Why debt collection is booming in Switzerland

The number of debt collections has doubled over the past 20 years. Fewer Swiss are paying their taxes, health insurance bills or online purchases on time.

“Only the Greeks are less punctual,” claimed the headline in the newspaper, the SonntagsZeitung, in a story at the end of last year.

It was referring to a report by debt collection company Intrum, in which about 25,000 people in 24 countries across Europe were surveyed about their attitudes towards paying bills.

Of the Swiss who were polled, 54% stated that they had failed to pay at least one bill on time in the previous 12 months. This put Switzerland second to last, just ahead of the Greeks.

The comparison website, ComparisExternal link, came to a similar conclusion, stating that one in four people in Switzerland had failed to pay punctually, and the indebtedness of one in seven had landed them in the debt collection register.

Another indication that the situation has got worse is the nearly annual increase in the number of debt collection and bankruptcy proceedings. The former have almost doubled in the past 20 years to around 650,000 (2017), while the latter have risen by around 50% in the same period.

Tax offices and health insurance companies have been particularly diligent using legal channels to get people to pay up. Roland Isler, spokesman for the Swiss Conference of Debt Collection and Bankruptcy Officers, adds that online shops are also regularly impacted. And young people are increasingly among the debtors.

The Swiss tax system could be one reason people are slow at paying their taxes. Unlike many countries, in Switzerland taxes are not deducted directly from employees’ pay checks. The entire federal, cantonal and communal tax burden is based on income and assets declared by the taxpayers themselves.

Another Swiss idiosyncrasy also makes a comparison with the rest of Europe difficult. “Switzerland is the only country in Europe where it is possible to pursue someone without a legal title,” says Isler.

Dieter Kläy of the association representing small and medium-sized companies says the shift to electronic and digital forms of payments may also contribute to Swiss tardiness. “It’s becoming rarer for people to pay cash for goods upon receipt.”