An article by Ferax from ExpertInfo, Issue 1 - 2026

What it's about

Employees who are shareholders in the employing company can be compensated either in the form of salary or through dividends. These two forms of remuneration are treated differently for tax and social security purposes and therefore result in different burdens.

Since the introduction of partial taxation of dividends as part of Corporate Tax Reform II (CTR II), these differences have become even more significant. If more dividends are paid out instead of salary, the OASI contribution base decreases.

A parliamentary motion has instructed the Federal Council to examine this issue and propose possible corrections.

Optimization Opportunities

Dividends – like other capital gains – are not considered earned income. Therefore, no social security contributions are levied on them. Since CTR II, dividends are also only partially taxed, provided the recipient holds at least a 10% stake in the company.

The choice between salary and dividends allows for a reduction in the overall tax and social security burden for the company and the employees involved.

However, this arrangement becomes problematic when an unusually low salary is set and an excessive dividend is paid out instead. This leads, on the one hand, to unequal treatment compared to self-employed individuals and, on the other hand, to lower revenues for the OASI.

Current Practice

Even today, the compensation funds examine cases where circumvention of OASI contribution obligations is suspected.

According to current practice, which is based on the jurisprudence of the Federal Supreme Court, distributed dividends can be reclassified, in whole or in part, as salary subject to contributions. This requires that both of the following conditions are cumulatively met:

• There is an obvious disproportion between the company's value and the distributed dividend (excessive dividend).
• There is an obvious disproportion between the work performed and the salary paid (non-market-compliant salary).

Dividends are generally considered excessive if they amount to 10% or more of the tax value of the equity interests as determined by the tax authorities.

Whether a salary is market-compliant is assessed based on whether a comparable person without capital participation would receive a similar salary for a similar activity in the same industry and with comparable education and experience.

In practice, it is often difficult to prove a non-market-compliant salary. If this disproportion cannot be proven, dividends are not reclassified as earned income subject to contributions.

Conclusion

As part of the next OASI reform, it will be examined whether in the future, a portion of obviously excessive dividends paid to employee shareholders of corporations should be subject to OASI contributions. Unlike current practice, it may no longer be necessary to additionally prove that an unusually low salary was paid.

‍