Procedures & Social Insurance
The simplified payroll procedure: the downsides nobody tells you about
The simplified payroll procedure sounds appealing: one settlement a year, tax included, little paperwork. And the AHV contributions are the same as in the standard procedure. The downsides lie elsewhere: in the 5% tax, the wage limits and the annual invoice. This article honestly shows where the limits are and when the standard procedure is the better choice.
You have found a cleaner, 4 hours per week, CHF 30/hour. The compensation office offers the 'simplified procedure'. Sounds perfect, and often it is. Then your cleaner asks why 5% tax is being deducted from her pay when she is Swiss and hardly pays any tax otherwise. What is going on?
The simplified procedure does not cut social contributions: AHV/IV/EO (10.6%) and ALV (2.2%) are the same as in the standard procedure and count the same towards the pension. The real downsides are the 5% tax for every employee, hard wage limits and a single invoice a year.
- You deduct the 5% from your employee's wage. It is final, applies to Swiss citizens too, and can be more than her normal tax.
- Only up to CHF 22'680 annual wage per person and CHF 60'480 for the whole household. If a limit is crossed, the office settles the whole year under the standard procedure.
- All employees in the household are in the same procedure. A voluntary switch is only possible on 1 January.
What Is the Simplified Payroll Procedure?
The simplified payroll procedure is set out in the Federal Act against Undeclared Work (BGSA, Art. 2 and 3). It is meant to make small household jobs easy: you settle once a year with the compensation office, and the office also collects a 5% withholding tax (Art. 37a DBG).
The social contributions do not change: AHV/IV/EO 10.6% and ALV 2.2%, split half and half between you and the employee, plus the canton's family allowance contribution. The 5% is tax on top, deducted from the employee's wage. It is available up to CHF 22'680 annual wage per person and CHF 60'480 total payroll for the whole household.
The procedure has existed since 2008. The idea: anyone who employs a cleaner for a few hours a week should be able to register her correctly without much effort. Take the 60-second suitability check to see if it still fits your situation.
The Benefits - Fair and Honest
Yes, the simplified procedure has real advantages. We are not hiding them:
So far, so good. But now comes the part most sites leave out.
The Downsides - What You Really Need to Know
This is where we get honest. Most websites stop at the benefits. We do not.
1The 5% can be more than her normal tax
The flat rate is a tax, not a social contribution, and it is final: no deductions, no refund. If your job is her only or almost only income, her normal tax would often be lower, sometimes zero. If she has other income, the flat rate is usually cheaper. The check further down works it out for your canton.
2Wage cap: CHF 22'680 per year and person
The simplified procedure only applies up to CHF 22'680 annual wage per employee, including holiday pay and board and lodging. At CHF 30/hour and 15 hours/week that is already CHF 23,400. You cross the limit, and the office settles the whole calendar year from 1 January under the standard procedure, not just from the month you crossed it. Many employers notice too late.
3All or none
The procedure applies to all the employees in your household together, and all wages combined may not exceed CHF 60'480 a year. If a nanny earning more than CHF 22'680 a year joins, your cleaner moves to the standard procedure too. No single employee can opt out, not even because of the tax.
4One invoice for the whole year
There are no advance payments in the simplified procedure. You report the payroll by 30 January of the following year and then pay twelve months of contributions and tax within 30 days. Set the money aside every month. Missing the deadlines risks default interest and exclusion from the procedure.
5You are liable for the tax
You deduct the 5% from the wage every month and pass it on through the office. If you forget the deduction, you still owe the tax: as the employer you are liable for it (AHV leaflet 2.07). So put the deduction in the employment contract and on every payslip from the start.
6Switching only on 1 January
A voluntary change of procedure is only possible at the start of a calendar year. If your employee realises in spring that the 5% is too much for her, the standard procedure applies next January at the earliest. So talk to her about the tax before you register.
Is the 5 % flat rate right for your employee?
The flat rate is paid by the employee, not the household. Four inputs, and you see whether the ordinary procedure would be cheaper for her.
Residence status
Income
Flat 5 %: CHF 50.00 a month, final, no deductions, no refund.
Ordinary withholding-tax tariff A0 Zurich: CHF 2.10 a month (0.21 %).
Source: ESTV withholding-tax tariffs 2026, tariff A0 (single, no children, no church tax), estimated between the table points.
Anatomy
The month the procedure flips
Wage ledger 2026
One domestic worker, one employer
CHF 30 an hour at 15 hours a week is CHF 1'950 a month. You stay below it until November; in December you are at CHF 23'400.
The ceiling is CHF 22'680 of annual wage, per employee and per employer. It counts the calendar year, not the twelve months from the start date.
The switch does not start in December. The office settles the whole year from 1 January under the ordinary procedure: the same social contributions, but normal taxation instead of the 5%, and the pension fund may come on top.
Which is why the number to watch is the running annual total, not the monthly wage.
The most common mistake
Same AHV contributions, same pension. The difference is the tax.
Simplified vs. Standard Procedure
Here is the direct comparison, so you can make an informed decision:
Simplified Procedure
- •AHV/IV/EO 10.6% and ALV 2.2%, split half and half
- •Plus a 5% withholding tax for everyone, final
- •Max. CHF 22'680 per person and CHF 60'480 per household
- •All employees in the same procedure
- •One invoice a year, no advance payments
- •Usually no salary certificate
Standard Procedure
- •AHV/IV/EO 10.6% and ALV 2.2%, split half and half
- •Withholding tax only without a C permit, at the cantonal rate; Swiss citizens file their own taxes
- •No wage cap
- •Pension fund mandatory above CHF 22'680 annual wage
- •Advance contributions during the year
- •Salary certificate every year
Learn more about the standard procedure in our articles Register Your Cleaner and AHV Registration for Your Domestic Worker. For a comparison of settlement options, see Simplified or standard: the direct comparison.
When You Should Switch to the Standard Procedure
The simplified procedure is not inherently bad. But it does not fit every situation. Here is our honest recommendation:
A wage exceeds CHF 22'680 a year
Then the simplified procedure is no longer possible, and for the whole year. At CHF 30/hour, just over 14.5 hours a week is enough. So plan pay rises for the turn of the year, not when the compensation office starts asking.
The 5% costs your employee more than her normal tax
This happens when your job is her only or almost only income. In the standard procedure her wage is then taxed normally. For you as the employer it costs not a franc more, only a little more admin.
A second employee joins
Add up the wages of all your employees. If the total is above CHF 60'480, or one of them earns more than CHF 22'680, the standard procedure applies to all of them.
You want to spread the cost over the year
In the standard procedure you pay advance contributions during the year instead of one big invoice afterwards. A little more paperwork, but no large sum all at once.
AK finder: your cantonal compensation office
AHV registration runs through the compensation office of your canton of residence. Pick your canton - you get the right office, its online portal and the registration form.
Zurich
SVA Zürich
Source: official data from the cantonal compensation offices.
Clino guides you through both procedures
Clino checks which procedure applies to your household, warns you before a wage reaches the limit, and prepares the registration, monthly payslips and the annual report for you. For CHF 19.90/month.
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Frequently Asked Questions
Is the simplified procedure illegal?
Does my domestic worker get a lower AHV pension in the simplified procedure?
Can I switch from simplified to standard mid-year?
Why do compensation offices recommend the simplified procedure?
Does my cleaner have to agree to the simplified procedure?
What happens if I exceed the CHF 22'680 wage limit?
Does the 5% withholding tax apply to Swiss citizens too?
Does the simplified procedure work for a nanny too?
Who pays the 5%: me or my employee?
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Sources & further information
- 1SECO - Simplified accounting procedure for private households - www.seco.admin.ch/de/vereinfachtes-abrechnungsverfahren-bei-tiefen-lohnsummen
- 2FSIO - AHV contribution rates - www.bsv.admin.ch/de/beitraege-im-ueberblick
- 3AHV/IV leaflet 2.07 - Simplified payroll procedure (as of 1.1.2026) - www.ahv-iv.ch/p/2.07.d
- 4FSIO - Swiss social insurance system - bsv.admin.ch/bsv/de/home/sozialversicherungen.html
- 5Fedlex - Federal Act against Undeclared Work (BGSA), Art. 2 and 3 - www.fedlex.admin.ch/eli/cc/2007/71/de