such work to be considered part-time, the income should be significantly lower than that earned from your primary job, and the part-time working activity should not interfere with your main job and be conducted outside of its working hours.

Who can become self-employed part time?

There are no restrictions on who can take up part-time self-employment. Individuals from various backgrounds, including professionals, students, and homemakers, can explore self-employment opportunities while managing their other primary responsibilities. Cross-border commuters and foreigners may also take up profit-making self-employment activities in Switzerland subject to certain requirements being met (more on this later).

That said, there are important factors to consider before embarking on part-time self-employment:

Firstly, it is recommended to have a stable source of income from elsewhere, be it a secure full-time job, or another guaranteed source of funds. This is especially important at the beginning of taking up part-time self-employment where a stable income source will make it easier to explore your entrepreneurial activities without unnecessary pressure. Generally, part-time self-employment activities are meant to function as a supplementary income stream and shouldn’t be relied on for covering your primary living costs.

Another consideration is your personal capacity to take on additional work. Part-time self-employment may be rewarding, but it also comes as an added time strain. You should be ready and able to take on this added burden on top of your main job, without damaging your performance or quality of life.

Advantages and disadvantages of part-time self-employment

Advantages

Part-time self-employment is an exciting and rewarding venture that offers many benefits:

• Flexibility: One of the primary advantages of part-time self-employment is that it offers excellent flexibility. You can set your own working hours and choose where and how to direct your energy. This allows you to find the right balance between your part-time work, your full-time work, family, and other personal pursuits.
• Low-risk: Part-time self-employment aims at providing a fulfilling way to generate a side-income. This means it is much less financially risky than starting your own business as your main job, where your financial stability depends on your success in doing so. Taking up part-time self-employment while continuing with your main job means you can be sure of covering your basic expenses while having the freedom to pursue your personal work projects pressure-free.
• Additional income: If your part-time business ventures are successful, you can benefit from the additional income stream in addition to the income you already earn from your primary work. Having a sideline also enables you to diversify your sources of income, thereby reducing financial dependence on a single job or employer.
• More time to build your business: when you take up self-employment part time, you have more time at your disposal to build a successful base for your business without the pressure of needing to immediately make a profit. This allows you to analyse the market over a longer time frame and thoughtfully create a sustainable independent business.
• More financing options: Starting a side venture gives you many options when it comes to funding. By continuing with your full-time job, you potentially have a direct means of financing your personal entrepreneurial activities with your salary. It is also easier to get financing and loans from banks if you start a business on the side, as the income from your full-time job lowers the risk of default and thus improves your creditworthiness.

Disadvantages

While there can be many benefits to taking up part-time self-employment, there are also some downsides to consider:

• Increased stress: One of the greatest difficulties with part-time self-employment is being able to strike the right work-life balance. The additional burden of part-time self-employment along with your main job can make things more stressful, and lead to less time for your personal life and family. This can ultimately lead to burnout and underperformance in both areas if not properly managed.
• Limited Benefits: Unlike full-time employment, part-time self-employment won’t give you access to the same employer benefits such as health insurance, paid leave, or retirement plans, which are typically provided by full-time employers. This is of course negated if you also have a full-time job which can provide those benefits.
• Limited time and energy: Starting your own venture requires a lot of dedication and time to maximise the chances of success. This can make it difficult to accomplish in addition to keeping up a full-time job. You might experience challenges in finding the time to develop your part-time work, and this could needlessly delay or even ruin your chances of success altogether.
• Variable income: Part-time self-employment often comes with income fluctuations, making it difficult to predict earnings and plan your finances accurately. This can pose financial challenges, especially if you do not have a stable income source from elsewhere. It is also one reason why it can in fact be good to engage in part-time self-employment alongside a stable full-time job as opposed to pursuing full-time self-employment.

Legal considerations of part-time self-employment

Duty of loyalty to your primary employer

If you have a full-time job and decide to take up part-time self-employment alongside it, you must adhere to the duty of loyalty to your primary employer. Basically, this means avoiding conflicts of interest and ensuring that your self-employment activities do not interfere with your obligations to your employer.

The duty of loyalty is a legal obligation that is outlined in Art. 321a of the Swiss Code of Obligations (OR). The duty of loyalty is seen to be violated if the part-time work in question:

• Directly competes with the primary employer (e.g., serving company clients on a private basis),
• Negatively impacts the company’s reputation,
• Impairs the employer’s performance to the extent that they are unable to properly fulfil their obligations to the company.

Social security contributions

As with full-time employees, self-employed individuals must generally also contribute into the 1^st pillar old-age and survivors’ insurance (AHV, IV, EO). The 1^st pillar is important for any working professional as it allows you to cover your living needs in old age or compensate your family in the event of death. The contribution amount depends on your level of earnings from your part-time work activities.

Self-employment can lead to increased contributions to social security, because unlike full-time employees who benefit from sharing the contribution to 1^st pillar with their employer, self-employed individuals must cover the full contribution themselves.

Here are some important details regarding social security contributions if you are self-employed part-time:

• If you are in full-time employment and your income is insured with the AHV, you must still register your self-employed secondary occupation with the compensation office, unless your annual income does not exceed CHF 2,300, in which case contributions to the AHV will only be levied at your request.
• If you are self-employed as a secondary occupation and belong to a professional association, you must generally join the professional association and pay into its funds in addition to the compulsory social insurance.
• Daily sickness benefits insurance is not compulsory
• If you employ staff as part of your self-employment, you must also register them with the social insurance schemes (AHV, IV, family allowances, etc.).

Tax considerations

Income generated from part-time self-employment must be declared on your tax return and is subject to income tax in the same way that the salary from your main employment is. Self-employed individuals are required to file their taxes independently, therefore keeping accurate records of income and expenses is essential for tax purposes.

If you use a sole proprietorship to conduct your part-time business, the income from these activities is taxed normally along with your regular income. However, if you operate a GmbH or AG, you need to keep in mind the potential for double taxation, in that the profits are taxed at the corporate level and then again as personal income tax when they are withdrawn in the form of dividends and/or salary.

Understanding the tax implications of self-employment is vital to avoid legal issues in the future and optimise your personal tax liability.

Registrations requirements

You are required to register with the compensation fund to become legally recognised as a self-employed person in Switzerland. To do so, you must fill out the registration form available on the compensation fund’s website. You will also need to attach the required documents such as copies of invoices that you have already issued, business agreements, company address and rental agreement, insurance policies, etc.   

Furthermore, if you decide to incorporate a legal business entity through which to conduct your self-employment, such as a GmbH or AG, you will be required to formally register the company into the corporate register and fulfill all other obligatory registration requirements for incorporating a new company in Switzerland.

FAQs

Can foreign citizens become self-employed in Switzerland?

Yes, foreign citizens can become self-employed in Switzerland. However, they must obtain the necessary permits and meet specific criteria outlined by Swiss immigration authorities.

EU/EFTA nationals are allowed to engage in profit-making activities in Switzerland easily. They simply need to apply to the Cantonal Migration Office, and upon approval a residence permit (B permit) will be issued which is valid for 5 years and renewable thereafter. This allows them to work in a self-employed capacity in Switzerland.

Nationals from outside the EU/EFTA (“third-country nationals”) must go through a lengthier application process to be able to work in Switzerland, whether it be in a full-time employed capacity or pursuing their own part-time self-employment or entrepreneurial activities. A C permit (settlement permit) is usually required for the main applicant, or else they should be married to the holder of a C permit or Swiss citizen. In some cases, third-party nationals may need to submit a specific application to the cantonal authorities to take up profit-making activities in Switzerland.

For a more in-depth look at starting your own in business in Switzerland as a foreigner, read our dedicated article here.

How do you become self-employed as a cross-border commuter?

You can work in a self-employed capacity in Switzerland as a cross-border commuter, but you must obtain a cross-border commuter permit (G-permit) from the cantonal population office in which you plan to work. This allows you to work and live in the specific Swiss canton you have applied to provided you return to your primary place of residence at least once a week.

Do you have to inform your employer?

You are generally not legally required to inform your main employer about your part-time work activities, and they don’t have a right to stop you from pursuing such activities so long as they don’t violate the duty of loyalty discussed previously. However, it is always recommended to maintain a transparent relationship with your employer and informing them of your part-time work activities can be a good way to do this.

If there are no conflicts of interest and the work doesn’t negatively affect your performance in your main job, your employer shouldn’t have any reservations. In fact, part-time self-employment may even be seen favourably by some employers in Switzerland, where a flexible and innovative workforce is highly valued. The skills and experience you get from your part-time work could actually contribute positively to your main job.

Can you become self-employed part-time if you don’t have a main job?

Yes, while the concept of part-time self-employment is most often associated with those who are already engaged in a full-time job, people without a main job can also pursue part-time self-employment in Switzerland. Whether you are a student, unemployed, a freelancer, or someone exploring entrepreneurial opportunities, you can engage in part-time self-employment without the need for existing employment. To maintain your status as a student or unemployed person though, you must declare your part-time self-employment to the compensation office and the income received should not exceed certain limits.