Expenses & remunerations
Expenses are disbursements directly related to the performance of activities for the association (committee work, other tasks) such as postage, telephone charges, materials, travel expenses, meals, the use of own infrastructure etc. Expenses can be reimbursed on the basis of receipts or as a lump sum according to estimated expenditure. In the case of lump-sum expenses, it is indispensable to draw up expense regulations, which may have to be approved by the cantonal tax authorities. Expenses are not taxable.
If someone’s time is compensated financially, this compensation must be registered as remuneration/salary in the association’s books. As a principle, remunerations are part of the taxable income of the person concerned; the association has to issue a corresponding salary statement. If salaries are paid, the provisions of the social security law must be observed.
Further information on important aspects of this sub-topic can be found at the bottom of this page.
Attendance fees represent taxable compensation. The association must therefore prepare a salary statement for them. Annual compensation in excess of CHF 2,300 is subject to social insurance contributions. Committee members can be paid a lump-sum expense allowance in order to cover costs for the use of their own infrastructure (PCs, printers, phones, etc.). This is not liable to tax. Expense regulations are required – as set out in the guideline "Expenses, expense regulations, compensation".
Question
Our committee has taken the decision to pay its members an attendance fee in future. Do we require the approval of the general meeting for this?
Answer
The association's articles of association govern who within the association has what authority. If it is stated therein, for example, that the committee is only entitled to compensation for actual expenses, it cannot pay its members attendance fees unless the payment takes the form of a flat fee for any expenditure incurred. If there is no such regulation in place and the general meeting decides on the budget, the amount must be listed there. This allows the members to exert influence during the budget approval process. It is possible that the committee also has a fixed amount at its disposal about which it can decide itself.
If no reference is made in either the articles of association or the relevant regulations about the authority for spending, it is best if the committee presents compensation and expense regulations to the general meeting for approval.
Please note that attendance fees represent compensation for performed work, meaning that the recipient also has to pay tax on them, i.e. the association has to prepare a salary statement. If the compensation totals more than CHF 2300 per person per year, the relevant social insurance contributions must also be settled (see the work aid "Expenses, expense regulations, compensation" in this regard).
As a principle, committee members provide their services on a honorary basis. Many associations provide for a reimbursement of expenses or an attendance fee for committee members, but other forms of recognition are also possible, e.g. training courses, exemption from contributions. Other associations pay an hourly remuneration for the committee’s work or certain activities for the committee. If committee members provide their specific expertise, a remuneration may be advisable. Any remuneration must refer to a clearly defined and limited mandate (paid tasks of the committee). Attendance fees and compensation in excess of the expense allowance are always subject to tax (salary statement) and may potentially be subject to social insurance. The Zewo quality seal is awarded only to associations whose committee members provide their services to a considerable extent on an honorary basis.
Question
Our association works with volunteers across Switzerland. They settle travel expenses for the association. For the processing of reimbursements, it is easiest if they send the tickets to the association via e-mail. Do original copies of the relevant receipts (travel costs, etc.) have to be collected? Or is it allowed to scan an original receipt, for example a paper train ticket, and archive it electronically as a PDF.
Answer
Business documents have to be stored for a period of ten years. This also applies to receipts. Generally speaking, an electronic receipt is permitted. It simply has to be stored in a way that allows it to be read for ten years. As we don't really know whether and how we will be able to read an electronic receipt in ten years, the receipts are archived in paper form. Original receipts can thus be scanned and sent to the association but have to be archived by the association as paper receipts for a period of ten years.
The expense regulations clarify which expenses will be compensated for the members of the executive committee, the employees or volunteers and to what extent. Regulations for expenses must be approved by the cantonal tax authorities if they do not correspond to the sample regulations for expenses of the Federal Tax Conference; see the aid “Expenses, Regulations for Expenses, Compensation”.
Question
Within our committee, there are very different opinions as to how expenses are to be reimbursed and whether committee members should receive compensation. What is the right approach?
Answer
In many associations, expense regulations and committee compensation are an ongoing topic and are often even a permanent source of conflict that is never made an issue. From a legal standpoint, there are no exact regulations on this issue and associations handle the topic of compensation very differently. Here are a couple of points of reference:
It should be a matter of course that compensation is provided for expenses that are actually incurred.
The expense regulations and the compensation provided must be adjusted in line with the association's financial situation. This expenditure should be included in the budget.
Generous lump sums and compensation payments may exhibit the character of payments that are subject to tax and other duties.
For associations that are exempted from tax and those that bear the ZEWO quality seal, more stringent requirements apply.
It is highly recommended to discuss the compensation of expenses in detail within the committee and to record the regulations decided upon in writing. See in this regard the work aid "Expenses, expense regulations, compensation".
Committee members and other members who take over tasks for the association are entitled to a reimbursement of their expenses such as travel expenses, postage, meals, hotel accommodation, the use of their own infrastructure (PC, printer, telephone, etc.) and material. Expense regulations shall determine the amount of such expenses and whether receipts have to be submitted. If a lump-sum compensation for expenses is agreed, it is indispensable to draw up expense regulations. These regulations may be subject to approval by the tax administration – see the aid “Expenses, Regulations for Expenses, Compensation”. The Zewo quality seal is awarded only to associations that comply with the certification authority’s expense and compensation regulations.
Question
Our committee has taken the decision to pay its members an attendance fee in future. Do we require the approval of the general meeting for this?
Answer
The association's articles of association govern who within the association has what authority. If it is stated therein, for example, that the committee is only entitled to compensation for actual expenses, it cannot pay its members attendance fees unless the payment takes the form of a flat fee for any expenditure incurred. If there is no such regulation in place and the general meeting decides on the budget, the amount must be listed there. This allows the members to exert influence during the budget approval process. It is possible that the committee also has a fixed amount at its disposal about which it can decide itself.
If no reference is made in either the articles of association or the relevant regulations about the authority for spending, it is best if the committee presents compensation and expense regulations to the general meeting for approval.
Please note that attendance fees represent compensation for performed work, meaning that the recipient also has to pay tax on them, i.e. the association has to prepare a salary statement. If the compensation totals more than CHF 2300 per person per year, the relevant social insurance contributions must also be settled (see the work aid "Expenses, expense regulations, compensation" in this regard).
Question
Are committee members generally entitled to compensation for the performance of their committee function?
Answer
There is no legal entitlement to compensation for committee members. On the contrary: an important condition for the association's tax-exempt status is that committee members perform their role on an unpaid basis. They are, of course, entitled to the payment of any expenses incurred. Compensation can be provided for special professional tasks but this should always be linked to specifically described and limited assignments.
All compensation paid to the committee must be included in the budget and be reported as such in the accounts. Always bear in mind that other forms of recognition are possible, including the option to complete further training, the waiving of membership fees and the provision of extras.
And it is also important to note that recipients of compensation that goes beyond an expenses allowance must also pay tax on the relevant amount, meaning that the association is required to prepare a salary statement. If the compensation totals more than CHF 2300 per person per year, the relevant social insurance contributions must also be settled (see the work aid "Expenses, expense regulations, compensation" in this regard).
Work of the committee is usually not paid. If individual members of the committee contribute considerably more time and effort than usual, if they contribute more work than the remaining members of the committee, and if they contribute their specific expertise and professional experience in a way that allows the association to do without paid employees, the question of remuneration arises. If a remuneration is paid, it is important that the payment is based on a precise mandate and that the expenses are reported in the accounts of the association. If no honorary member is available for one of the responsibilities of the committee and if sufficient funds are available, a person can be employed and compensated under a mandate. This person will not automatically become a member of the committee, unless he/she has been elected. However, the Zewo quality seal is awarded only to associations whose committee members provide their services to a considerable extent on an honorary basis.
As a principle, committee members provide their services on a honorary basis. Many associations provide for a reimbursement of expenses or an attendance fee for committee members, but other forms of recognition are also possible, e.g. training courses, exemption from contributions. Other associations pay an hourly remuneration for the committee’s work or certain activities for the committee. If committee members provide their specific expertise, a remuneration may be advisable. Any remuneration must refer to a clearly defined and limited mandate (paid tasks of the committee). Attendance fees and compensation in excess of the expense allowance are always subject to tax (salary statement) and may potentially be subject to social insurance. The Zewo quality seal is awarded only to associations whose committee members provide their services to a considerable extent on an honorary basis.
The activity in the committee is usually an honorary office and is performed without remuneration. Compensation for expenses is permissible and advisable.