Switzerland

Cross-border home office: Tax agreement between Switzerland and France

As of 1 January 2023, and renewed under the mutual agreement dated December 2024, the cross-border agreement between France and Switzerland authorises cross-border commuters to work up to 40% from home. There is a sustainable tax regime for all cantons: 40% of the working time can be performed from home per year without having an impact on the state of taxation of the employment income. This new rule is applicable to cross-border commuters who are otherwise commuting on a daily basis between their home and their employer in the other state, and not to extensive business travellers. Indeed, only ten business travel days are tolerated in this agreement and count toward the 40% threshold. The employer must provide to each cross-border commuter a certificate indicating the percentage of working time (or the number of days) realised from home. This certificate may be requested by the tax authorities. Automatic exchange of information in this regard is delayed and will likely be effective as from 2027. The social security affiliation position is not part of this agreement and is treated separately.

Cross-border home office: Social security multilateral agreement

Switzerland and some European Union (EU) states signed a multilateral agreement that contains a derogation in the area of insurance subordination in order to facilitate teleworking after 30 June 2023 in the interest of employees and their employers. The agreement provides that persons who work in the state in which their employer’s registered office is located may perform up to 49.9% cross-border telework in the state of residence and remain affiliated in the state of the employer’s registered office for social security purposes. This exception is only applicable to situations involving two states that have signed the agreement. Switzerland, as well as Germany, Liechtenstein, Austria, and Italy have signed it. This multilateral agreement is meant to cover teleworking of cross-border commuters and not multi-state workers who may work in other countries on top of the residency and employer’s country. These business travellers are covered by the existing 25% multi-state activity provisions. In both cases, an A1 must be applied for in order to validate the country of social security affiliation.

Double Tax Treaty (DTT): German cross-border and managerial staff

According to art. 15 para. 4 of the DTT between Switzerland and Germany, the income of an individual who is resident in one contracting state but works as a director, managing director, or authorised signatory of a corporation that is resident in the other contracting state may be taxed in the second state, unless the activity is limited to tasks outside this state. If the second state does not tax the income, it may be taxed in the state of residency (so-called ‘Leitender Angestellter / Executive Clause’).

The definition of individuals falling under this clause has been the basis for disputes between the national tax authorities of the two countries. In a consultation agreement dated 18 September 2008, the two countries agreed on a more restrictive interpretation, stating that the clause should only apply to employees with procura resp. signatory rights for the company or if the individuals function as listed in art. 15 para. 4 is stated in the commercial register.

In contrast, the new consultation agreement dated 6 April 2023 allows a broader interpretation of the clause. It now applies to individuals who are listed in the commercial register with individual or collective signatory rights without designation of the function. It also applies to individuals who are not listed in the commercial register at all but, from a civil law perspective, occupy a position within a corporation that is comparable to the functions mentioned in art. 15 para. 4 and representation authority, taking into account the overall circumstances of the individual case. The management function and representation authority must be equivalent to at least a procura. This may be proven with a respective power of attorney to represent the company, e.g. through a circulation resolution, internal signatory regulations, or company statutes.

When analysing the overall circumstance of the individual, the following factors should be considered:

• Individual falls into one of the top salary grades within the company.
• Profit-sharing agreements and royalty gains.
• Granting of special benefits-in-kind or on-cash benefits.
• Reporting lines and number of subordinated employees.
• Independent hire and fire powers.
• Promotion/advancement associated with a change or expansion of the scope of activities.
• Exempt from legal limitation of maximum working hours.

The new consultation agreement is to be applied to all open cases and its duration is limited until 31 December 2025, unless the competent authorities agree on a continuation of the agreement.