01Hobby or Business? The Distinction
Not every side activity is automatically taxable side income. The tax authorities clearly distinguish between a hobby and self-employed activity. The distinction has far-reaching consequences — both for tax and social insurance purposes.
The tax administration examines the following criteria to classify a side activity as self-employed activity:
- Intent to profit: You regularly earn income and intend to make money — not just cover costs
- Systematic approach: You operate in the market, have clients, issue invoices or publicly offer services
- At your own account and risk: You bear the entrepreneurial risk yourself (e.g. bad debts, material costs)
- Participation in economic activity: You offer services or goods to a broader audience, not just occasionally to an acquaintance
- Regularity: The activity is not one-off but repeated over a longer period
Hobby example: You occasionally knit scarves and sell three of them once a year at the Christmas market for a total of CHF 150. That is a hobby — not taxable self-employment.
Business example: You offer graphic design services in the evenings and on weekends, have a website, issue invoices and earn CHF 12'000 per year. That is side income and is subject to taxation.
02OASI Obligation: From CHF 2'300 per Employer
The OASI contribution obligation for side income depends on whether you are earning side income as an employee or as a self-employed person. The rules differ:
| Situation | OASI Obligation | Legal Basis |
|---|---|---|
| Employed side job | Yes, from CHF 2'300/year per employer | AHVG Art. 34d |
| Side job in a private household | Yes, from the first franc (no exemption) | AHVG Art. 34d Para. 4 |
| Self-employed side income | Yes, from CHF 2'300 net income/year total | AHVG Art. 8 + 9 |
| Self-employed with less than CHF 2'300/year | Voluntary (no obligation) | AHVV Art. 19 |
For most side earners: As soon as you earn more than CHF 2'300 annually, OASI/DI/APG contributions are due. For employed side income, employer and employee share the contributions (5.3% each). For self-employed side income, you bear the contributions alone.
As a self-employed side earner, you must register with the cantonal compensation office. Your side income is combined with any existing main income from self-employment for the OASI calculation.
03Income Tax on Side Earnings
Side earnings are fully taxable in Switzerland — regardless of their amount. There is no tax-free allowance for side income. Your side earnings are added to your other income (main employment, investment income, etc.) and taxed together.
Since Swiss income tax is progressive, your side income is taxed at the highest marginal tax rate. This means: The additional income from side earnings is taxed at a proportionally higher rate than the base income.
Practical example:
| Item | Amount |
|---|---|
| Main employment income (salary) | CHF 75'000 |
| Net side income | CHF 15'000 |
| Total taxable income | CHF 90'000 |
| Marginal tax rate (example Canton ZH) | approx. 30% |
| Additional tax on side income | approx. CHF 4'500 |
In the tax return, you declare side income differently depending on its type:
- Employed side income: You receive a separate salary statement, which you include in the tax return
- Self-employed side income: You fill in the form for self-employed activity (worksheet or questionnaire depending on the canton) and prepare an income-expense statement
04VAT Relevance for Side Income
VAT can also be relevant for side income. The VAT obligation is tied to worldwide annual turnover — regardless of whether the activity is carried out as a main or side occupation.
The threshold is CHF 100'000 annual turnover (Art. 10 MWSTG). You can find all the details in our article on the VAT obligation from CHF 100,000. For most side earners, this threshold is not reached. But beware in the following scenarios:
- Combination of main + side activity: If you are self-employed in both your main and side activity, both turnovers are combined. Example: CHF 70'000 as a photographer (main activity) + CHF 35'000 online shop (side activity) = CHF 105'000 → VAT-liable
- High side turnover: Anyone who earns CHF 100'000 or more in side income alone (e.g. successful online trade) is VAT-liable
- Voluntary registration: Even below CHF 100'000 turnover, you can register voluntarily — e.g. to reclaim input tax on larger purchases
05Bookkeeping Obligation for Side Income
Whether you need to keep books for your side income depends on the type and extent of your activity:
| Situation | Obligation |
|---|---|
| Employed side job | No bookkeeping obligation (salary statement suffices) |
| Self-employed side income under CHF 500'000 turnover | Income-expense statement (simplified bookkeeping) per OR Art. 957 Para. 2 |
| Self-employed side income from CHF 500'000 turnover | Regular bookkeeping with double-entry accounting per OR Art. 957 Para. 1 |
| VAT-liable (regardless of turnover) | Records must be VAT-compliant (input tax/output tax traceable) |
For most side earners, a simple income-expense statement suffices. In this, you list all income and business expenses chronologically and calculate the profit as the difference.
Regardless of the obligation, it is advisable to retain all receipts — for at least 10 years (OR Art. 958f). In a tax audit, you must be able to substantiate every declared deduction.
06Impact on Your Main Employer
A question that concerns many: Am I even allowed to earn side income while employed? In principle yes — Swiss labour law permits side income. But there are important restrictions:
- Duty of loyalty (OR Art. 321a): You may not compete with your employer. Side income in the same industry with the same clients is problematic
- Check your employment contract: Many employment contracts contain a clause on secondary employment. A reporting obligation or even an approval requirement is often stipulated
- Working hours and rest periods: The Labour Act (ArG) prescribes rest periods. Your side income must not lead to exceeding the statutory maximum working hours (max. 45 or 50 hours/week depending on the industry)
- Daily sickness allowance / UVG: In case of an accident during side employment, the main employer's accident insurance may be involved. Clarify the insurance situation
From a tax perspective, the side income has no direct impact on the main employer. The employer continues to deduct the usual social insurance contributions from your salary. You declare your side income separately in the tax return.
07Practical Example: Side Income as a Web Designer
Marco works 80% as an employee in an office (annual salary CHF 68'000). In the evenings and on weekends, he creates websites as a freelancer -- similar to many who look into freelancer taxes. His side income is CHF 18'000 per year. Here is his tax situation:
Side income: CHF 18'000. Deductible costs (software subscriptions, hosting, proportionate home office, training): CHF 3'200. Net side income: CHF 14'800.
Since Marco is employed in his main job and already pays OASI contributions on CHF 68'000, he must additionally pay OASI on his self-employed side income. Contribution rate on CHF 14'800: approx. 5.371% = CHF 795/year.
Marco's total taxable income: CHF 68'000 + CHF 14'800 – CHF 795 (OASI deduction) = CHF 82'005. At a marginal tax rate of approx. 28% (example Canton Zurich), he pays approx. CHF 3'920 additional tax on the side income.
With CHF 18'000 turnover, Marco is well below the VAT threshold of CHF 100'000. No VAT obligation.
Of CHF 18'000 in income, after business costs (CHF 3'200), OASI (CHF 795) and taxes (CHF 3'920), approximately CHF 10'085 remains net — about 56% of the income.