Welcome to Switzerland! Let me support you on the topics of insurance, tax and social security.
- christoftremp
- Aug 20
- 5 min read
Updated: 7 days ago
Introduction
Starting a new life in Switzerland is exciting – and it also comes with some important administrative steps. This article helps you navigate the essentials of financial security: insurances, taxes, and the pension system.
First things first: set up your health insurance, accident and liability insurance, and understand your taxes. Once those are in place, you can turn to the three-pillar system, which will secure your future, build wealth, and save taxes.
Residence Permits – The Foundation
Your residence permit defines how long you can stay and how you are taxed.
L Permit – short-term stay, up to one year
B Permit – standard residence permit, usually 5 years
C Permit – settlement permit after 5–10 years, full tax declaration
G Permit – cross-border commuter
Health Insurance – Mandatory for Everyone
Health insurance is compulsory. You must register within 3 months of arrival.
Everyone living in Switzerland must take out basic health insurance (KVG). The benefits are the same across providers, but premiums vary significantly depending on the insurer, your canton, and your chosen franchise (deductible).
Franchise explained:
The franchise is a major cost driver. The illustration below shows the annual premium for a person above age 26, living in Zurich, with the lowest offer available:
Annual premium ranges from CHF 4,129 (with CHF 2,500 franchise) to CHF 5,561 (with CHF 300 franchise). That’s a difference of CHF 1,432 per year.
The tipping point is CHF 1,900 in annual health costs:
If your costs are below this, you save more with the higher franchise (CHF 2,500).
If your costs are above this, the lower franchise (CHF 300) becomes cheaper overall.
For high health costs, the maximum difference between the two models is CHF 768.
How to decide:
Decide first on the franchise (CHF 300 vs. CHF 2,500).
Choose the provider with the lowest cost offer for your region.
Finally, check if you are eligible for subsidies (Prämienverbilligung), which reduce premiums depending on income and canton. Zurich subsidy information (2025)
Insurances
Accident insurance – mandatory
Covers medical treatment and income loss if you’re injured.
Provided by your employer if you work more than 8h/week.
Otherwise, add it to your health insurance.
Example: You break your leg skiing or crash your bike – hospital costs and income loss are covered.
Car liability insurance – mandatory
Required if you own a vehicle.
Personal liability insurance (Privathaftpflicht) – highly recommended
Protects you against damage you cause to others. Standard coverage: CHF 5–10 million.
⚠️ Watch out: A bike accident with injuries, water damage leaking into a neighbour’s flat, or a broken shop window can quickly lead to claims of several hundred thousand francs.
Premiums are around CHF 100–200/year – excellent value for essential protection.
Household insurance (Hausrat) – optional
Covers your belongings against fire, theft, water damage.
Typical premium: CHF 150–250/year for a 3-room apartment.
Example: A fire destroys furniture, clothes and electronics worth CHF 25,000.
Supplementary health insurance – optional
For comfort and additional quality (private hospital room, free doctor choice).👉 More details in this dedicated article: Zusatzversicherungen – was du wirklich brauchst und was nicht.
Life & disability insurance – optional
Important for families to secure income in case of disability or death.
👉 Principle: Insure only what you cannot afford to pay yourself.
Taxes in Switzerland
Tax-at-source (Quellensteuer)
If you don’t have a C permit, your employer deducts taxes directly from your salary.
Gross annual income (CHF) | Tax rate (approx.) – Zurich, single, no religion |
60,000 | 9.5 % |
80,000 | 10.5 % |
100,000 | 12.0 % |
120,000 | 13.0 % |
Tax-at-source is convenient – you receive your salary already net of tax.
Ordinary Taxation (Tax Return)
For Swiss citizens and C-permit holders, taxes are not deducted on the payslip. Instead, you file an annual tax return and pay separately – which means you must set money aside yourself.
Taxes consist of three levels:
Federal tax – modest, same nationwide
Cantonal tax – big differences (Zug vs. Geneva)
Communal tax – local surcharge
Comment: If your annual income exceeds CHF 120,000, you must file an ordinary tax return even with a B permit. Even below this threshold, you can voluntarily switch to ordinary taxation – often beneficial if you have high deductions (Pillar 3a, childcare, mortgage interest).
Wealth Tax
In addition to income tax, Switzerland levies a wealth tax at cantonal level.
Net wealth (CHF) | Annual wealth tax – Zurich (single, no religion) |
100,000 | ~ CHF 200 |
500,000 | ~ CHF 2,000 |
1,000,000 | ~ CHF 4,000 |
The Three-Pillar Pension System
Switzerland secures long-term financial stability with the three-pillar system.
Pillar 1 (AHV/IV/EO):
ensures basic existence coverage – enough to survive.
Covers old-age, disability and survivors. Contribution rate: 10.6% of salary, split evenly between employee and employer.
Typical pension range: CHF 15,120 – 30,240 per year (single).
Also includes unemployment insurance (ALV) and family allowances / income compensation (EO) such as maternity or military service benefits.
Pillar 2 (BVG/Pensionskasse):
Designed to maintain your standard of living.
Funded by both employer and employee (usually 6–12% of salary, increasing with age).
Covers retirement income and also includes mandatory accident and disability coverage.
Many employers offer additional contributions (so-called Überobligatorium), which can significantly improve your benefits.
Pillar 3 (Private Pension): Together, Pillars 1 and 2 often leave a 20–40% gap compared to your needs. This gap is closed with the private pension. Almost all Swiss residents use it.
Pillar 3a (tied):
Tax-deductible contributions (max. CHF 7,258 in 2025).
Locked until retirement or special cases (buying a home, moving abroad).
Often combined with death/disability coverage.
Attractive because it lowers your taxable income.
Pillar 3b (flexible):
Other forms of saving without tax benefits.
Examples: savings account, ETFs, investment funds, life insurance.
Tip: make sure you leverage the compound interest effect in pillar 2 & 3!
Payslip Example – What You Actually Receive
Indicative Example: 30-year-old, gross salary CHF 100,000 in Zurich
Deduction | % of salary | Annual amount (CHF) |
Gross Salary | 100,000 | |
AHV/IV/EO (social security) | ~5.3 % | -5,300 |
ALV (unemployment insurance) | ~1.1 % | -1,100 |
Pension fund (BVG, employee part) | 6–8 % | -7,000 |
Non-occupational accident (NBU) | ~1 % | -1,000 |
Tax-at-source | ~12 % | -12,000 |
Net income | 73,500 |
Comment: With Tax-at-source, all deductions are automatic. With ordinary taxation, only social contributions are deducted – income tax must be paid separately, and you must plan ahead.
Useful Resources
Health insurance: priminfo.ch, comparis.ch
Premium subsidies Zurich: svazurich.ch – premium reduction
Insurance: moneyland.ch
Residence permits: sem.admin.ch
Conclusion
The Swiss system is well structured and provides reliable financial security.
First things first: take care of your health insurance, accident insurance, liability insurance, and understand your taxes.
Longer term: invest time to understand the three-pillar system and use it to your advantage. It provides security, builds wealth, and saves you many thousands of francs in taxes over time.
Disclaimer: This article is for information and guidance only. All figures are illustrative examples and may differ depending on your personal situation, canton, or provider. It is not legal, tax or financial advice. For binding information, always refer to the official cantonal authorities, insurers, or tax office, and seek support from a qualified expert.
