Switzerland

Individual - Significant developments

Last reviewed - 29 June 2020

The State Secretary for International Finance has negotiated special agreements with France, Germany and Italy regarding the tax consequences for cross-border commuters during the period affected by COVID-19. These agreements are expected to stay in place until the end of June or August 2020, but not longer than until 31 December 2020. They may be terminated pre-mature by the competent authorities of the involved countries. Also, cantonal tax authorities are considering how they will allocate employment income for the period during which employees could not work, where they usually would have. Employees should therefore review their individual situation for 2020. Depending on their personal situation, they may need to apply for wage tax correction by 31 March 2021 the latest. It is strongly recommended to review one's own tax position for 2020 to tackle any double taxation issues as early as possible.

The revised expatriate ordinance, applicable since January 2016, applies tax benefits more restrictively. Per the new definition, only executives and specialists temporarily transferred or assigned to Switzerland will qualify. The absolute limitation is still five years. With the new law, the deduction for double housing is only available if the dwelling in the home country is not rented out and therefore available to the expatriate. The tax administration is strongly focusing on cases of career expatriates, and such assignments that, after five years, are extended. For these cases, strong evidence of the initial need of a limited stay in Switzerland is required.

The State Secretariat for Economy Affairs has issued a directive regarding the intra-group staff lending and stated again that staff lending from abroad into Switzerland is generally forbidden and only very restrictively allowed within a group of companies. It is recommended to seek advice before a work permit is applied for an individual seconded to Switzerland.

On 3 May 2018 in Brasilia, Switzerland and Brazil signed a double taxation agreement (DTA) in the area of taxes on income. It will create legal certainty conducive to the further development of economic relations and tax cooperation between the two countries. The cantons and the business associations concerned have welcomed the conclusion of this DTA. The agreement still has to be approved by parliament in both countries before it can come into force.

On 1 January 2019, the DTA between Switzerland and Kosovo has become effective.