What do I need to bear in mind when accepting a board mandate?
Board memberships are interesting, create new prospects and offer prestige. However, they also come with a good deal of responsibility. Personal joint and several liability is an important factor, particularly in the area of social insurance.
- As a member of the board of directors (BoD), you are a governing body of a corporation. In Switzerland, a board of directors mandate is always considered a dependent activity, i.e. a board of directors fee cannot be invoiced by an individual or a partnership.
- A board of directors mandate can only be exercised ad personam. A number of rules must therefore be observed when charging a director’s fee through a corporation.
- If a director’s fee exceeds the entry threshold in accordance with the Swiss law on occupational pension schemes (BVG/LPP) or the pension plan of the company awarding the mandate, it may be mandatory to join the pension fund.
- As a governing body, the board of directors is liable for social insurance claims secondarily to the executive committee. It is therefore also your responsibility to ensure that salaries are paid in full and correctly and that social insurance contributions are paid.
- If you are domiciled abroad, please note that serving on a board of directors in Switzerland is always considered a dependent activity. This may result in general social insurance coverage in Switzerland, including for other income from your country of residence or from other countries, depending on the circumstances.
We can advise you on your personal situation and your responsibilities as a governing body.
Board member in a personal capacity
Tom sits on the board of directors of a small private bank and receives an annual fee of CHF 25,000 for this mandate. Under social security law, Tom is treated as an employee, meaning that the bank must pay OASI contributions on the fee and issue a corresponding payslip and salary certificate for Tom. Whether he is also subject to accident insurance depends on the overall picture of his activities for the bank. Whether he is subject to occupational pension requirements (BVG/LPP) depends on whether and what other jobs he has. Incidentally, any occupational pension contributions made by the bank should be included in the remuneration report. If Tom also lives and works abroad, the mandate with the bank may turn his entire pension provision upside down.
Board member in a professional capacity
Sabrina is an experienced businesswoman who contributes her experience in a number of board mandates. She does not carry out any operational activities; she lives off the combined board fees from her various mandates. If she is treated as an employee in each of her mandates, this can have disadvantages for her in terms of both pension provision and tax. She has therefore set up her own company limited by shares, through which she invoices all her director’s fees. As board mandates can only be exercised in a personal capacity, this solution only works to a limited extent.
Tip: Board of Direction - Guidelines, commissioned by swissVR and prepared by us.