Are allowances for phone, meals or car taxed in Switzerland?

A common element an employee may see on their payslip is allowances. An allowance is an advance payment for expenses the employee will incur while doing their job.

In the example below, this employee is receiving an allowance for both phone and laptop. The employee is likely using his personal phone and personal laptop to do the work the company has requested of him. The company therefore pays the employee an allowance of 50 CHF per month for his phone and 50 CHF per month for his laptop.

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How do companies calculate that 50 CHF?

If the employee is paying a 100 CHF each month to Salt or Swisscom for their personal phone, the company has calculated the employee is using 50% of his phone to conduct company business and therefore they pay him/her an allowance of 50 CHF (half the monthly phone bill) to cover the costs. The same logic applies to laptops and allowance use cases.

Are allowances taxed as income?

On the payslip below, you can see the employee's "Bruttolohn" or gross salary is 10,000 CHF but he is being taxed AHV, ALV and on amount of 10,050 CHF.

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This tells us that 1 of the 2 allowances, is non taxable and the other is taxable. In this case, the phone is taxable and the laptop. In order to avoid a taxable allowance, a company must approve the allowance with the cantonal tax office.

The Cantonal office would review the employee's case and requested allowance. The Cantonal office would then decide whether a portion, the entire sum or no amount of the allowance should be non taxable. If they approve it, the amount is not taxed. The Cantonal tax offices have a standard by which they assess each unique scenarios put forward.

If you get an allowance on your payslip, be sure to check if its taxable. If it is, encourage your company to apply for a tax approved exemption with their local cantonal tax office so you don't have to pay taxes on something that should realistically be an expense.

At Earny, we facilitate the tax approval process and work with SMEs to identify which allowances are eligible for tax approvals to help save them and their employees money.

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