An employee does not have to pay business tax

An employee does not have to pay business tax

"I work in the restaurant trade in Geneva, and my employer deducts business tax from my salary once a year. It seems to me that this tax is payable by the employer. Does he have the right to do this?

Stéphane, Geneva

The Local Business Tax is a tax that provides Geneva's municipalities with some of the resources they need to finance various tasks. It also makes it possible to obtain a public contribution from successful companies that, because of their legal form or structure, pay little or no tax on profits.

This tax is levied annually by the communes, although it is a cantonal tax. It is based on the Geneva law on public contributions (LCP) and its implementing regulations. All natural and legal persons, whether or not they are entered in the commercial register, who are self-employed or run a commercial business in the canton (article 301 LCP) are subject to this tax.

Business Tax is calculated for each taxpayer on the basis of three factors: the average turnover for the last two years, i.e. the total services or revenue obtained, the average rent for the premises occupied by the business and the average number of employees. All taxpayers liable for municipal business tax are required by law (art. 309 LCP) to register spontaneously and without delay.

If your employer is liable to pay the local business tax as a Geneva restaurant owner, you are not, because as an employee you are by definition not self-employed. There can be no question of your employer making you pay part of his own tax, which cannot be deducted from your salary! You are therefore entitled to demand payment of your full salary, in accordance with art. 322 of the Swiss Code of Obligations. What's more, the Swiss Federal Court has ruled that clauses in an employment contract that allow the employer to deduct public-law social security contributions from the agreed gross salary are null and void. If your employer insists on making you pay the tax, you can take the matter to the Labour Court.