Paying Yourself Smartly in Switzerland

Salary, dividends, shareholder loans and business expenses explained.

As an entrepreneur, you’ve probably asked yourself more than once:

What is the best way to pay myself from my company?

The answer is more complex than it may seem. It depends on several factors, including your business model, financial capacity, and personal needs. Your compensation strategy should also take into account your personal tax situation and long-term planning objectives, which will ultimately influence the direction you choose. A well-structured tax strategy is essential for any entrepreneur, regardless of the size of the company.

Alex Clarke from Albatross Group works closely with entrepreneurs navigating exactly these questions. Here, he breaks down the key elements for you to consider.

Salary: stability and long-term security

Salary remains the most traditional form of compensation.

It is tax-deductible for the company, reducing its taxable profit. However, it is also subject to social security contributions (AVS, pension fund, etc.), which increases the overall cost.

Its main advantage lies in the security it provides. Salary contributes to retirement, offers coverage in case of disability and provides financial stability. It is therefore a key pillar of an entrepreneur's long-term social protection and pension planning.

Dividends: useful, but not a shortcut

Dividends represent the distribution of company profits after tax. Unlike salary, dividends are not subject to social security contributions, making them an effective tool for tax optimization. However, they can only be distributed if the company has sufficient distributable profits.

An important point to note is that dividends must be aligned with a reasonable level of salary. If the salary paid to the shareholder-director is considered too low compared to market standards, tax authorities may reclassify part of the dividends as salary. This can trigger additional social security contributions (AVS) and taxes.

Dividends should therefore be seen as a complement to a market-level salary, not a

substitute.

Shareholder Loan: flexibility with caution

A shareholder loan involves the entrepreneur borrowing funds from their own company.

In principle, it is not considered income and is therefore not taxed as such. However, this mechanism is strictly regulated. It must comply with market conditions, particularly regarding interest rates and repayment terms.

If these conditions are not met, tax authorities may reclassify the loan as salary or dividends.

Often misunderstood, shareholder loans can be useful for short-term flexibility, but they carry significant risks if not properly structured.

Business Expenses: often overlooked

Business expenses are often an underestimated lever for entrepreneurs.

When properly identified and documented, they allow the company to reduce its taxable profit while covering costs that are genuinely related to the business. However, the distinction between business and personal expenses must be strictly respected. Every expense should be justified, necessary for the activity, and compliant with

tax regulations.

In cases of abuse or insufficient documentation, tax authorities may deny the

deduction or reclassify these expenses as taxable income. A structured and disciplined approach to managing business expenses not only helps optimise taxation but also protects the entrepreneur in the event of a tax audit.

Bringing it all together

There is no one-size-fits-all approach. In most cases, the right strategy involves a combination of salary, dividends and other tools, aligned with both the business and personal situation of the entrepreneur. At Albatross, this is a conversation they have regularly with clients. A clear, well-structured approach makes things easier to manage and easier to understand.

Exciting News! Upcoming Seminar in Gland

We are pleased to announce that Fidela our sister company we will be hosting a free

seminar on this particular topic.

Tuesday 12 May 2026

5.30pm to 7.30pm

Salle des Colonnes, Chem. de la Serine 1, Gland

In collaboration with the Commune de Gland, the session will cover:

• how to structure your compensation effectively

• ways to optimise your tax position

• how to manage business expenses as an entrepreneur

• 
  

It’s a practical opportunity to gain clearer insight into how these elements work together.