Will Switzerland extend the beneficial tax arrangements for cross-border workers?

Will Switzerland extend the beneficial tax arrangements for cross-border workers?
A barricade at the Switzerland-France border. Photo: FABRICE COFFRINI / AFP
During the coronavirus, Switzerland and France agreed to relax its taxation rules for cross-border workers. A new proposal hopes to see that arrangement continued.

Advocates of extending the plan, including the Association of Swiss Employers, say that not only should it be extended, but that it should be made permanent when the country emerges fully from the coronavirus crisis. 

As reported in the NZZ, a number of Swiss companies see the benefit of encouraging their workers to work from home, either permanently or on a part-time basis. 

Under the deal, people working from home were treated as if they were working from the office in Switzerland. 

Prior to the deal, workers could work a maximum of one day a week from home. If they exceeded this, they would be taxed in their country of residence rather than in Switzerland. 

Advocates of keeping the new rules in place say they are beneficial for employee health and well-being as well as reducing the risk of transmitting the virus across borders. 

With France's tax and social security contributions usually much higher, companies in Switzerland say they cannot afford to pay both the higher Swiss wages along with these inflated contributions. 

'A pragmatic and sensible response to the crisis'

After the outbreak of the virus, working from home was encouraged by federal and cantonal authorities for anyone who was able to do so, but for this to be possible deals had to be struck quickly between Switzerland and neighbouring countries.

Under normal circumstances a worker who spent more than 25 percent of their working week at home, in France for example, would have to re-register under France's social security system rather than the Swiss one.

READ: How Switzerland avoided a coronavirus 'catastrophe' by protecting cross-border workers 

Tax treaties between France and Swiss cantons would also be flouted if workers stayed at home rather cross the border into Switzerland.

But agreements were quickly drawn up between France and Swiss authorities that essentially allowed workers to be based at home, rather than travelling to Switzerland without it impacting their social security and tax status.

“The overall principle applied during the border closures is that cross-border workers should continue to be subject to the same tax and social security as if they had continued to work in their normal location, when in fact they were working at home in their country of residence,” said Daniel Foster Director in global mobility services for KPMG, told The Local Switzerland. 

READ: What impact will the new Swiss-German tax treaty have on cross-border workers? 

 


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