Self-employed taxes: how is your income taxed?

The Swiss tax system for self-employed individuals: overview

In Switzerland, self-employed individuals are subject to a three-tier tax system: federal, cantonal and municipal. Unlike employees whose tax is deducted at source, you must declare your income yourself each year.

The principle is simple: you calculate your net profit (income minus expenses), deduct your social security contributions, and this amount becomes your taxable income. The tax period corresponds to the calendar year, and you'll receive your tax return the following spring.

This difference from employee status implies greater responsibility: you must set aside the money needed to pay your taxes yourself. To better understand the specificities of self-employed status, consult our comparative guide to legal forms.

How to calculate your taxable income

The calculation of your taxable income follows precise accounting logic. It's not simply your turnover, but your net profit after deducting all your justified business expenses.

The basic formula is as follows: Taxable income = Gross income - Deductible expenses - Social security contributions. Each element of this calculation must be documented and justifiable to the tax authorities.

Understanding this mechanism is essential to anticipate your tax burden and legally optimise your situation. The following three subsections detail each component of the calculation.

Gross income: what you actually receive

Your gross income corresponds to all amounts received as part of your self-employed activity: fees, service provision, product sales, commissions.

Not considered as income: client expense reimbursements (if invoiced separately), personal loans, or capital contributions. However, subsidies related to your professional activity are taxable.

Concrete example: Sophie, a freelance graphic designer, invoiced CHF 78,000 in 2024. She also received a cantonal subsidy of CHF 5,000 to develop her activity. Her gross income therefore amounts to CHF 83,000.

Deductible expenses that reduce your taxable base

The deductible expenses are all expenditures necessary for carrying out your professional activity. They directly reduce your taxable income, hence the importance of properly identifying and documenting them.

Main admitted expenses: rent and charges for your office, IT equipment and materials, professional subscriptions, travel expenses, continuing education, professional insurance, justified entertainment expenses, supplies and consumables.

Golden rule: each expense must be justified by an invoice or receipt, and have a direct link with your activity. Mixed expenses (private and professional use) must be apportioned proportionally.

For an exhaustive list and optimisation advice, consult our detailed guide on deductible business expenses.

Complete calculation example

Let's return to Sophie's example to illustrate the complete calculation of her taxable income:

• Gross income: CHF 83,000 (invoicing + subsidy)

• Deductible expenses: CHF 24,500 (office rent 12,000, equipment 4,500, travel 3,200, training 2,800, insurance 1,500, miscellaneous 500)

• Net profit: CHF 58,500

• Social security contributions AVS/AI/APG (10%): CHF 5,850

• Net taxable income: CHF 52,650

It's on this final amount of CHF 52,650 that Sophie will be taxed according to federal, cantonal and municipal scales.

Social security contributions: deductible but mandatory

As a self-employed individual, you must register with an AVS compensation fund and pay your social security contributions yourself. These contributions represent approximately 10% of your net income (AVS/AI/APG), to which are added family allowances depending on your canton.

Good news: these contributions are fully deductible from your taxable income. They therefore reduce your tax base, even though they represent a real burden on your cash flow.

Optional insurance (LPP 2nd pillar, loss of earnings insurance, supplementary insurance) is also deductible within certain limits, which can significantly reduce your tax burden whilst protecting you.

The calculation is done in cascade: you first calculate your net profit, then the contributions on this amount, then you deduct these contributions from your taxable income. To understand your obligations in detail, consult our guide on social security contributions and insurance.

Tax scales: how much will you pay?

Once your taxable income is calculated, it is subject to a progressive system: the higher your income increases, the higher the tax rate increases. This system applies to all three tax levels.

Progressivity means that you don't pay the same rate on your entire income, but increasing rates by brackets. An income of CHF 60,000 will not be taxed at 60,000 × maximum rate, but by successive tiers.

Your total tax burden combines direct federal tax (IFD) and cantonal/municipal taxes, which vary considerably from one canton to another. This is why two self-employed individuals with the same income can pay very different amounts depending on their place of residence.

Direct federal tax (IFD)

Direct federal tax follows a progressive scale identical throughout Switzerland. For a single person, the rate starts at 0% up to approximately CHF 17,800 of taxable income, then increases progressively.

Indicative brackets (single person, 2024): 0% up to CHF 17,800, then from 0.77% to 2% between 17,800 and 31,600 CHF, from 2% to 6.6% between 31,600 and 78,100 CHF, and up to 11.5% beyond 755,200 CHF.

Example: With a taxable income of CHF 52,650, Sophie will pay approximately CHF 1,200 in direct federal tax, i.e. an effective rate of approximately 2.3%. This amount remains moderate because federal tax is the lowest of the three levels.

Cantonal and municipal taxes

This is where the differences become significant. Each canton applies its own scale, and municipal taxes are added. The total tax burden can vary from single to double depending on your domicile.

Examples of total effective rates (cantonal + municipal) for a taxable income of CHF 50,000, single person:

• Zug: approximately 8-10% (most advantageous canton)

• Zurich: approximately 12-14%

• Vaud: approximately 15-17%

• Geneva: approximately 18-22% (highest canton)

These rates include cantonal, municipal and parish tax. For Sophie in Lausanne, with CHF 52,650 of taxable income, she will pay approximately CHF 8,000 to 9,000 in cantonal and municipal taxes, in addition to federal tax.

Always check the specific scale for your canton and municipality on your cantonal tax administration website.

The provisional instalment system

Unlike employees who pay tax at source each month, self-employed individuals must generally pay instalments during the tax year. This system avoids having to pay the entire tax in one go the following year.

Instalments are calculated based on your previous taxation or an estimate if it's your first year. They are generally payable monthly or quarterly depending on the canton.

Once your tax return is processed, the tax administration establishes the final taxation and calculates the difference between what you actually owe and the instalments already paid. You'll receive either a balance to pay, or a refund if you've paid too much.

How instalments work

The amount of instalments is determined by the tax administration based on your last taxation. If your income increases or decreases significantly, you can request an adjustment of the amount.

Deadlines vary according to canton: some require monthly payments, others quarterly or half-yearly. You'll receive a payment slip indicating the amounts and payment dates.

Non-payment of instalments results in default interest (generally 4-5% per year). Conversely, if you pay too much, you'll recover the overpayment with remunerative interest (lower, around 0.5-1%).

First year of activity: what to do?

During your first year of self-employed activity, the tax administration has no basis for calculating your instalments. Two options are available to you: pay nothing during the year and settle the full amount the following year, or voluntarily request to pay instalments based on an estimate.

The second option is strongly recommended to avoid a large bill all at once. Estimate your annual net profit, apply approximately 25-30% to provision your taxes, and transfer this sum to a separate account each month.

This financial discipline will help you avoid unpleasant surprises. To properly start your activity and anticipate all your obligations, consult our guide on essential administrative steps.

Practical advice for optimising your taxation

Legally optimising your taxation doesn't mean committing fraud, but simply using all legal levers to reduce your tax burden. Three main axes: rigorous documentation, expenditure planning, and professional advice if necessary.

These strategies are accessible to all self-employed individuals, regardless of the size of their activity. They simply require a minimum of organisation and anticipation.

The objective is twofold: pay the right amount of tax (neither more nor less) and avoid any problems with the tax administration thanks to impeccable documentation.

Document your expenses rigorously

The golden rule of tax optimisation: keep ALL your supporting documents. Each invoice, receipt or ticket that justifies a deductible expense must be archived for at least 10 years.

Set up a simple system: monthly folder, scanning app, or better still, an invoicing tool like BePaid that centralises your issued invoices and allows you to easily export your data for your tax return.

Good documentation protects you in case of tax audit and ensures you don't miss any legitimate deduction. BePaid automatically generates compliant income reports to facilitate your declaration.

Plan your investments

If you're planning significant professional purchases (computer, equipment, training), group them at the end of the tax year to maximise your deductions for the current year.

This strategy is particularly useful during a year with exceptionally high income. Be careful however: each expense must remain professionally justified and consistent with your activity.

Continuing education, professional subscriptions and equipment renewals are easy items to plan to optimise your taxation without artifice.

Consult a tax specialist for complex situations

As soon as your situation becomes complex (high income, multiple activities, significant investments, particular family situation), calling on a tax specialist or fiduciary becomes profitable.

An expert will identify legal optimisations that you would have missed and will help you avoid costly errors. Fees (generally CHF 500 to 1,500 for a return) are moreover deductible.

BePaid helps you manage your invoicing and payments on a daily basis, but doesn't replace personalised tax advice. To know when to delegate, consult our article accounting: do it yourself or delegate.

The Swiss tax system for self-employed individuals is based on a simple principle: you are taxed on your net profit, i.e. your gross income minus your deductible expenses. Understanding this mechanism allows you to anticipate your tax burden and legally optimise your situation.

The three main taxes (federal, cantonal and municipal) apply according to progressive scales that vary considerably from one canton to another. Provisional instalments help you avoid unpleasant surprises by spreading your payments throughout the year.

To master your taxation, rigorously document all your professional expenses and keep your supporting documents. Each franc spent correctly can reduce your taxable base. Don't hesitate to consult a tax specialist for complex situations or during your first year of activity.

To simplify your daily management and maintain a clear view of your income, try BePaid for free. Our solution allows you to create compliant invoices, track your receipts and easily export your data for your tax return.