Master business expense compliance in Switzerland

 

If you're a seasoned business traveller, you're likely familiar with the intricacies of business travel expenses. Every country has its own unique set of rules when it comes to expenses, including popular destinations such as Austria, Belgium, and Switzerland. These countries have their own terms and regulations for expenses that you should be aware of.

Curious about how expenses work in Switzerland? Look no further! This article will provide you with a comprehensive overview of everything you need to know about expense payments in Switzerland, including daily allowances and tax treatment.

What are business expenses in Switzerland?

Business expenses are defined as "expenses incurred by employees in the performance of their duties at their official residence or on business trips" (§ 64 para. 1 VVO).

These business expenses encompass various aspects of a trip including travel costs, meal expenses, accommodation fees, parking charges, and other related expenses. It is crucial to understand that these expenses are only eligible for reimbursement if they are directly connected to the professional duties and are deemed reasonable in terms of their amount.

What business expenses can be claimed in Switzerland?

If an employee is required to travel from one work location to another within a single day for business purposes, this qualifies as a business trip and the employee may be eligible for expense reimbursement.

The provisions concerning expenses in Switzerland are regulated by law in the OR (Code of Obligations) Art. 327a para. 1 ff. It states: "The employer must reimburse an employee for all expenses incurred while working for said employer".

To ensure proper reimbursement, the employee must provide invoices or receipts that substantiate expenses related to meals, overnight stays, and other incidental travel costs such as parking tickets or tolls.

Another way of reimbursing expenses is with the use of a per diem or daily allowance, which is regulated in Art. 327a para. 2 (OR). Employees are given a fixed amount of money, known as a lump sum, to cover any potential expenses they may incur. Lump sum expenses should be carefully determined to ensure that they adequately cover the actual costs incurred.

According to the guidelines set by the Swiss Tax Conference (SSK), lump sum expenses typically range from 3-5% of the employee's net salary, with a maximum limit of CHF 24,000 per year.

Business expense amounts in Switzerland

Expense payments in Switzerland are not standardised by law, allowing companies and organisations to establish their own guidelines. This flexibility accommodates variations in industries, positions, and fields of activity, ensuring that expense amounts are tailored to specific needs. This adaptability allows for a more efficient and realistic approach to expense reimbursement, benefiting both employees and employers alike.

A commonly used expensing method in Switzerland is the lump sum payment. This means that a fixed daily rate is established to cover all expenses incurred during a business trip. The specific flat rate can vary depending on the region and the policies of each individual company, typically ranging between CHF 50 and CHF 150 per day. This approach provides flexibility and convenience for both employees and employers, ensuring that expenses are adequately covered while adhering to company guidelines.

Mileage allowance in Switzerland

In Switzerland, you can rely on the Touring Club of Switzerland (TCS) to provide you with an annual table to calculate the mileage rates for kilometers travelled in different vehicles and cantons. This helpful resource ensures that you can accurately calculate your mileage expenses and stay on top of your travel budget.

Are expenses tax-free in Switzerland?

The lump sum expense allowances mentioned below are exempt from being included in the gross salary and do not require a tax declaration:

• Lunch / dinner expenses of max. CHF 30.
• Small expenses in the form of a daily allowance of CHF 20.
• Mileage expenses (for a private car) of max. 70 centimes per kilometre.

Example 1: Business trip within Switzerland lasting several days

Let's say a Swiss employee embarks on a multi-day business trip within the country. This trip spans a total of five days, during which the employee incurs expenses for meals and overnight accommodation.

As per the company's guidelines, the employee is entitled to a daily per diem allowance of CHF 100 for meals and for accommodation. 

The total expenses for the business trip are calculated as follows:

Meals: 100 CHF/day x 5 days = 500 CHF + Accommodation: 100 CHF/day x 5 days = 500 CHF.

For this business trip within Switzerland lasting several days, the employee would therefore be able to claim a total of CHF 1,000 in expenses.

Example 2: International business trip in Europe

Now let's look at a scenario where a Swiss employee embarks on a five-day business trip to Germany. Throughout the trip, they will of course have meals and require overnight accommodation, all within the guidelines set by their company.

According to these guidelines, the employee is entitled to a per diem rate of CHF 80 per day for meals and overnight stays in Germany. Now, let's calculate the expense payment for this business trip:

Meals: CHF 80 per day * 5 days = CHF 400 + Accommodation: CHF 80 per day * 5 days = CHF 400

For this international business trip, the employee would therefore be able to claim a total of CHF 800 in expenses.

It's important to note that specific exchange rates and expense amounts may vary depending on the company. Always check the guidelines and current rates applied by your company to ensure accurate calculations for your expense claim.

What information belongs on an expense form in Switzerland?

In order to claim expenses in Switzerland, it is essential to provide the necessary information. Like in Germany or Belgium, certain details are mandatory when submitting an expense claim in Switzerland such as:

• Date of the expense claim
• Traveller details (name, address, IBAN)
• Justification for the expenses (receipts for meals, accommodation, incidental travel expenses)
• Amount of expenses to be reimbursed in CHF (converted from another currency if necessary)
• Mileage driven (if using a private vehicle)
• VAT amount

Expenses are entered in the salary statement under item 13 "Reimbursement of expenses". Actual expenses are entered under 13.1. If lump sum expenses are paid, they are entered under 13.2 and are considered taxable income.

Business expenses in Switzerland: tax treatment

When it comes to settling and reimbursing expenses in Switzerland, it's important to understand the tax implications.

If expenses are reimbursed based on receipts, they must be declared for tax purposes.

However, there are certain conditions under which expenses do not need to be declared such as:

• direct reimbursement of accommodation costs
• lump sum payments for lunch or dinner (up to a maximum of CHF 30)
• business meals with an invoice
• public transport expenses with a receipt
• mileage with a private vehicle (up to a maximum of CHF 0.70 per kilometer)
• and incidental expenses (up to a maximum of CHF 20).

To ensure compliance with tax regulations, Swiss companies can seek approval from the cantonal tax authorities for their expense regulations. These regulations specify both the flat-rate and actual expense payments that are allowed. By adhering to these regulations, companies will provide employees clarity and transparency in their expense reimbursement processes.