Why governance remuneration requires accounting attention
In a Sagl or SA, payments made to the board of directors, board members with executive functions or managers are not a simple cost item: they affect governance, payroll taxation, withholding tax and transparency towards partners and shareholders. Incorrect treatment can lead to OASI assessments, tax disputes or challenges during approval of the financial statements.
Swiss SMEs often operate with lean bodies: the founder combines the roles of partner, manager and board member. In these cases, the distinction between employment salary, mandate fee and profit participation becomes decisive for correct accounting and social security contributions.
This guide outlines the federal legal framework, practical differences between Sagl and SA, the necessary resolution steps and the accounting and tax rules to apply with Accountex to maintain a documented and compliant process.
Legal basis: who decides and by what procedure
Swiss company law clearly distinguishes between management bodies, remuneration and decision-making powers. The following table summarises the main references in the Code of Obligations (CO):
| Aspect | Sagl (GmbH) | SA (AG) |
|---|---|---|
| Management body | Manager(s) (Art. 812 et seq. CO) | Board of directors (Art. 698 et seq. CO) |
| Competence on remuneration | Partners' meeting, unless the articles of association provide otherwise (Art. 812 para. 2 CO) | General meeting for the total amount of board and management remuneration (Art. 698 para. 3 lit. d CO); board for individual executive management remuneration |
| Conflict of interest | The manager does not participate in the resolution on their own remuneration | The interested member abstains; documented in the minutes |
| Transparency towards holders | Disclosure at the meeting and, if material, in the notes to the financial statements | Mandatory remuneration report if the company is listed; otherwise according to articles or practice |
| Liability | Unapproved remuneration may be challenged by partners | Shareholders may contest manifestly excessive resolutions |
In both corporate forms, the articles of association may provide for an annual cap, a per-meeting fee or adjustment criteria linked to inflation. Even in the absence of detailed statutory provisions, prudence requires formalising every payment with a written resolution and an accounting trail.
Types of remuneration and their treatment
Not all payments to corporate bodies have the same legal nature. Classifying them correctly is the first step for tax and accounting purposes:
Fixed annual fee
Lump-sum amount approved by the meeting for the non-executive director mandate or supervisory role. Typical in SAs with a part-time board.
For accounting purposes, it falls under personnel costs or administrative expenses, with monthly accrual or year-end provision if payment is made retrospectively.
Per-meeting fee
Variable remuneration linked to the number of meetings actually held. Requires signed minutes and an annual summary statement.
Useful for boards with intermittent activity; accounting is recorded when the entitlement arises, not necessarily on the payment date.
Employment salary
Salary of the operating manager or board member with executive functions who manages day-to-day operations. Subordinate employment relationship.
Subject to OASI/DI/IC, occupational pension (BVG), accident insurance (UVG/NBU) and, where applicable, withholding tax. Must be clearly distinguished from mandate fees.
Profit participation and dividends
Distribution to partners or shareholders in their capacity as quota or share holders, not as remuneration for the mandate.
Not a deductible expense for the company. Different tax treatment: qualified or ordinary taxation at beneficiary level, with no social security contributions on dividends.
Resolutions and documentation: the compliant process
Remuneration paid without a valid resolution exposes the company to civil and tax risks. For SMEs, an orderly process comprises four documented stages:
- Reasoned proposal. Management or the board prepares a proposal with amounts, criteria and market comparison. For material amounts, a brief comparison with industry studies strengthens defensibility.
- Resolution by the competent body. In a Sagl, the partners' meeting approves managers' remuneration unless the articles provide otherwise. In an SA, the general meeting approves the total amount of board and management remuneration (Art. 698 para. 3 lit. d CO); the board determines individual remuneration of operating management.
- Timely accounting entry. Each payment is recorded with description, reference period and beneficiary. In Accountex, linking the entry to the minutes facilitates audit and review.
- Tax and social security reporting. The distinction between non-executive mandate and subordinate employment determines withholding tax, occupational pension, accident insurance and salary certificate content; OASI obligation on fees or salary in both cases, unless documented exceptions apply. Retain documents for at least ten years.
Minimum content of the minutes
- •Date, participants and quorum reached
- •Approved amount or calculation formula
- •Beneficiary's declaration of abstention
- •Accrual period and payment method
- •Any ancillary allowances (expense reimbursements, training)
Accounting in compliance with Swiss standards
Under Swiss accounting standards (Code of Obligations and, where applicable, Swiss GAAP FER), remuneration of corporate bodies is recorded when the company has a legal obligation to pay, regardless of the settlement date:
Typical entries
- •Fee accrual: Debit personnel costs / administrative expenses — Credit liabilities to corporate bodies
- •Payment: Debit liabilities to corporate bodies — Credit bank
- •Withholding tax: Debit liabilities to corporate bodies — Credit withholding tax liabilities
- •OASI contributions: Debit personnel costs — Credit pension institution / OASI
Year-end closing and notes
- •Accrue fees resolved but not yet paid as at 31 December
- •Separate employment salary and mandate fees in cost items
- •Disclose total remuneration in the notes if material for reading the financial statements
- •Attach extracts from minutes to adjustment entries in Accountex
Companies applying Swiss GAAP FER must also assess whether remuneration falls under related-party transactions, with disclosure obligations if material. SMEs using simplified accounting also benefit from clear segregation between fixed governance costs and operating remuneration for margin analysis.
Common scenarios in Swiss SMEs
Sagl with a sole partner-manager
The partner managing operations normally receives an employment salary, not a mere fee. The meeting — formally composed of the partner alone — approves the remuneration in writing. The salary must be commensurate with market value to avoid the tax authorities reclassifying part of distributed profits.
SA with a family board
Several family members on the board without executive functions receive mandate fees. Document meetings actually held and refrain from paying remuneration disproportionate to time spent and company size.
External professional director
Remuneration is generally paid to the individual mandate holder (ad personam). If the mandate holder is a VAT taxpayer, the fee may be subject to VAT; the company may deduct it if the activity is taxable. Verify domicile and status for withholding tax purposes (Art. 93 DBG for foreign beneficiaries). Retain mandate contract and periodic documentation.
Operational checklist for entrepreneurs and fiduciaries
- Review the articles of association on powers, caps and remuneration approval procedure
- Classify each beneficiary: subordinate employment, non-executive director mandate or partner only
- Prepare resolution before payment, with beneficiary abstention
- Record in accounts at accrual, with year-end provisions
- Issue salary certificate and manage withholding tax as applicable
- Clearly separate salary, fees, expense reimbursements and dividends
- Archive minutes, contracts and supporting documents in Accountex for audit and review
- Review annually the adequacy of remuneration against revenue, results and industry benchmarks
An orderly process protects the company in the event of a tax audit, ordinary audit or dispute between partners. Consistency between resolution, contract, accounting and tax returns is the criterion by which tax authorities and auditors assess compliance of treatment.