{"id":128554,"date":"2026-02-05T14:04:45","date_gmt":"2026-02-05T14:04:45","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=128554"},"modified":"2026-02-12T09:15:14","modified_gmt":"2026-02-12T09:15:14","slug":"switzerland-employee-incentives","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/switzerland-employee-incentives\/","title":{"rendered":"Switzerland: Employee Incentives"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-128554","comparative_guide","type-comparative_guide","status-publish","hentry","guides-employee-incentives","jurisdictions-switzerland"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">KPMG<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/02\/KPMG_NoCP_Blue_CMYK_V2_284.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">KPMG<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/02\/KPMG_NoCP_Blue_CMYK_V2_284.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Employee Incentives laws and regulations applicable in Switzerland<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of incentive plan are most commonly offered and to whom?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This largely depends on the industry, company setup and size, ownership structure, remuneration strategy, and employee demographics. From experience many Swiss companies offer performance-based cash incentive plans. Certain companies (e.g. start-ups, large or listed) commonly offer share and option plans, too.<\/p>\n<p>Typically, a company\u2019s employees are (potential) beneficiaries of such incentive schemes (including employees of affiliates, middle or executive management, etc.).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share option plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Conceptionally, share option plans either are equity-based or cash-based (virtual).<\/p>\n<p>Share option plans can generally be established rather freely, subject to mandatory laws. They generally grant employees the optional right to purchase certain shares at a predetermined exercise price within a specified period. The respective eligibility often is limited to selected participants. Participants typically receive a grant letter detailing the number of options, grant price, vesting conditions (e.g. performance, time, or corporate events), exercise price, leaver rules, term, and references to plan rules. For virtual share option plans essentially the ultimate award (upon exercise of the (virtual) option) is a cash-payment (upon fulfilment of vesting criteria).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share acquisition\/share purchase plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Share purchase plans generally follow international standards and can be designed rather flexibly, subject to mandatory laws. Two common schemes in Switzerland are: (i) employee share purchase plans, where employees can buy a limited number of shares, often at a reduced price (at times: allocation for free); and (ii) share matching plans, where employees purchase shares and receive additional free shares for each share purchased and held over a certain period.<\/p>\n<p>Eligibility may include all employees or be limited, e.g. to certain functions or ranks. The purchase price is often reduced, with purchase limits set by share number or value, and a defined purchase windows. Plans may include holding periods, transfer restrictions, potential fiduciary arrangements, salary\/bonus set-off (for payment), etc.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What other forms of long-term incentives (including cash plans) can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Other long-term incentive schemes may include contingent rights to employee shares (e.g. restricted share units (RSU) or performance share units (PSU)), virtual shares including stock appreciation rights (SAR), deferred cash compensation and bonus banks.<\/p>\n<p>A contingent right to shares (e.g. RSUs\/PSUs) typically entails the right to receive shares (generally for free or at a reduced price) subject to certain vesting (RSUs) and\/or performance (PSUs) conditions. Upon fulfilment of the vesting and\/or performance conditions, a corresponding number of shares is generally received.<\/p>\n<p>SARs are a form of cash-settled incentives that give employees the right to receive a payout, typically equal to the increase in value of shares over a defined period.<\/p>\n<p>A virtual\/phantom (share or option) plan typically offers the possibility for employees to buy (or receive for free) fictional shares that reflect the value of the actual shares and upon fulfilment of any vesting \/ performance conditions are awarded in cash. The right to sell phantom shares or exercise any phantom options may be linked to specific vesting conditions (such as performance, time, or corporate events). Virtual\/Phantom shares or options have no voting rights and are generally not entitled to dividends.<\/p>\n<p>Deferred cash compensation scheme, mainly used in the financial sector, is typically a target-based bonus where part of the annual payout is deferred over a vesting period (e.g. three years) and depends on continued employment.<\/p>\n<p>Bonus banks (rather uncommon in Switzerland) essentially are virtual individual accounts in which annual bonus amounts are credited or debited based on company or individual performance. The balance is tracked over a defined multi-year period (e.g. three years) and can fluctuate over time, including becoming negative. A payout only occurs in case of a positive final balance at the end of the period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on who can participate in an incentive plan and the extent to which they can participate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The participant circle can be defined rather freely and usually depends on industry practice, company setup and structure, management decisions, ownership structure, remuneration strategies, and employee demographics. Employers may choose to invite all employees, selected groups, or only certain defined (and discretionarily chosen) participants, e.g. senior or executive management. In practice, participation is often linked to specific functions or ranks, while hourly waged employees, temporary staff, interns or apprentices are typically excluded.<\/p>\n<p>However, from a corporate governance perspective certain limits may apply or be recommended, particularly for board of directors, control functions and\/or key function holders.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to performance criteria, vesting schedules and forfeiture?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, yes. Performance or time-based vesting conditions are very common and can be designed rather freely, including requirements such as continued employment, time lapse, achievement of business goals, share value increases, exit events, etc.<\/p>\n<p>Forfeiture\/Leaver provisions are also common and typically distinguish between good leavers (e.g. retirement, death, disability) and bad leavers (e.g. termination for cause or resignation without cause). Good leavers usually retain their vested awards, while bad leavers often forfeit or receive reduced awards. The enforceability of forfeiture \/ leaver provisions is often questionable though (see question 12).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to post-vesting and\/or post-employment holding periods. If so, how prevalent are these provisions both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Holding periods (or also blocking periods) are generally less common but can carry tax advantages. Principally, awards may be made subject to post-vesting and\/or post-employment holding periods. However, their enforceability depends on the legal qualification of such incentive, particularly whether the holding periods were elected voluntarily.<\/p>\n<p>If the incentive qualifies as a gratification (see question 12 below), post-vesting and post-employment holding periods generally are possible.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent malus and clawback provisions are and both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malus and clawback provisions are occasionally found in incentive schemes, especially in the financial and insurance industry. However, depending on the legal nature of the incentive (salary vs. gratification), scheme, metrics, awards and circumstances, they might not be enforceable. Clawback clauses based on false calculations or alike will generally be in order though.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for participants in an incentive plan including: (i) on grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; and (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>(i) on grant;<\/strong><\/p>\n<p>When employees receive equity incentives (genuine employee participations), these are generally treated as taxable employment income and are subject to social security contributions at the time of grant, unless they involve blocked or unlisted options or contingent rights to employee shares (e.g., RSUs\/PSUs). The taxable amount of such genuine employee shares corresponds to the fair market value (FMV) less any (reduced) purchase price paid by the employee. For employee shares that are subject to blocking periods, a discount of approximately 6 percent per blocking year (for maximum 10 years) is applied to the FMV for income tax purposes.<\/p>\n<p>For shares that are not listed, generally no FMV is available. Therefore, the tax-relevant value is generally the formula value determined according to a suitable and recognised valuation method (e.g. the &#8216;practitioner method&#8217; according to Circular 28 of the Swiss Tax Conference; revenue multiples; earnings before interest, tax, depreciation and amortisation multiples, etc.). Forward-looking valuation methods (e.g. based on a discounted cash flow valuation) are not accepted as a formula value by the Swiss tax authorities.<\/p>\n<p><strong>(ii) on vesting;<\/strong><\/p>\n<p>Contingent rights to employee shares, e.g. RSUs \/ PSUs will be subject to income tax and social security charges at the time of vesting (conversion into shares). The taxable amount is equal to the FMV (or formula value, if the shares are not listed) of the underlying shares at the time of vesting.<\/p>\n<p><strong>(iii) on exercise;<\/strong><\/p>\n<p>The option will be subject to income tax and social security charges at the time of exercise, if it\u2019s not freely disposable and is not listed. The taxable amount will be calculated on the spread at exercise (i.e. the difference between the FMV \/ formula value of the shares at the date of exercise less the price paid by the employee (e.g. exercise price)).<\/p>\n<p><strong>(iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; and<\/strong><\/p>\n<p>Shares: Genuine share awards are subject to income tax and social security charges on grant (see above (i)). During the holding period, shares held as of 31 December of the respective year are subject to wealth tax. Any dividend income typically triggers income tax. Depending on the circumstances and the grant price and sale price of the share awards, potential tax-free capital gains may be possible. This depends particularly on the holding period of share awards (not listed).<\/p>\n<p>RSUs\/PSUs: The award (RSUs\/PSUs) will be subject to income tax and social security charges on vesting (see above (ii)). The participant must also report all unvested RSU\/PSU awards granted for information purposes in the wealth tax sections of the income tax return. Any shares delivered at vesting of the awards should be reported at the FMV \/ formula value per the end of the tax year following the vesting date. Capital gains tax should not be due on any post-vesting gain on the sale of the shares, if the shares are listed. For shares that are not listed, potential tax-free capital gains may be possible. This depends particularly on the holding period of the underlying shares.<\/p>\n<p>Options: An option will be subject to income tax and social security charges on exercise, if the option is not freely disposable and is publicly traded (see above (iii)). The participant must also report all unvested and\/or not exercised options granted for information purposes in the income tax return (wealth tax sections). Any shares delivered at exercise of the option should be reported at the FMV \/ formula value per the end of the tax year following the exercise. Capital gains tax should not be due on any post-exercise gain on the sale of the underlying shares if the shares are listed. For shares that are not listed, potential tax-free capital gains may be possible. This depends particularly on the holding period of the underlying shares.<\/p>\n<p><strong>(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/strong><\/p>\n<p>Interests shall be calculated at third party market level (safe harbour rates, annually published by the Swiss Federal Tax Administration) and are generally deductible by the employee for income tax purposes (limited). If shares are mostly financed (&gt; 50%) by a loan this might have an impact on the clarification as a professional securities dealer for the employee.<\/p>\n<p>If the interest is charged below arm\u2019s length, the benefit may be considered employment income for the participant.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for companies operating an incentive plan? (i)\ton grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>(i) on grant;<\/strong><\/p>\n<p>See above question 9 (i). The employer must deduct and settle the social security contributions on grant.<\/p>\n<p>For employees who are non-Swiss residents or not Swiss nationals and don\u2019t have a Swiss residence permit C, income taxes at source must be deducted by the employer.<br \/>\nFor corporate tax purposes, the employer company might deduct the expenses for employee share plans from the taxable profit, provided that certain conditions are met.<\/p>\n<p><strong>(ii) on vesting;<\/strong><\/p>\n<p>See above question 9 (ii). The employer must deduct and settle the social security contributions on vesting.<\/p>\n<p>For taxes at source employer obligations and corporate tax purposes see elaborations in (i) above.<\/p>\n<p><strong>(iii) on exercise;<\/strong><\/p>\n<p>See above question 9 (iii). The employer must deduct and settle the social security contributions on exercise.<\/p>\n<p>For taxes at source employer obligations and corporate tax purposes see elaborations in (i) above.<\/p>\n<p><strong>(iv) on the acquisition, holding and\/or disposal of any underlying shares or securities;<\/strong><\/p>\n<p>See above question 9 (iv).<\/p>\n<p><strong>(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/strong><\/p>\n<p>Interests shall be calculated at third party market level (safe harbour rates, published annually by the Swiss Federal Tax Administration) and charged to the participant. If the interest is not deemed at arm\u2019s length, a monetary benefit may be considered as taxable income subject to Swiss withholding taxes of 35%.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the reporting\/notification\/filing requirements applicable to an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The reporting, notification, and filing requirements for an incentive plan depend on the circumstances (e.g. company is listed or unlisted), regulatory environment and the incentive instrument used. Generally, the following requirements may apply:<\/p>\n<p><strong>Corporate actions and approvals:<\/strong> The plan must generally be approved by the board of directors. Amendments to the articles of association (e.g. for new share classes or capital increases), to be approved by the shareholders\u2019 meeting, need to be filed with the Commercial Register.<\/p>\n<p><strong>Disclosure obligations:<\/strong> For listed companies, grants to board members or executive management and the exercise or sale of awards, may need to be disclosed as management transactions. Remuneration and certain plan details generally also need to be reported in corporate governance or remuneration reports at Swiss-based listed companies. Further, regulated companies may need to file remuneration schemes with supervising bodies.<\/p>\n<p><strong>Participant register:<\/strong> Companies shall generally keep a detailed register of plan participants and an accurate share register for any shareholdings.<\/p>\n<p><strong>Payroll and tax reporting:<\/strong> Participation must be reflected in payroll, including the deduction and payment of taxes at source (\u2018Quellensteuer\u2019) and social security contributions, where applicable. Employers must also report equity-based compensation in the annual salary certificate and prepare a separate annex (so called \u2018Bescheinigung zum Lohnausweis\u2019) according to Swiss equity-based compensation regulations.<\/p>\n<p>Employees must declare the monetary benefits in their annual tax return, based on the salary certificate and the annex issued annually by the employer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do participants in incentive plans have a right to compensation for loss of their awards when their employment terminates?  Does the reason for the termination matter?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This essentially depends on the legal qualification of the award. From a Swiss employment law perspective, in summary, awards either qualify as a gratification or a (variable) salary component (if not deemed a non-employment-related ordinary contractual arrangement, under which the parties can agree rather freely on terms including forfeiture rules).<\/p>\n<p>Principally, an employee has no legal claim to a gratification, whereas they have a general claim to (variable) salary &#8211; at least to a certain extent.<\/p>\n<p>Factors to consider essentially may be the:<\/p>\n<ul>\n<li>applicable law and dispute forum<\/li>\n<li>granting entity<\/li>\n<li>wording of the plan documentation and employment documentation<\/li>\n<li>discretionary elements in awarding incentives<\/li>\n<li>frequency of awards (potentially with reservation)<\/li>\n<li>nature of targets\/performance\/vesting conditions (hard or soft targets)<\/li>\n<li>total remuneration of the employee (including the proportion between the award and fixed remuneration)<\/li>\n<\/ul>\n<p>In case an award qualifies as (variable) salary, certain (bad) leaver provisions, forfeitures and clawbacks (including malus), basically leading to a loss of awards, may likely not be enforceable in case of a dispute (see also question 8).<\/p>\n<p>Finally, the reason for termination does not matter in this regard.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any data protection requirements apply to the operation of an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Federal Act on Data Protection (FADP, including its Ordinance on Data Protection) applies if either the company granting the awards or the employee is domiciled in Switzerland. Depending on the circumstances, other data protection laws, e.g. the EU General Data Protection Regulation, may also be relevant.<\/p>\n<p>Regarding employment relationships essentially only personal data necessary for its underlying contract\u2019s administration may be collected and processed (e.g. also regarding an incentive plan). Employers must provide employees with clear and comprehensive information about how their personal data will be processed, typically through a privacy notice.<\/p>\n<p>Generally, the employee\u2019s consent can be one justification for (additional) processing of employee personal data. However, the consent must be informed, specific, and freely given, which can be challenging due to the inherent power imbalance in employment relationships.<\/p>\n<p>Additional safeguards and actions are needed, if personal data is transferred to a country without an adequate level of data protection (e.g. currently the United States). Further, compliance shall be observed during the collaboration with third-party service providers (e.g. share plan administrators).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any corporate governance guidelines that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The main corporate governance guidelines \/ regulations are the following in our experience:<\/p>\n<ul>\n<li>Swiss Code of Obligations (e.g. corporate law, provisions on compensation reporting within listed companies, negotiable securities law)<\/li>\n<li>Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading ((FMIA), articles 142 and 154)<\/li>\n<li>Federal Act on Financial Services ((FinSA) article 35)<\/li>\n<li>SIX Swiss Exchange Listing Rules (articles 53 and following)<\/li>\n<li>SIX Directive on Information relating to Corporate Governance (Annex, Section 5)<\/li>\n<li>SIX Directive on the Disclosure of Management Transactions (Section 6)<\/li>\n<li>Swiss Code of Best Practices<\/li>\n<li>FINMA Circular 2010\/1, Remuneration Schemes<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prospectus or securities law requirements that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, the public offering or admission to trading of securities in Switzerland requires a prospectus under the FinSA. However, no prospectus obligation applies if securities are offered by the employer or an affiliated company to current or former board members, executive management, or employees and\/or certain types of securities are admitted to trading.<\/p>\n<p>For listed companies, buyback programmes to source shares for employee share plans are subject to specific rules under the FMIA, the Swiss Financial Market Supervisory Authority (FINMA) Financial Market Infrastructure Ordinance, and the Takeover Board Ordinance (e.g. on volume, duration, and disclosure of buybacks).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any specialist regulatory regimes apply to incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Based on article 25 FinSA and its Ordinance on Financial Services (articles 24 and following), financial service providers must take risk-adequate organisational precautions. Essentially, their remuneration system must not create an incentive for staff to disregard statutory duties or conduct themselves in a non-detrimental manner to clients, e.g. so that the variable remuneration elements do not diminish the quality of the financial services rendered to clients or that a conflict of interest arises between\/within the activities of business units.<\/p>\n<p>Further, FINMA issued FINMA Circular 2010\/1, Remuneration Schemes, which sets minimal standards for remuneration systems at financial institutions (subject to meeting certain thresholds, particularly for banks, securities firms and insurance companies). This circular sets out various principles regarding remuneration (e.g. the remuneration being aligned with risk policies, linked to long-term economic performance, subject to deferrals or blocking periods, etc.).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any exchange control restrictions that affect the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, currently not.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the formal process for granting awards under an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no statutory process for granting awards, save for the regulations for allocating \/ transferring the underlying incentive instruments itself. The grant procedure is typically set out in the plan documentation. In practice, eligible employees are usually invited or awarded to participate by signing an agreement (grant letter) acknowledging the terms and referenced conditions of the plan. At the time of materialization of the award, if at all, typically an acknowledgment, confirmation letter or other communication is issued.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas corporation operate an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, yes. They can operate such plan for employees based in Switzerland or employed by a local Swiss subsidiary. Depending on the circumstances, even if the plan is governed by foreign law, certain aspects of Swiss law may still apply.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas employee participate in an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, yes. However, mandatory local laws remain reserved.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are share options or awards held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If a participating internationally mobile employee, with residence in Switzerland at some point, changes tax residence during the vesting period, a proportionate taxation to any monetary benefit realised from employee options or contingent rights to employee shares (RSUs\/PSUs) is triggered in Switzerland. The respective taxable amount is linked to the number of working days spent in Switzerland during the vesting period, divided by the total number of days in the vesting period.<\/p>\n<p>This approach applies whether the employee moves to Switzerland (import) or relocates abroad (export) before the options or awards vest or are exercised.<\/p>\n<p>If the employee leaves Switzerland before realisation (exercise or vesting), the Swiss employer must withhold taxes at source at a special lump-sum rate, even if the award is granted by a foreign group entity. The relevant compensation must be reported with the source tax declaration. The employer must prepare the reporting of the equity-based compensation instrument as part of the source tax declaration.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are cash-based incentives held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For cash-based incentives held, e.g. phantom stocks, see question 21. If an ordinary cash bonus payment is made, the period considered for taxation might be different to (essentially e.g. the calendar year will be considered) and the tax treatment is the same as for ordinary salary payments.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What trends in incentive plan design have you observed over the last 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>We recently experienced a trend towards broader participation in employee share plans. While the focus was traditionally on management and executives, unlisted medium-sized and large employers increasingly are or are considering extending incentives to the wider workforce. We recon this reflects the growing importance employees place on remuneration and the efforts by employers to enhance motivation, align interests, and improve retention throughout the workforce.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the current developments and proposals for reform that will affect the operation of incentive plans over the next 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>To our knowledge currently none.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3883<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/128554","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=128554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}