Why family employment is not an «informal» choice
In Swiss SMEs it is common to involve spouses, children or other relatives in the business: reception, administration, sales, production or IT support. Family proximity supports flexibility and operational continuity, but from a legal and tax perspective every employed family member is an employee like any other — except for limited exceptions for very young children in family contexts governed by the Labour Act (LA) and the Ordinance on the Protection of Young Workers (OPYW 5).
The tax authorities and social security funds carefully verify that remuneration corresponds to actual and regular work, that compensation is at market rates and that documentation is complete. Excessive pay, absence of a contract or missing OASI registrations can lead to adjustments, penalties and reclassification as hidden benefits for the company or sole proprietor.
This guide sets out the practical requirements for correctly structuring the hiring of family members in a company, with reference to current federal law and cantonal rules on tax deductions, updated for 2026.
Legal basis of family employment
An employment relationship with a family member rests on the same pillars as any other subordinate employment:
The Code of Obligations (CO), Articles 319 et seq., defines the requirements of the employment contract: personal performance, subordination, remuneration and duration. There is no «privileged» regime for family members: defined duties, a plausible working schedule or workload and a genuine hierarchical relationship are required.
The Federal Act on Old Age and Survivors' Insurance (OASI Act) requires registration with a compensation fund for every person receiving a salary — including spouses and adult children. The obligation applies even for part-time activity and modest amounts. Specific exceptions mainly concern family members treated as independent farmers in an agricultural business (e.g. unemployment insurance exemption: Art. 2 para. 2 let. b ALVIC and Art. 1a para. 2 ALIC), as well as special rules for young people under the LA and OPYW 5.
For minors, the Labour Act (LA) and the Ordinance on the Protection of Young Workers (OPYW 5) set age limits, working hours and permitted types of activity. In general, paid work is allowed from age 15; narrow exceptions exist for light work in a family business or in agricultural contexts, always subject to cantonal authorisation where required.
Comparison by type of family member hired
The implications vary according to degree of kinship, age and volume of activity:
| Aspect | Spouse / partner | Adult child | Parent / other relative |
|---|---|---|---|
| Employment contract | Mandatory (written recommended) | Mandatory | Mandatory |
| OASI registration | Yes, from the first franc | Yes | Yes |
| Mandatory occupational pension (BVG/LPP) | From CHF 22'680/year (2026 threshold) | Same, if threshold exceeded | Same |
| Accident insurance (LAA) | Mandatory for the employer | Mandatory | Mandatory |
| Withholding tax | No if Swiss citizen/settlement permit C with CH domicile | Assess if cross-border worker or foreign national without permit C | Case by case |
| Deductibility for the company | Yes, if market salary and genuine work | Yes, same conditions | Yes, same conditions |
| Audit risk | High if compensation disproportionate to role | High if «convenience salary» during studies | Medium: verify hierarchical independence |
| Training | Possible professional development pathway | Apprenticeship (FETA) often preferable if young | Rare; assess age and qualifications |
Remuneration: the arm's length principle
Remuneration is the aspect most closely scrutinised by the FTA and cantonal authorities. To be deductible and socially compliant, it must meet the arm's length (market rate) criterion:
Permitted remuneration elements
- Base salary commensurate with role, seniority and sector (comparison with SECO or market studies)
- 13th monthly salary if company practice or contractual
- Travel and meal expense contributions, within tax limits
- Bonus or profit participation if contractually provided and commensurate with role
- Fringe benefits (phone, laptop) if necessary for work and documented
Practices to avoid
- Paying a spouse CHF 8'000 per month for 8 hours per week of «light» bookkeeping
- Paying a full-time student child without documented presence in the company
- Compensating «off the books» or via unrecorded private bank transfers
- Alternating months with salary and months at zero without justification
- Exceeding sector benchmarks without objective justification
For significant amounts or ambiguous roles, it is prudent to request a tax ruling from the cantonal tax authority. A ruling binds the administration for a defined period and reduces uncertainty, especially when the family member combines several functions (e.g. administration + marketing + sales).
Tax deductibility for the company
For corporations, sole proprietorships and partnerships, a family member's salary is deductible if it meets the tax criteria of related-party transactions and commercial justification (Art. 58 para. 1 DFTA and corresponding cantonal provisions):
| Condition | Requirement | Consequence if missing |
|---|---|---|
| Actual work | Duties performed regularly, traceable | Deduction denied; possible taxation as hidden dividend |
| Market remuneration | Amount aligned with comparable roles | Reduction of deduction to acceptable amount |
| Correct accounting | Personnel costs in income statement, with social contributions | Adjustment and default interest |
| Salary certificate | Official annual form (Art. 14 Salary Certificate Act) | Salary Certificate Act penalties; difficulties during OASI/FTA audit |
For the employee family member, salary constitutes ordinary taxable income (employment income). The tax reduction reserved for qualified dividends does not apply: the family member pays income tax according to the cantonal and municipal scale, with a flat-rate deduction for professional expenses generally equal to 3% of net income (min. CHF 2'000, max. CHF 4'000 at federal level), unless actual costs are accounted for analytically and cantonal rules differ.
In cantons with separate taxation or income splitting for spouses, the spouse's salary normally falls within the taxable income of the person receiving it; verify cantonal rules if both spouses are employed in different companies or if one is the owner and the other an employee.
Documentation and operational traceability
A complete dossier protects the company in the event of a tax audit, OASI inspection or cantonal labour inspection:
- 1.Written employment contract with job description, percentage of employment, place of work, probation period, notice period and salary clause (gross, 13th month, benefits).
- 2.Personnel register and copies of identity documents; for foreign nationals, residence permit with authorisation for gainful activity.
- 3.Proof of work performed: attendance records, activity reports, company emails, invoices generated, completed projects — particularly relevant for administrative or internal consulting activities.
- 4.Monthly payslips with gross/net breakdown, OASI, BVG/LPP, LAA contributions and any deductions.
- 5.Annual salary certificate issued to the family member and, where required, to the cantonal tax office and OASI compensation fund.
- 6.Justification of salary level: sector benchmark, comparable job offers or tax ruling.
Special cases: children, apprenticeships and unpaid help
Apprenticeship vs employment
If a child completes an apprenticeship in the company, the relationship is governed by the Federal Act on Vocational and Professional Education and Training (FETA) and the training contract, with minimum remuneration per training year. Do not confuse an apprenticeship with an «adult» salary: the authorities verify compliance with cantonal sector minimums and the existence of a training plan.
Occasional family help
Sporadic services without ongoing subordination (e.g. helping in the shop for a weekend) may not constitute an employment relationship, but the threshold is blurred. If the activity is regular or paid on a fixed schedule, treat it as employment. When in doubt, consult the cantonal labour office or an employment adviser.
Managing family members on payroll with Accountex
Managing family employees multiplies the risk of manual errors: forgetting OASI registration, miscalculating BVG/LPP contributions or failing to issue the salary certificate on time. Integrated accounting software such as Accountex lets you register each family member with contract, percentage of employment and cost centre, generate compliant payslips and track personnel costs in the income statement.
Centralising accounting, payroll and documents (contracts, certificates, salary justifications) simplifies year-end checks and preparation of the tax return — for the company and for the family member who must declare their employment income.
Quick checklist before hiring
- ✓Define duties, schedule and documented market remuneration
- ✓Draft and have the employment contract signed
- ✓Register the family member with an OASI compensation fund within legal deadlines
- ✓Enrol in BVG/LPP if salary exceeds the entry threshold
- ✓Take out accident insurance (occupational and, if necessary, non-occupational)
- ✓Set up monthly payroll with contributions and annual salary certificate
- ✓Archive proof of work performed and salary benchmarks
- ✓Consider a tax ruling for high amounts or non-standard situations
Hiring family members can strengthen a Swiss SME, provided the relationship is treated with the same rigour as any other employee. Compliance protects the company from costly adjustments and ensures the family member has social security coverage and correctly declared income.
Social security and insurance
The employer must fulfil the same social security obligations as for any other employee:
OASI, DI, income compensation and unemployment insurance
OASI/DI/income compensation contributions total 10.6% of OASI salary (5.3% employer + 5.3% employee). Unemployment insurance (ALV) adds a further 2.2% (1.1% employer + 1.1% employee). The obligation to register with an OASI compensation fund exists regardless of amount and degree of kinship. Even a family member working a few hours per month must be registered and contributions paid quarterly.
Family allowances are payable to the employee; if the family member is a spouse with dependent children, check with the cantonal family allowances office on payment arrangements to avoid improper double recognition.
Occupational pension (2nd pillar / BVG/LPP)
Affiliation to a pension fund is mandatory when annual salary exceeds the BVG/LPP entry threshold, set for 2026 at CHF 22'680 (indicative amount, subject to annual adjustment). Below this threshold, the family member may be excluded from mandatory BVG/LPP coverage, unless the fund's regulations require early enrolment.
BVG/LPP contributions are split between employer and employee according to the fund's regulations; they must be stated separately in the contract and on the salary certificate.
Accident insurance and sickness coverage
The employer must insure the family member against occupational accidents (LAA) and, for at least 8 hours per week, also against non-occupational accidents. If working hours are lower, the family member is not covered by the employer for non-occupational accidents and must arrange cover personally through mandatory health insurance (LAMal); commuting accidents remain covered as occupational accidents. In case of illness, there is an obligation to continue paying salary for a limited period (Art. 324a CO) or, as an equivalent alternative, collective daily sickness benefits insurance (DSBI) — often recommended for a spouse who contributes significantly to household income.