Swiss Entrepreneur Residence Permits for EU/EFTA Nationals: Proving Genuine Self-Employment (and Avoiding “Disguised Employment”)

Swiss immigration law distinguishes sharply between genuine self-employment and what the authorities regard as “disguised employment” (Scheinselbständigkeit / faux indépendants). For EU/EFTA nationals moving to Switzerland under the Agreement on the Free Movement of Persons (AFMP), this distinction is not merely academic. It can determine whether a person is registered as self-employed with an EU/EFTA residence permit, whether a permit is renewed, and whether an arrangement is treated instead as an employment relationship requiring an employed person’s permit framework and, in some cases, compliance steps by the engaging Swiss business.

For time-poor professionals, the difficulty is that AFMP rights are framed at a high level, while the practical implementation sits with cantonal migration authorities, often working alongside AVS/AHV compensation offices and tax authorities. Cantons do not apply a single checklist. They assess the reality of the activity and whether the person is pursuing a genuine and effective economic activity as an independent person, rather than entering Switzerland under the label of entrepreneurship while in substance working like an employee for one principal.

This article explains how cantons typically assess self-employment for EU/EFTA nationals, what “viability” and “independence” mean in practice, and how to build a credible, consistent file that reduces the risk of reclassification as disguised employment.

Self-employment under the AFMP: what the residence right is (and what it is not)

Under the AFMP, EU/EFTA nationals have a right to take up economic activity in Switzerland either as employees or as self-employed persons, subject to meeting the relevant conditions and completing the required registration/permit process. In the self-employed route, the central legal idea is that the person is exercising an independent economic activity in Switzerland. Cantons therefore focus on whether the activity is genuine and effective and whether it is being carried out on an independent basis.

Two practical consequences flow from this.

First, the canton will usually require evidence that the individual has actually commenced (or is in the process of commencing) a self-employed activity in Switzerland. A mere intention to start a business at some point is rarely sufficient. Secondly, because the AFMP route is not a general “startup visa” for EU/EFTA nationals, the authorities are not simply assessing a business idea; they are assessing whether the person’s actual working arrangement is independent, sustainable, and consistent with self-employed status in Swiss social security and tax terms.

This is where “disguised employment” becomes relevant. If the relationship looks like employment in substance, the canton may refuse or limit the self-employed registration, or renewals may become difficult. In parallel, the AVS/AHV authorities may refuse to recognise the person as self-employed for social security purposes, which then undermines the immigration position.

Cantonal assessment in practice: the two core questions

Although cantonal practice varies in tone and depth, the assessment tends to revolve around two questions.

The first is independence: does the person bear entrepreneurial risk and operate with organisational autonomy, or are they integrated into someone else’s business like an employee? The second is viability: is the activity capable of supporting the person in Switzerland on a realistic, ongoing basis, without the arrangement being essentially a temporary or marginal activity that does not reflect genuine establishment as a self-employed person?

These concepts are related. A person can be “independent” on paper yet economically dependent in a way that suggests an employment relationship. Conversely, a person may have multiple clients but still be under such strict control and integration that the arrangement resembles employment. Cantons therefore look for an overall picture that makes sense across immigration, AVS/AHV, tax, and the commercial reality of the work.

Independence: how disguised employment risk is identified

Disguised employment is typically flagged when the factual pattern resembles a standard employment relationship, even if the parties have labelled it as a consultancy or contractor arrangement. In immigration terms, the concern is that the person is relying on the AFMP self-employed route to take up what is, in substance, salaried work without being treated as an employee.

Cantonal authorities commonly probe independence through practical indicators such as client structure, control over work, and economic risk. Multiple clients are not an absolute legal requirement, but in practice they are a powerful indicator of independence because they reduce the appearance of subordination and dependency. A file showing that most revenue comes from one Swiss principal over an extended period, with working time and place dictated by that principal, will often attract closer scrutiny.

Control and integration matter. If the person is expected to work at the client’s premises, use the client’s equipment, follow internal working hours, report to a line manager, appear on organisational charts, or represent themselves as part of the client’s staff, the arrangement starts to look like employment. Exclusivity clauses, non-compete obligations that go beyond what is typical for independent contractors, and client approval rights over holidays or absences can also point in the same direction.

Entrepreneurial risk is another key theme. A genuine independent person typically quotes and negotiates fees, issues invoices, carries the risk of non-payment (subject to contractual protection), corrects defective work at their own cost, and invests in their own tools and insurance. If the arrangement is an open-ended “daily rate” engagement with guaranteed continuous work, no real market-facing activity, and no meaningful business overheads, the authorities may ask whether the person is essentially an employee paid through invoices.

A further area that can trigger reclassification is substitution and delegation. Independent contractors are often free (at least in principle) to use assistants or subcontractors to deliver a project, while employees must personally perform work. If a contract requires personal performance and the client controls how tasks are assigned, this may reinforce the impression of employment. This point needs handling with care, however: in many professional services it is normal that the named specialist performs the work personally. What matters is whether the overall relationship shows autonomy rather than personal performance alone.

Viability and “genuine and effective” activity: the sustainable income rationale

Under AFMP logic, self-employment is a residence route anchored in actual economic activity. Cantons therefore tend to ask whether the activity is more than marginal and whether it is credible that it will support residence in Switzerland.

This does not mean the canton is applying the same sort of “business plan approval” that applies in some non-EU work authorisation contexts. For EU/EFTA nationals, the focus is usually pragmatic: has the person commenced trading, do they have contracts or mandates, do they have realistic projected revenue, and do they have the financial means to bridge the startup period without turning to social assistance?

In practice, the authorities may look at revenue already generated, signed client mandates, a pipeline of work evidenced by correspondence and proposals, and bank statements showing the capacity to cover living costs and business expenses. The “sustainable income” story is important: it should be coherent, conservative, and anchored in the Swiss cost of living in the relevant canton. A projection that assumes immediate full utilisation at high day-rates without explaining client acquisition can undermine credibility.

For some categories of activity, viability is easier to evidence because there is a clear fee model and clear documentation (for example, regulated professionals, IT consultancy, engineering services). For others, particularly early-stage entrepreneurial ventures where revenue is delayed, the file needs to work harder to show genuine establishment in Switzerland. Cantons may be sceptical where the person describes themselves as an entrepreneur but cannot show either current trading activity or a robust financial runway, because the residence right is not designed to cover an open-ended “pre-revenue” period without demonstrable economic activity.

The role of AVS/AHV recognition as self-employed: why it matters so much

One of the most practical anchors in these cases is recognition of self-employed status by the AVS/AHV compensation office. In Switzerland, social security classification is a factual assessment, and the authorities look at similar indicators: independence, entrepreneurial risk, multiple clients, and whether the person appears integrated into another business.

For immigration purposes, AVS/AHV recognition is not merely an administrative detail. Where a person claims to be self-employed but cannot obtain recognition as such, the cantonal migration authority may conclude that the underlying situation is not consistent with self-employment. Conversely, where AVS/AHV self-employed status is granted and the person is paying social contributions as an independent person, this can materially strengthen the credibility of the residence position.

It is important, however, not to treat AVS/AHV recognition as a silver bullet. If the commercial reality changes - particularly if the person later becomes effectively exclusive to one client, or moves into a pattern of integration and control that resembles employment - the risk of reassessment can re-emerge, including at permit renewal stage. The strongest files are those where the immigration narrative, the AVS/AHV position, the contract documentation, and day-to-day working reality all align.

Evidence that typically strengthens an EU/EFTA self-employment file

Cantons generally respond well to documentation that shows the person has actually entered the market as an independent provider and is not merely invoicing one company as a proxy for salary.

This includes contracts or mandates with more than one client where possible, together with invoices issued, proof of payments received, and a business bank account showing trading activity. Evidence of business premises is not always necessary, particularly for mobile or remote work, but it can help to show establishment in Switzerland, as can evidence of business insurances commonly held by independent professionals (for example, professional indemnity where appropriate).

Marketing and business development evidence can also be relevant when revenue is still ramping up. A professional website, client proposals, documented networking or tender activity, and a realistic pipeline can help show that the person is operating as a business. For regulated fields, membership of professional bodies or evidence of recognition of qualifications can help, provided the activity is lawful and the person is properly authorised to practise where necessary.

Financial evidence should be approached strategically. The aim is to show that the person is not vulnerable to becoming dependent on social assistance and that the business can realistically support their stay. This may include savings, a spouse’s income where relevant, and conservative cash-flow projections grounded in signed mandates or market rates.

Two recurrent pitfalls: single-client dependence and “employee-like” contracts

Many problematic cases arise not because the person is not entrepreneurial, but because the first Swiss opportunity is effectively a single-client engagement and the contract is drafted like an employment contract.

Single-client dependence is not automatically fatal, particularly in the early months of establishment, but it increases scrutiny. If the person’s first year is largely one mandate, it becomes important to show active steps to diversify, and to ensure that the terms and working reality show independence: control over scheduling, deliverables-based billing where feasible, and the absence of deep organisational integration.

The contract itself can create avoidable risk. Clauses that mirror employment - fixed hours, detailed instruction rights, broad exclusivity, paid holiday concepts, ongoing provision of work, and extensive managerial control - may be understandable from a commercial perspective, but they can undermine the immigration and AVS/AHV classification. A well-drafted independent contractor agreement will usually focus on deliverables, confidentiality, IP, and clear allocation of risk, while preserving autonomy in how the services are performed.

Because Swiss authorities assess facts over labels, rewording a contract without changing working reality rarely solves the problem. If a person sits at a client desk, works 100% for that client, uses the client’s tools, follows the client’s internal processes, and reports like staff, the relationship may still be treated as employment regardless of what the contract says.

Renewals and longer-term residence: keeping the position consistent

For EU/EFTA nationals, the self-employed residence position is not only tested at the initial registration stage. Renewals and transitions to longer-term status will often re-examine whether the activity remains genuine and effective.

Professionals should therefore treat self-employment as an ongoing compliance posture. This means maintaining a coherent documentary trail: invoices, contracts, accounts, AVS/AHV contributions, tax filings, and evidence of continuing commercial activity. If the business model changes - for example, taking a long-term quasi-exclusive mandate - it is sensible to assess in advance whether this could trigger reclassification, and whether a switch to employed status would be more robust.

Over time, many EU/EFTA nationals in Switzerland also consider settlement (the C permit). While settlement eligibility depends on several factors and routes, it is important to appreciate that long-term residence outcomes are supported by stable lawful residence, clean compliance, and economic self-sufficiency. Ensuring that the initial self-employed classification is correct, and remains correct, avoids complications later when a more holistic assessment of integration and compliance may take place.

Conclusion: what cantons want to see

Cantonal authorities assessing AFMP self-employment are essentially asking whether the person is truly operating a business in Switzerland or whether the “entrepreneur” label is being used to mask an employment relationship. The most persuasive files show real market activity, credible and sustainable income logic, and independence in how work is organised and delivered. Multiple clients, genuine entrepreneurial risk, and AVS/AHV recognition as self-employed are practical indicators that frequently carry significant weight, but they must align with the day-to-day reality.

For EU/EFTA nationals, the self-employed route can be straightforward when the facts are strong and the documentation is coherent. Difficulties typically arise where there is one principal client, employee-like control, or a pre-revenue venture without a clear bridge to self-sufficiency. Addressing these issues early often determines whether the case proceeds smoothly or becomes a protracted classification dispute.

Contact Our Immigration Lawyers In Switzerland

If you are an EU/EFTA national seeking to register as self-employed in Switzerland, or you are concerned that your contractual arrangement could be viewed as disguised employment, our Swiss immigration lawyers can advise on the applicable cantonal practice, supporting evidence, and how to present a consistent position across migration, AVS/AHV and tax. To arrange an initial consultation, please call Richmond Chambers Switzerland on +41 21 588 07 70 or complete an enquiry form.