Stock Options for Employees in Switzerland

Stock options for employees in Switzerland

Equity incentives are an invaluable way to attract, motivate, and retain top talent for your business. But when you cross hiring borders, they can become deeply complex.

Remote enables you to easily offer non-qualified stock options (NSOs) to your team members in Switzerland. There are no compliance headaches or administrative hassles — just simplicity and clarity for you and your people at every step.

What are NSOs?

NSOs are a type of equity incentive. They give your team members the right to buy a set number of shares in your company at a fixed price, known as the exercise price.

This typically happens after a vesting period, which is often based on the length of time your team member stays at your company. As a result, they are a great way to foster long-term commitment, and align people with your company’s strategic goals.

Who can receive NSOs in Switzerland?

	Direct employees	EOR employees	Contractors
Can receive NSOs?	Yes	Yes	Yes
Difficulty score	Easy	Easy	Hard

It’s important to note that granting stock options to contractors can also potentially increase your misclassification risk in Switzerland (although this is not the primary factor). See how Remote protects you against misclassification.

How are NSOs taxed in Switzerland?

In Switzerland, NSOs are taxed in the following ways:

	Direct employees	EOR employees	Contractors
At grant	There is no taxation at grant.	There is no taxation at grant.	There is no taxation at grant.
At exercise	The spread (i.e., the difference between the fair market value of the shares and the exercise price) is taxed as salary income.	The spread (i.e., the difference between the fair market value of the shares and the exercise price) is taxed as salary income.	Your contractor will normally have to pay taxes on the spread in the same way as their professional income. If the contractor works through a personal management company (which often happens in Switzerland), they are subject to two layers of tax: one at the company level (subject to company income tax), and another at the personal level (for the taxation of salary and dividends).
At sale	Part of any gain will likely be taxed as salary, and the rest will likely be exempt from taxation.	Part of any gain will likely be taxed as salary, and the rest will likely be exempt from taxation.	Any gain on the sale has to be reported in the income statement of the yearly tax return, and is subject to regular income tax and social security. If the contractor works through a personal management company (which often happens in Switzerland), they are subject to two layers of tax: one at the company level (subject to company income tax), and another at the personal level (for the taxation of salary and dividends).

Note that taxation in Switzerland is particularly complex for contractors. It’s recommended that they consult with a local tax advisor to verify their tax treatment at the time of exercise.

Are there tax advantages for your team members?

Direct employees	EOR employees	Contractors
There is no tax-favored scheme as such in Switzerland. However, part of the gain made by the employee when selling their shares could be tax exempt. This tax exemption serves a similar purpose to tax-favored schemes seen in other countries.	There is no tax-favored scheme as such in Switzerland. However, part of the gain made by the employee when selling their shares could be tax exempt. This tax exemption serves a similar purpose to tax-favored schemes seen in other countries.	There are no tax-favored schemes for contractors.

Is your business eligible?

If you want to use Remote Equity Advanced to offer stock options to your Switzerland-based team members, your top corporation (i.e., your parent company) must be incorporated in Delaware. Your company must also be private — not publicly listed.

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