For daily cross-border commuters the agreement includes the following regulations:
Days spent working at home due to COVID-19 restrictions are considered the same as they would be if the pandemic hadn’t happened — that is, if workers would have returned each day to their homes in Germany. This rule is not applicable if employees would have spent the day in their home country anyway.
If the daily cross-border commuter had to remain in Switzerland and the employer paid for accommodation during the period of lockdown, these days are taxed the same way as if the workers continued to return every day to Germany.
For the period of this agreement, the 60 non-return days rule will be disregarded. As such, the 60- day threshold will have to be pro-rated for the rest of the year.
For other cross-border employees:
Days spent working at home during the lockdown are considered the same as they would be if the pandemic hadn’t happened. However, this rule is only applicable if the employee can prove that their income has been taxed in Switzerland at regular rates.
If the employee applies this rule, they will have to notify German tax authorities in and provide suitable evidence, such as the number of days spent in the home country that would have been spent in Switzerland if COVID-19 hadn’t happened.
In such a case, the employee will agree that Switzerland will tax their income. The employee must inform the employer of the notification. The employer will then have to confirm the application of the rule in writing, for instance on the salary certificate or other suitable format.
If the employee does not make use of the work rule, the regular rules of the treaty continue to apply. However, income paid to employees who were unable to work will be taxable in Switzerland.
“If these concessions had not been agreed to, then cross-border workers could have found themselves with unexpected tax bills and unintended changes in social contributions and coverage. Employers would have had onerous and unclear compliance obligations”, said Daniel Foster, director of Tax & Legal department at KPMG Zurich.
“The agreements and guidelines are, on the whole, a pragmatic and sensible response to the crisis”, he added.
About 33,700 German citizens currently work in Switzerland.
During the lockdown, when all non-essential travel into Switzerland was restricted, cross-border workers were among the few foreigners allowed into the country.